Being a rideshare driver can be challenging, specially when tax season rolls around. Whether you're on the road full time or driving on the side of a day job, don't let doing your Uber 1099 taxes get in the way of picking up more rides.
In this article, we’ll go over how much tax you'll have to pay, and what official tax documents you'll need to file. Next, we'll cover the best way to deduct car expenses, followed by the other business expenses you can deduct. Finally, we'll dive into when you should pay your taxes: quarterly, or annually.
What taxes do you have to pay as a rideshare driver?
First things first — let's talk about what you're on the hook for as a rideshare driver. As self-employed workers, Uber drivers are responsible for two main types of taxes. The first? Your 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'll pay depends on your state and your tax bracket, which is usually based on how much you earned over the calendar year.
The second type of taxes you're responsible for is self-employment taxes. As an Uber driver, you're classified by the IRS as an independent contractor, rather than an employee. That means you technically run your own business, so Uber won't withhold taxes for you the way most traditional employers do.
Understanding self-employment taxes for rideshare drivers
As an independent contractor, you're in charge of paying FICA taxes on your self-employment income.
FICA stands for Federal insurance Contributions Act, and includes both Medicare and Social Security taxes. The Medicare tax rate is 1.45%, while Social Security is 6.2%. Together, that adds up to 7.65% in FICA taxes.
Since you’re self-employed, you'll be responsible for paying both the employer portion and the employee portion, which brings your total up to 15.3%. If Uber is your side hustle, you'll pay 15.3% in FICA taxes on your income from the platform, and only 7.65% on your day job earnings.
Budgeting for your Uber tax bill
Taxes for independent contractors can be complicated, since there's no withholding to take advantage of. You're on the hook for making sure you've saved enough to pay your taxes.
Luckily, this doesn't have to be guesswork: You can use a self-employment tax rate calculator to figure out how much you should be setting aside for taxes.
If Uber is your side hustle, the calculator will even account for withholding from your day job, so you get an accurate sense of how much rideshare income you have to sock away from taxes.
How to file your Uber 1099 taxes
Now that you understand your tax liability, it's time to figure out how to file as a self-employed worker.
As a general rule of thumb, if you earned over $600 from rideshare driving with Uber or delivery driving with Uber, you'll have to pay taxes on your income for the year. (Note: Even if you made less than $600, you'll still have to report your earnings to the IRS.)
At tax time, you'll be able to file using a simple, four-step process:
- Find your income information on your 1099 forms.
- Choose between the actual expenses method and the standard mileage method for writing off your car expenses.
- Gather your records for all your other business expenses.
- Use that information to fill out your Schedule C (Profit and Loss From Business), which you'll attach to Form 1040.
The Uber driver tax forms you'll need
Now, let's talk about the forms you'll use over the course of this process. There are three types of 1099 forms that you may need to report your income accurately.
This annual summary shows you the gross earnings you made from Uber, along with the minimum business expenses you can deduct, such as commissions and fees. We'll talk more about tax deductions later.
This shows your gross income summary from your payment settlement entity — in this case, Uber. Your 1099-K will list the total transaction amount you were paid for each ride or delivery.
For 2022, Uber drivers in most states only got a 1099-K if they had:
- Had more than 200 rides or UberEats deliveries
- Made over $20,000 from customer payments
Originally, the dollar amount was set to drop to $600 this year. But the IRS delayed this change. So the much higher requirements are still in play.
This form, for non-employee compensation, replaced Form 1099-MISC from previous tax years. If you made over $600 in non-delivery or ridesharing income — say, through referrals — then you'll usually receive a 1099-NEC.
Where and when to find your Uber 1099 forms
In most cases, your Uber Tax Summary will be available by January 31. You can access it on the Uber website at drivers.uber.com, in the Tax Information Tab on your Driver Dashboard.
If you don't see your tax information by the end of January, you still have to report your income to the IRS. To be on the safe side, contact Uber's support team to find out when you can expect to see your tax forms.
How to write off your car expenses
Once you have your business income from your 1099 forms, it's time to put together a record of all the business expenses you can deduct. You'll use this information to fill out your Schedule C, the form that summarizes your ridesharing business's profits and losses.
