So at the end of every January every single year, Uber and Lyft send out 1099’s and tax summaries to Rideshare drivers across the country. We end up getting a whole bunch of questions, because the way they do it is a little bit different than maybe what you’re used to. In today’s video I’m going to go over your 2017 taxes for Uber and Lyft.
We’ll explain how it works, we’ll go over all the 1099’s and we’ll also give you all the information that you need to go ahead and file your taxes. Because although it may seem a little bit confusing at the start, once you watch this video you should have pretty much all the information you need in order to do your taxes and make sure you do them right.
Take a look at my video, then check out the video transcript below to see all the points I cover.
This video and post cover taxes for 2017 income
This video is actually relevant for 2017 taxes, so all of the rides you did in 2017. If you’re watching this in the future in 2018 or 19, or whatever it might be, the concept we talk about in this video should all be the same. It’s just that sometimes from year to year Uber and Lyft use slightly different requirements when they’re sending out 1099’s. Sometimes the mileage amounts that they provide are different, but like I said the general concepts will all be the same.
Uber and Lyft have until January 31st every single year to send out 1099’s and I think Uber actually cut it pretty close this year. They sent out their 1099 at the end of the day on January 31st. The first thing you probably noticed is that Uber and Lyft both consider themselves third party payment processes. What that really means is that they’re considering themselves intermediaries. For you, that means that if you do over $20,000 and 200 rides on Uber they’re going to send you a 1099K. If you do anything under that you’re not going to get a 1099 K, but that doesn’t mean that you don’t have to pay taxes.
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The Uber 1099-K and 1099-Misc
Now lets also talk about the 1099 Misc, because that’s something that you’re probably more familiar with. A 1099-Misc is going to be issued by Uber if you did over $600 in referral payments or any type of special promotions or anything like that. That’s really with Uber how the 1099K’s and the 1099 Misc are going to work. Now the other thing that you probably got, or if you didn’t get you can actually check on your driver app, or go to the tax summary on partners.uber.com, you’re looking to look for, navigate to the tax documents. You’re going to look for your tax summary, now this is not an official IRS document, but it is something that’s provided by Uber and it’s going to give you your gross earnings and it’s also going to give you your expenses and fees and commission. Then it’s also going to give you your net pay out.
The net payout is actually when you add up all the payments that you got from Uber in 2017 to your bank account, that should equal your net payouts. I you want to do a quick sanity check, that’s how you would do it. But you don’t want to just enter your net payout into your taxes, because even though that would sort of get the same result it’s not the official way that you’re going to want to do it.
The way that you’re going to want to do it on your taxes is you actually take your gross earnings, so that’s going to be all the amount on your 1099K, if you got one. Add that to your 1099 Misc and that should equal your total gross earnings.
Figuring out expenses and fees to get to your true net income
Where it gets a little tricky is the expenses and fees number. In this example I’m using right here it says $33,000 in gross earnings, $5,000 in expenses and so that’s going to be all of Uber’s bookings fees, their commission and everything. They count that as your gross, but of course you want to subtract that out otherwise you’re going to be paying taxes on money that you basically didn’t earn. That’s the one little caveat, and it’s pretty simple to account for it.
Uber provides ‘on-trip’ mileage numbers
Now Uber also provides on-trip miles, so basically online miles, so these are going to be all the miles when you log onto the app. So you’re waiting for a passenger, you’re driving to a passenger and then you’re with a passenger. Remember you’re online during all of that time, even if you have the destination filter. Now this is different than what they provided in the past, and I think it’s actually more thorough but there may be additional miles that you can actually deduct. Because if you have your app off during certain times, or even if you’re also driving for Lyft, which we’ll get into in a minute. You might have a lot of cross over, so that’s why I always recommend a third party mileage tracking app, actually you can see right here, we recommend Stride Tax.
Once you have your 1099K, your 1099 Misc from Uber or use your gross earnings from your tax summary, that’s the total that you’re going to put down for income on your Schedule C. The Schedule C is a document that when you go to do your taxes, you have your 1040 and then you also have your Schedule C, since you’re a sole proprietorship. That basically is saying that you had a business during the year, so you have to file a Schedule C. All you really have to do is enter that gross earnings number and enter your expenses, and you subtract one from the other and you get your net. If you use a tax software, which we’ll get into below, it’ll take care of all that for you and it’s actually pretty easy.
Figuring out Lyft taxes on 2017 income
Now lets talk about Lyft for a little while, because the way they do their 1099’s is a little different. First off, if you did earn about $600 in bonuses, mentor rides whatever it might be, from special promotions, then you would have got a 1099-Misc from Lyft. Now unlike Uber though, Lyft actually sends a 1099K to all drivers who earned at least $600 in gross ride receipt. Again it’s that gross number, so basically if you did any decent number of rides for Lyft you should have got a 1099K this year. You can see here in this example from one of our contributors Joe, he did total ride payments, you can see these gross ride payments $28,000 and then they take that Lyft commission and subtract it out to get the $23,594.
