Tax Questions, Answered.
Many people dread April 15th every year. Why? TAXES.
It’s not a fun process and it can be completely and utterly mind-boggling. Why? Because the government does not make it easy! Complex legal jargon, confusing instructions…it all sucks.
If you’re a rideshare driver, you’re responsible for keeping your own records so when the time comes, you’ll be able to file your taxes properly. You may have questions. We can help.
If you drive for Uber or Lyft, you should know they consider themselves third party payment processors. What that means in laymen’s terms is basically they are the payment go-between with you and your passengers. They do more than process payments but this is how they’ve chosen to describe themselves.
How Uber Works
Uber will send a 1099-K whether you hit the $20,000/200 ride mark or not. Every Uber driver will get one regardless of how much money you’ve made. You’ll get a 1099-MISC if you’ve made $600 or more in bonuses/driver referrals.
Here’s how those two work on your Schedule C: combine the amount on your 1099-K and the amount on your 1099-MISC and that is the number you’ll input on your Schedule C. Not too difficult, right?
It gets a bit trickier. You’ll notice that number is higher than what you actually made and you’re right, it is. To get your true and accurate earnings, you’ll need to refer to the Uber 1099 Summary Page. You’ll find that in the Uber Dashboard.
Here's how you’ll get your total for Schedule C - Commissions and Fees. Earnings and expenses from Uber are your toll fees, safe ride fees and split fare fees. Those fees are already included in the income on Schedule C so what you’ll need to do is add those to the subscription fee for your device and voila! That amount is what is entered for Commissions and Fees.
You can if you want total up all of your payouts from your partner statements for the year and that number should be equal to your total income. Or at least really close. That formula: Total Income (1099-K + 1099 MISC) - Commissions and Fees.
What you should not do is list the sum of your partner payments as your total on the Schedule C. While the amount may be the same, you may run into trouble if the amount Uber reports conflicts with the information the IRS has. Avoid the hassles and do it the right way.
How Lyft Works
Like Uber, Lyft will send a 1099-MISC to drivers who earn $600 or more in bonuses, however; Lyft will not send a 1099-K if you’ve not reached the $20,000/200 transaction threshold. Keep in mind that even if you don’t receive a 1099-K from Lyft, you do still have to pay the taxes on your income.
To find the information you need, go to Lyft’s Tax Summary page. This where you’ll find your earnings, toll fees and Lyft commissions. Uber includes trust and safety fees whereas Lyft does not so those you don’t have to worry about if you drive for Lyft.
If you drive for both Lyft and Uber, you’ll only file one Schedule C but you’ll combine earnings from both companies to get your totals.
Note: the business code for Uber and Lyft is 485300 Taxi & Limousine Service. This is used for statistical purposes by the IRS and does not affect your tax return.
How to File Your Taxes
You have options:
H & R Block Online: works about the same as TurboTax but will smaller price points.
TurboTax: This option can be combined with QuickBooks Self-Employed which means the business earnings data you’ve entered into QuickBooks can be imported into TurboTax.
CPA: go this route if you’re simply not comfortable filing your own taxes and find one with experience in filing 1099 taxes.