Chances are good that the bulk of your business expenses will be related to your car. In order to write these off, you'll have to choose between the two possible methods for deducting the business use of your car: the actual expenses method and the standard mileage method.
Using the actual expenses method
Your first option is to deduct the actual costs of running your vehicle, and then multiply that by your business-use percentage — that is, the percentage of time you're using your car for rideshare or delivery driving, instead of for personal errands.
The expenses you can write off using this method include:
- ⛽ Gas
- 🛢️ Oil
- 🛡️ Insurance (including specific Uber insurance)
- 🔧 Repairs and maintenance
- 🏷️ Vehicle depreciation
- 💰 Vehicle lease payments
To use the actual expenses method, you'll have to keep a detailed record of all these purchases Luckily, apps like Keeper make this recordkeeping easy for you by automatically scanning your purchases for car-related write-offs.
There's one more thing to keep in mind about deducting actual car expenses: if you choose this method the first year you use your car for work, you won't be able to switch to the standard mileage method for that same car.
Using the standard mileage method
Instead of tracking your actual expenses, taking the standard mileage deduction lets you write off a flat rate for every mile you drive for work. This amount changes every year. In 2022, there are two rates: $0.585 from January to June, and $0.625 from July onward. (Adjusting it upward for the last six months is the IRS's way of accounting for high gas prices!)
Which method is best?
If you do a lot of rideshare or delivery driving, then tracking your miles is a good idea — you'll end up saving more on your taxes with this method.
However, say you drive as a side gig and work in an office most of the time. Depending on the number of miles you're logging for work, the actual expenses method might make more sense for you.
We broke down how the actual expenses method compares to the standard mileage method in this post, so you can pick the best option for you. But here's the bottom line: For most rideshare drivers, the standard mileage deduction will provide the biggest tax savings.
Other tax write-offs for Uber drivers
Whether you opt for the actual expenses method or the standard mileage method, there are plenty of other tax deductions you can take. These aren't strictly related to your car, so they can stack on top of the standard mileage method, unlike gas and repairs.
We've got a full list of Uber and Lyft write-offs here, but first, make sure you're not missing these popular ones:
- 💵 Uber service fees and commissions
- 🛣️ Roadside assistance plans
- 🥨 Rider supplies like water and snacks
- 🅿️ Parking and toll fees
- 💻 Training materials like online classes ebooks
- 🥡 Trunk organizers or delivery bags for Uber Eats
- 📱 Cell phone accessories, and a portion of your cell phone
- 🎶 Music services like Spotify or Apple
Writing off purchases you use for business and personal purposes
Business expenses like your phone and your Spotify Premium subscription can be a little confusing. After all, you probably use these in your personal life too.
For purchases like these, keep this in mind: You can only write off the business-use portion of your expenses.
Here's a good example. Say you only use your phone for business 70% of the time. In that case, you can only write off 70% of your phone bill and the cost of your phone. Any accessories you buy just for work, though, like a phone mount? That's 100% tax-deductible.
When to file Uber taxes: Quarterly or yearly?
By now, you know how to file your Uber taxes and which deductions you can use to lower the amount you'll have to pay. It's time for the final piece of the puzzle: when to file.
For plenty of self-employed workers, including rideshare drivers, Tax Day doesn't just roll around once a year, on April 15. Instead, they file taxes quarterly — four times a year.
Whether you have to pay quarterly or annually depends on your annual earnings. If you’re expecting to owe the IRS $1,000 or more, then you should 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
If you should be making quarterly payments, but don't, that oversight could carry a hefty price tag. That's because interest will get tacked onto your original tax bill, and it'll go up the longer you delay on making your payment.
You'll be subject to this penalty if you don't pay up to 90% of your total tax due. If ignored, this quarterly tax penalty could go up to 25%.
What's one of the most common reasons people fail to pay their quarterly taxes? They just don't save enough. To avoid making that mistake, use a quarterly income tax calculator to estimate the exact amount you'll have to pay. That way, you'll be prepared whenever a deadline rolls around.
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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email firstname.lastname@example.org with your questions.