Being Freelancer, Finances and Taxes, Freelancers, Income, Taxes

Tax Tips for Uber and Lyft Drivers

 

Delivery drivers make up a large percentage of independent contractors in the United States. From food to online orders, these workers transport goods from client to customer. Many delivery drivers work on a freelance basis, picking up gigs when available, either to supplement or replace their full-time income. In both cases, it’s important to report this income correctly for tax purposes. So here are some simple tax tips for Uber and Lyft drivers.

Taxes for those who are independent contractors, freelancers, or self-employed are handled differently than those employed full-time and there can be certain nuances depending on what you do. If you are a delivery driver, take a look at this 3-step guide to doing your taxes:

Step 1: Understanding your tax documents

As an independent contractor, your clients will typically send you a 1099 (as opposed to a W-2, which you may be accustomed too). 1099s come in many forms and the most typical is the 1099-MISC. For clients in which you earned more than $600 in the year, you should receive a 1099 by January 31st. They will also send a copy to the IRS. If they fail to send you a 1099, you must still report this income. You must also still report income from clients you earned less than $600 from. This income can be reported in your Schedule C.

Step 2: Tracking write-offs and expenses

It’s important to track and correctly list all business expenses. For independent contractors, this reduces your taxable income and can save you a significant amount of money.

For delivery drivers, these are the most common write-offs:

  • Transportation:
    • Car: If you use your car as your main form of transportation, you can write off this expense the following ways:
      • Standard mileage rate: Using the standard mileage rate, you can multiply your business mileage by the IRS approved rate. This rate in 2014 was $.56. This includes insurance, depreciation, maintenance and repairs, and gas.
      • Actual costs method: You could also calculate the actual costs to you. This tends to be more complicated, as you have to figure out the percentage of each cost that relates to business.
    • Bikes: Many delivery drivers use bikes as their main form of transportation. You can write off the depreciated value (and do this year over year) or write off the entire cost of the bike in one year. You can also write-off maintenance and repair expenses.
  • Cell Phone: Cell phone expenses can be written off. If your cell phone is used for both business and personal purposes, you have to calculate the percentage of your bill you use for business purposes and list that amount only.

You can use your own discretion when deciding what business expenses to list. Keep in mind that the IRS requires expenses to be ‘ordinary and necessary’ to your business.

Step 3: Complete and send

After you have received your 1099s and completed your appropriate documents, it’s time to send it off. Typically independent contractors will file a 1040 and a Schedule C (or Schedule C-EZ). For more information about taxes for the self-employed, visit the IRS website. You should file your taxes, either electronically or postmarked, by April 15th.

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Game Changer: Uber Drivers will get their day in court

Drivers for Uber Technologies Inc. will get their day in court.

A California federal judge has set a trial date of June 20, 2016 for a class-action lawsuit that could help decide the employment status of Uber drivers, according to the lawyer representing the plaintiffs.

The case, O’Connor v. Uber, concerns the ride service’s classification of drivers as independent contractors rather than employees.

The plaintiffs say that, because Uber controls things like ride prices and performance standards, they should be considered employees and eligible for reimbursement of expenses such as gas and vehicle maintenance.

Judge Edward Chen already certified the case as a class action, rejecting Uber’s argument that drivers should take their claims to individual arbitration proceedings. Uber has appealed the class certification to the Ninth Circuit Court of Appeals.