The gig economy has become more and more of a way of life for many every year. Rideshare services take up a big portion of the gig economy, with Uber and Lyft being the largest of the two. With over 4.5 million drivers combined worldwide, they dominate the rideshare industry, and many want to get in on the action. With that being said, the many eager to try it have questions as to how it works. Whether they're asking others what are the best hours to drive Lyft or the best cars for Uber, one question common among many is, "How do I pay my taxes?" Tax filing is essential for any working citizen, and this article goes in-depth on how to pay your taxes while driving for Uber.
Uber Driver Taxes
As an Uber driver, you are considered self employed. And as a self employed worker you won't receive a W2 form when tax time comes around. Instead you will receive a 1099 tax form at the end of the year (provided you made over $600 during the year). You need to report this on your tax return and pay income tax on what you made from driving for Uber. When working for yourself, you have to pay the full 15.3% income tax fee. All taxes come from your own pocket, unfortunately, as there is no employer.
Not all self employed workers are allowed to pay all of their taxes all at once. If you make a certain amount then you must make quarterly tax payments. Whether you have to pay or not depends if you make any income during a certain time period. For example, if you don't make anything from April 1st to May 31st then you don't pay anything for the upcoming pay period.
When tax filing don't forget about tax deductions you can get. This is very important, as this can decrease the amount of money you'll have to pay around tax time. As a rideshare driver, look for deductions such as mileage, paying gas, car repairs, and other things related to your car. Make sure to keep a record of these things throughout the year so that you can use them to deduct your payments when tax time comes around.
Tax Information for Uber
Provided you met the required earnings, tax information for Uber drivers are located on the dashboard and are usually available by the end of January. You can also request to receive it in the mail. Uber sends out three types of tax documents depending on the situation:
- Tax Summary: This is an unofficial tax document made by Uber that is given out to every driver. This tax summary includes a breakdown of your yearly earnings and any related expenses. It also includes the total number of miles driven that year. Although it is not a tax document this document is still very valuable, as you could potentially get tax deductions on a number of things because of this.
- 1099-K: This is an official IRS tax document that includes a total breakdown of your yearly gross earnings. You will only receive a 1099-K if you made more than $20000 and made at least 200 rides in a year.
- 1099-MISC: This is an official IRS tax document that gives a summary, referral, and other miscellaneous payments. If you made more that $600 for the year expect to receive this form.
TurboTax for Uber Drivers
Uber drivers can get special discounts and tax services from TurboTax. The TurboTax discount can range from free tax filings, to deep discounts on tax software and more. All Uber drivers are eligible to receive these benefits and they can all be accessed from the dashboard.
As an Uber driver you can file your state and federal taxes for free. TurboTax Self-Employed is an online tax service designed for people who work for themselves. When filing online, the program highlights specific deductions for rideshare drivers so that they can keep more of their hard-earned money.
½ off TurboTax Live
TurboTax Live is a program that lets you chat to a certified tax expert online to help you with your taxes. The program is very convenient and is always online year-round.
If you file your taxes within a certain time frame you can also receive a free subscription to QuickBooks Self-Employed. QuickBooks Self-Employed is an accounting program which helps you keep track of income and other expenses. It is also used to help calculate and estimate quarterly taxes.
Self Employment With Uber
Whether it's a side job or you plan on working full-time, self employment with Uber has been a popular route for many to go and will likely continue to grow in the future. With that being said, don't forget that when driving with Uber you are self-employed and you will not receive a W2, but a 1099 form. While it does seem scary at first, Uber does a lot to help out. They provide your 1099 tax forms along with a detailed tax summary all online. Also, don't forget that you can do your online tax filing for free with TurboTax e-file and that Uber provides you with a TurboTax discount on their TurboTax Live service in case you need any extra help.