If you’re a rideshare driver, you will definitely want to know what the deal is regarding paying your taxes. This article has got you covered whether you want to know about Uber driver taxes or Lyft driver taxes.
We will take a look at the ridesharing industry as a whole and what rideshares taxes drivers are liable to pay in the USA. Let’s get into it.
What Are Rideshare Taxes?
Uber currently has 3 million drivers globally to Lyf’s 1.4 million. A pretty staggering number considering the rapid growth of this industry as experienced in recent years.
What is even more impressive is how many of these drivers are located in the USA alone. Uber currently boasts a little over 800,000 active drivers while Lyft is following closely in second with 700,000. This makes these two companies the USA ridesharing industry’s behemoths, but what does that mean for the taxes?
Rideshare taxes is just the name of the tax that drivers must pay as part of their overall income. Whether they drive part-time to supplement their salary from their regular job, or whether their rideshare driving job is the main source of income, the taxes are calculated in the same way.
How to File Taxes for Uber and Lyft?
Rideshare taxes are not automatically deducted from the rideshare drivers’ salary, so this must be taken into account from the get-go for new drivers. As Uber and Lyft drivers are considered to be self-employed drivers, the company doesn’t cover either the Uber and Lyft insurance or the taxes.
In order to file your taxes, you need to prepare your documents to ensure the process is as smooth and pain-free as possible. You need to have your identification with you (Social Security number and your Individual Taxpayer Identification Number (ITIN)), your tax documents (forms 1099-MISC, 1099-K, W-2 (if you had an employer), and last year’s tax return), your driver information from the company dashboard, and a list of expenses that you want to claim deductions for.
You can find your Uber and Lyft tax documents in your driver’s dashboard.
Aren’t Uber And Lyft Drivers Self-employed?
Yes, Uber driver taxes and Lyft driver taxes count as self-employment taxes and must be paid in addition to your regular income taxes. Let’s say you drive for Uber on a part-time basis to supplement your income. Your Uber driver taxes must be included in your regular income taxes, which means that you’ll end up with a larger overall tax bill when you file.
Do I Have To Declare Uber Income?
Yes, you must report your income to the IRS. As mentioned, if you earn over $400, then you have an obligation to file a Form 1040 while attaching a Schedule C and Schedule SE to report your ridesharing income. If you earn an Uber income, you will almost always be liable to pay Uber driver taxes.
What Happens If You Don’t Report Uber Income?
You would almost certainly get penalized for not reporting your income. One way or another, your Uber driver taxes will catch up with you as Uber themselves report the income to the IRS.
It’s worth bearing in mind that some sources claim Uber only reports an income of over $20k to the IRS, so if you are below this, you may get away with it. However, it’s not a risk worth taking. In other words, report your income and pay your Uber driver taxes. The same goes for Lyft drivers taxes too, of course.
How Do Uber And Lyft Taxes Work?
You must understand how self-employment taxes work when it comes to rideshare taxes. Even though you may not owe anything in income tax, you could still owe self-employment tax. This is because your self-employment tax is a separate entity that must be paid to the federal government to cover things such as Medicare and your Social Security pension payments.
When you have a regular job, these payments are already taken out of your pay before you get your hands on them. However, when you’re self-employed, you have to take care of these things by yourself as you’re now acting as both the employer and the employee.
Who Must File Taxes?
Any driver who earns more than $400 as a rideshare driver must then file a tax return and disclose your entire driver’s earnings to the IRS. You must then calculate your Uber taxes or Lyft taxes as a self-employed person.
How to pay quarterly estimated taxes?
As an independent/self-employed contractor, you may be liable to pay Uber taxes and Lyft taxes quarterly. You can avoid a penalty by paying enough tax on time, so it’s important to do so. For more information on quarterly taxes and how to estimate quarterly taxes for gig work, visit this IRS page.
Are There Any Differences Between Uber And Lyft Taxes?
There are no differences between Uber taxes and Lyft taxes. You must gather your Lyft tax documents the same way you would for Uber, and all of the calculations are done the same.
The only difference may be in how your expenses are calculated with each company and how they report your statistics and earnings on their driver dashboard.
No matter which company you drive for, the IRS declares you as a business owner if you drive for a rideshare company, and you must file your taxes as such.
What resources are available to help Uber and Lyft drivers with their taxes?
Uber and Lyft both have extensive resources to help their drivers with their taxes. Here is a link to Uber’s site that has a full guide on how to file taxes for their drivers and where you can find all the documents you need. Here is the link to Lyft’s website where you can find similar resources.
They both have extensive information for their drivers and list all of the items/documents you need to file your tax. You can also download your Annual Summary document which will show you a breakdown of the number of rides you’ve given, your gross earnings from rides, non-ride earnings (like bonuses), tolls, and mileage info.