If you drive for Lyft, you’re responsible for tracking and paying your own taxes. Here’s what you need to know about Lyft driver taxes.
Are you an employee? Do you get a W2 from Lyft?
Most Lyft drivers sign an independent contractor agreement. Generally Lyft drivers do not get a Form W-2. Instead, you get a 1099-NEC and 1099-K at the end of the year.
Some states have passed laws or had lawsuits ruling that Lyft drivers are employees. If you’re in one of those states, you should receive a W-2.
Does Lyft provide a 1099?
Lyft issues two types of 1099 forms.
You’ll get a 1099-K for your ride earnings and tips. You’ll also get a 1099-NEC for payments from the platform like referral bonuses and special incentives.
Sending two 1099s is part of Lyft’s strategy to prove that drivers are independent contractors not employees. Lyft says it’s just a middleman and payment platform, and it’s the customers who are hiring and paying you.
What’s the difference between a W-2, 1099-MISC, 1099-NEC, and 1099-K?
- IRS Form W2 reports employee wages. You will only get a W-2 if you’re in a state that says drivers are employees.
- IRS Form 1099-NEC reports independent contractor income that the company you contracted with paid directly to you. This income used to be on Form 1099-MISC along with other types of income. The IRS now uses Form 1099-NEC instead for their tracking purposes. The IRS requires a 1099-NEC when you earn $600 or more from a payer.
- IRS Form 1099-K reports independent contractor income that you received from an electronic payment network such as PayPal, Stripe, or another system. Again, Lyft is saying they’re the payment network when it comes to rider payments. Form 1099-K now has the same $600 minimum as Form 1099-NEC.
How to Find Your Lyft Tax Documents
Lyft will post your 1099 in the Tax Information tab of your Driver Dashboard by January 31st. You can still access your tax documents even if your Lyft account is no longer active.
If you didn’t earn the minimum amount to receive a 1099 but need to know how much you earned to include on your tax return, you can use your Annual Summary. Lyft uses both 1099-NEC and 1099-K forms depending on your income.
What’s your income?
Your income includes all the money you receive for your ridesharing services. This includes both cash and electronic payments whether or not you receive a 1099.
Tips are taxable self-employment income the same as your fares. Waiters and taxi drivers have previously tried to have tips taxed as non-taxable gifts and failed. Trying to say that tips are gifts could result in heavy fines or tax evasion charges for taking a frivolous or fraudulent position.
Cleaning fees, toll reimbursements, and similar payments are also part of your income. You’ll take a deduction for any expenses you paid on a separate part of your tax return.
When reimbursements equal your costs, the income and expense will cancel each other out. If the reimbursement was more than your actual costs, the extra amount counts as taxable income. If the reimbursement was less than your actual costs, you get an extra tax deduction.
Can you deduct mileage?
You can generally take a deduction for all mileage while you are active on the platform. This includes when you have a fare in your car, driving to pick up a fare, and driving around trying to find a fare.
If you turn your app off to head home or don’t turn your app on as soon as you leave home, the miles between your home and where you start/finish working are usually nondeductible commuting miles.
Note that many ridesharing apps only track your miles while you have a passenger in your car. You should track miles on your own to account for the other miles.
You can either download a separate mileage tracking app or write down your odometer reading at the start and end of your shift.