The Last Uber 1099 Tax Guide You'll Ever Need
Whether you drive for Uber, Lyft or both being a ride share driver can challenging, especially during these times. Don't let doing your Uber 1099 taxes get in the way of picking up more rides. Doing your taxes for this app or other job like Uber should be a quick and easy process, but only if you know what you are doing. Many ride share drivers overlook doing their taxes. Don't be one of them! Failing to file your tax return properly could put you in a lot of trouble with the IRS.
This article will cover:
- What taxes you have to pay as an Uber driver
- Which 1099 forms you will need and where to find them
- The business tax deductions you can take to lower your tax bill
- The actual expense vs the standard mileage deduction
- Whether your taxes are due quarterly or annually
How to File Your Uber 1099 Taxes as a Ride Share Driver
Filing your taxes can be boiled down to a simple 4 step formula.
1. Find your income information from your 1099 forms.
2. Choose between the actual expense or the standard mileage deduction.
3. Gather all your records from a 1099 expense tracking software.
4. Use the information to fill out your Schedule C - Profit and Loss From Business.
As a general rule of thumb, If you earned over $600 from Uber Eats or ridesharing for the year, then you will have to pay taxes on your income. Note that even if you made under the $600 threshold, you still have to report your earnings to the IRS.
What Taxes Do You Have to Pay as a Ride Share Driver?
There are two main types of taxes you will have to pay as an Uber driver. The first is federal and state income taxes. Your federal tax rate can vary from 10% to 37%, while your state rate can be anywhere from 0% to 10.75%. The exact percentage you pay depends on your state and tax bracket, which is usually based on how much you earned over the year.
The second type of taxes you will have to pay are self employment taxes. As an Uber driver you are classified by the IRS as an independent contractor, not an employee. This means that Uber does not withhold taxes for you, like most traditional employers.
You are in charge of paying your self employment income (FICA) taxes. FICA stands for Federal insurance Contributions Act and includes medicare as well as social security taxes. The Medicare tax rate is 1.45%, and social security is 6.2% which adds up to 7.65% for FICA taxes. Since you are self employed you will be paying the employer and employee portions which brings your total up to 15.3%.
Knowing how much you have to pay should never be guess work. Use a calculator to find out the exact amount you should be saving for taxes.
Once you understand your tax liability as a self employed delivery driver, then you can begin to find the 1099 forms you require before you can file.
Which Tax Form(s) Will You Need?
There are three types of 1099 forms that you may need to report your income accurately.
This form includes the gross earnings you made from Uber along with the minimum business expenses that you can deduct, such as commissions and fees. More on tax deductions later.
This is gross income summary from your payment settlement entity, which in your case is Uber. The total transaction amount of each ride or delivery will be listed on this form. For most states you will only get one if you had more than 200 rides and made over $20,000 in customer payments.
If you are from Vermont or Massachusetts and made $600 or more worth of deliveries or rides for the year, then you will get a 1099-K.
Form 1099-NEC Non-employee Compensation
This is replacing the Form 1099-MISC from previous tax years. If you made over $600 in non delivery or ridesharing income such as referrals, then you will usually also receive a 1099-NEC.
When and How to Find Your Uber 1099 Forms?
In most cases, your Uber Tax Summary will be available by January 31st. You can access yours at drivers.uber.com in the Tax Information Tab on your Driver Dashboard.
If you don't see your tax information by then, you still have to report your income to the IRS. Contact Uber's support team to get an estimation on when your tax forms will show up, to be on the safe side.
Once you your total income for the year from your 1099s, the next step in the tax filing process is to calculate all the business expenses you can deduct to lower your tax bill.
What Write Offs Can I Take Advantage Of?
Before we dive into figuring out which business expenses you can take, you need to choose between two main types of deductions for writing off the business use portion of your car.
Actual Costs Deduction
Your first choice is to deduct the actual costs of running your vehicle, which includes the gas, oil, insurance, registration, repairs, maintenance, depreciation, car washes and lease payments. It's important to note that once you choose this deduction for a vehicle, you are not allowed to choose the standard mileage deduction for that same car.
Make sure you keep a detailed record of all your expenses if you plan to use the actual expenses deduction. This helps you write off your expenses easier and be prepared for an IRS audit.
Standard Mileage Deduction
This method lets you write off a set amount off the miles you drive, but doesn't allow you to deduct other expenses associated with your car. The standard mileage rate as of the year 2020 is 57.5 cents per mile of business driving.
You may be overwhelmed by which deduction to choose, but the standard mileage deduction usually provides the largest savings and is also the easiest to use. Make sure to double check with your tax professional to find out the best option for you.
The other tax deductible expenses Uber drivers may write off are:
- Uber service fees and commissions
- Roadside assistance plans
- Rider supplies such as water and snacks
- A portion of your cell phone and accessories
- Parking and Toll Fees
- Training materials such as online classes, ebooks, and other forms of training for driving.
- Music services such as Spotify or Apple
- Trunk organizers or delivery bags for Uber Eats
Remember that you are only allowed to write off the business use portion of your expenses. So if you use your phone 30% of the time for personal use, then you are only allowed to write off the 70% business portion of the same phone's expenses.
Once you have your business income from your 1099s and a record of all your expenses, then you can begin filling out the Schedule C tax document, which summarizes the profits and losses your ridesharing business incurred.
Now that you know how to find the information you need to file your taxes, you are most likely wondering when they are due.
When Do I File My Uber Taxes?
Whether you have to pay your taxes quarterly or once a year depends on your annual earnings. If you are expecting to owe the IRS $1000 or more, then you have to pay estimated quarterly income taxes four times a year.
The quarterly tax due dates are:
- 1st Quarter - April 15th
- 2nd Quarter - June 15th
- 3rd Quarter - September 15th
- 4th Quarter - January 15th
*Dates are subject to change due to COVID.
If a taxpayer fails to submit their quarterly taxes, that could carry a hefty price tag. It doesn't matter if you miss the deadline by a single day, interest will be tacked onto your original bill and if ignored could go up to 25%.
One of the most common reasons why people don't pay their quarterly taxes is they didn't save enough. It's very important that you have enough savings for your tax bill if you don't want to pay extra. Use a quarterly income tax calculator to estimate the exact amount that you have to pay.
When in Doubt Use a Calculator
The most challenging part about being a ride share driver with a changing income is knowing how much to save for tax season. Take the guesswork out of your business by using an income tax calculator so you can feel calm and know exactly what you will owe before it's too late.