Lyft provides different mileage calculations
That’s basically how you calculate that and you can also see that Lyft provides in-ride miles and also out of ride miles. If you combine those that would be sort of the same as the number that Uber’s providing, and that’s going to be all of your on line miles. So you know you can sort of see that these companies do things slightly differently, I think probably to try and confuse you.
You can actually access this information if you go to lyft.com and sign in and then go to Tax Information. You’ll be able to actually see all this, or directly from the driver app. Definitely that’s really what you want to keep in mind, that 1099 is what trips up a lot of people sometimes. But really regardless of whether you get a 1099 or not you still have to pay taxes on all the money you earn. You’re going to take that gross number that Uber or Lyft presents to you and then make sure you subtract out all of their expenses and fees. Then that net number that you’re paying taxes on, that net number should be the same as all of the sum of the money that came into your bank account from that company.
Calculating your final Schedule C income for Uber and Lyft
Hopefully that makes sense because there’s also some additional deductions that we’re going to talk about . Those would be on top of those expenses and fees, and anything like that. If you did drive for Lyft and Uber, which obviously I recommend, it’s kind of a no brainer. You’re just going to combine the gross income from Uber and combine the gross income for Lyft and sort of think about that Schedule C as one business. Your business is being a Rideshare driver, so you would combine the gross income, combine the expenses to get that total net income.
Important deductions – Most are for your vehicle
The big deductions that you want to think about are for your vehicle. The standard mileage rate is what probably is going to be most beneficial to a lot of drivers. For 2017 the standard mileage rate is 53.5 cents per mile. Remember we’ve done videos where most peoples cars should not cost that much to operate, so this is really beneficial deduction. You really want to do a great job of tracking all your mileage because you actually save a ton of money, not only from taking the deduction, which actually is representative of some of your costs. But if you’re driving a super fuel efficient vehicle that doesn’t need a ton of maintenance, your actual cost may be closer to 20 to 30 cents per mile. So you’re really actually offsetting a lot of your income, it can be pretty beneficial.
Standard deduction vs actual expense method
Uber provides total number of miles you drove while you’re online in your tax summary, and Lyft also provides the same number but via the on trip and off trip miles, which you can kind of combine in order to get the same number. But I definitely still recommend a third party tracking app, like Stride Tax, which is completely free for Android and IOS. That way you can have your own account so you don’t have to rely on Uber and Lyft, and you can potentially get more mileage deductions that way too.
The other option too you can use the actual expense method instead of taking the standard mileage rate. That’s a little bit more complex but over time you would need to use a product like Quick Books Self-employed or track all of the expenses of your vehicle. The nice thing about a Quick Book Self-employed is you can actually compare the two. So if you have a more expensive to operate car you can see, which deduction will be better.
Other deductions: You can only deduct business use
There are a ton of other deductions that you can go for, like car washes, cellphone use, etc. You’re only allowed to deduct the percentage that you use for business, so if you have a cell phone and use it 90% of the time for business, you can deduct 90% of the cost. For example I use a GoPro in my car and sometimes it’ll record videos, or sometimes just as a dash cam and I use it probably about 90% of the time for business. But then when I go travel I also use it when I travel and so it’s maybe 10% personal time. Yet I get to deduct 90% of the cost of that GoPro and still use it for my travels. You always want to look for those sort of shared personal business expenses, that’s a nice one. Just keep in mind that allocation.
If you’re wondering about actually filing their taxes, we have this cool graphic here that tells you, we surveyed over 1100 drivers to see how they’re filing their taxes. 50% actually say that they do taxes themselves, 32% say that they hire a CPA and then 12% go to an in-person tax chain, like an HNR block or something like that, five percent other. If you have any type of complicated situations or scenarios, or if you want to be aggressive with your taxes and talk to a CPA and sort of run through the numbers there, definitely I have a CPA that I recommend, Joe Starzick. He gives a special deal to Rideshare drivers because he’s been doing this for a few years. We have a few links in this article to guides that he’s done, and maybe I’ll even interview him in the future, so he can share some more knowledge. But he’s worked with a ton of Rideshare drivers.
Most drivers can do their own taxes with software like TurboTax
If you’re more the do it yourself type, which is totally fine honestly, I don’t think that being a Rideshare driver and doing your taxes is all that difficult. Turbo Tax will really walk you through it, and just make sure that you select the right version of Turbo Tax and you can actually go ahead and, we’ve got an affiliate link right here if you want to go ahead and use our affiliate link to purchase Turbo Tax. You can get the right addition, HNR Block online software is another good one. But you know basically kind of wrap things up, you know that 1099K and 1099 Misc is an issue that some drivers often have to figure out and are a little bit surprised by. But if you go to that tax summary page that’s going to give you pretty much all the information you need and you’ll be able to file your taxes from there.
Taxes are tough. Don’t hesitate to get help
I know taxes can be a little bit daunting and you’re a little bit scared, or nervous but I’m here to help you guys out and answer anything you might have. We’ve been doing this for a long time and we’ve seen a lot of different questions so I think we’ll definitely be able to help you. Stay tuned, and stay safe out there!
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