{"id":7107,"date":"2015-02-14T07:35:01","date_gmt":"2015-02-14T07:35:01","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=7107"},"modified":"2022-04-05T16:25:18","modified_gmt":"2022-04-05T21:25:18","slug":"uber-lyft-taxes","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/income\/wages\/uber-lyft-taxes\/","title":{"rendered":"Uber Driver Taxes: Listen Up!"},"content":{"rendered":"

Editor’s Note:<\/strong> Whether you drive for Uber, Lyft or other ride sharing service, don’t underestimate the importance of reporting your income for tax purposes. Here are five essential facts about Uber driver taxes, so you can avoid\u00a0unwelcome surprises.\u00a0<\/em><\/p>\n

Mobile ride-booking\u00a0services operate in cities all over the world, connecting passengers with drivers of vehicles for hire through various smartphone applications.<\/p>\n

It\u2019s likely that many of these drivers moonlight with these companies to earn income in addition to what they earn with their main employer. But when it comes to income taxes, the difference between those two types of income is as big as the difference between hailing a cab in the rain and ordering a ride in a Town Car with the touch of a smartphone button. For drivers who have steered into the \u201csharing economy,\u201d here are five essential facts to keep in mind as tax time approaches.<\/p>\n

1. Congratulations, you\u2019re a small business owner!<\/h2>\n

Along with the freedom to choose your own schedule, dictate your own hours and be your own boss, you’ll need to consider that the income you receive\u00a0is self-employment income, and self-employment tax will be due (see #2).\u00a0You\u2019ll also need to think about things like commercial insurance to protect yourself and your property, as well as state and local rules and licensing requirements.<\/p>\n

2. What you make is not what you earn.<\/h2>\n

Because you are self-employed now, your income is subject to a 15.3 percent self-employment tax<\/a>. This tax covers your required contributions to Social Security and Medicare, and functions similar to FICA taxes that are withheld from your wages and paid by your employer if you are an employee, rather than self-employed. While it can be exciting to see the deposits in your bank account every week, keep in mind that you need to pay the taxes on this side income.<\/p>\n

3. Record retention is your friend.<\/h2>\n

Welcome to the world of trade or business deductions. Since you probably spend a significant amount of money running your ride-sharing business (on things like gas, car washes, mints, and bottled water), you\u2019ll want to claim those expenses as deductions on your tax return. It\u2019s important to keep receipts for all of the items you purchase to run your business. And if you\u2019d like to take the IRS\u2019 standard mileage deduction to calculate your deductible vehicle expenses, it\u2019s essential that you keep a log of miles that you traveled for business.<\/p>\n

4. Your tax return is about to get a bit more complicated.<\/h2>\n

In January, you\u2019ll receive a Form 1099<\/a> reflecting the income you earned working as an independent contractor driver for the ride-booking company. You\u2019ll need to report all of this income on Schedule C of your federal income tax return. The IRS also receives a copy of any Forms 1099 you receive, and will match that information against your tax return to make sure all of the income is reported.<\/p>\n

It\u2019s a common misconception that if a taxpayer does not receive a Form 1099, or if the income from the side job is less than $600, that income isn\u2019t taxable. This isn\u2019t true. All income you earn through your business, as an independent contractor or from informal side jobs, is self-employment income, which is fully taxable and must be reported on Form 1040, Schedule C. If your net profit exceeds $400 for the year, you\u2019ll also need to prepare Form 1040, Schedule SE, for self-employment taxes.<\/p>\n

5. Account for your tax liability.<\/h2>\n

You may be surprised to learn that, unlike Form W-2 income received from your employer, no taxes are withheld from the income you receive from your ride-booking company. Federal taxes will be assessed on the income you earn. That means, depending on your tax situation, you\u2019ll be taxed at a rate of 15 percent to 40 percent, or even more, of your gross profits. You can account for this amount by making estimated tax payments, or by adjusting your withholding with your main employer to cover the taxes you will owe from your side job.<\/p>\n

The big thing to remember when it comes to taking on side jobs is that there\u2019s added complexity to consider at tax time. But much of this is overcome with patience during the initial learning curve. Once you\u2019ve complied with local business regulations and get in the habit of keeping records, anticipating your tax consequences, and accurately filing your tax return, that driving side job could be well worth the extra effort.<\/p>\n

Hopefully you learn more about Uber driver tax. For more information on self-employment tax, visit<\/p>\n","protected":false},"excerpt":{"rendered":"

Editor’s Note: Whether you drive for Uber, Lyft or other ride sharing service, don’t underestimate the importance of reporting your income for tax purposes. Here are five essential facts about Uber driver taxes, so you can avoid\u00a0unwelcome surprises.\u00a0 Mobile ride-booking\u00a0services operate in cities all over the world, connecting passengers with drivers of vehicles for hire […]<\/p>\n","protected":false},"author":487,"featured_media":26104,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[24,46],"tags":[],"class_list":["post-7107","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income","category-wages"],"acf":[],"yoast_head":"Taxes for Uber and Lyft Drivers | H&R Block<\/title>\n<meta name=\"description\" content=\"Uber and Lyft drivers must file self-employment income taxes. 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