Uber Driver, Uber Eats, and Postmates Tax Guide

Uber ridesharing, Uber Eats, and Postmates all operate as part of Uber. If you worked for any of these services, you’ll get a tax form from Uber. Here’s what you need to know about filing your taxes, how much you’ll owe, and how to save money.

Are you an employee or independent contractor?

Most Uber drivers sign an independent contractor agreement. Generally, Uber drivers do not get a Form W2. Instead, you get a 1099-NEC or 1099-K at the end of the year.

Some states have passed laws or had lawsuits ruling that Uber drivers are employees. If you’re in one of those states, you may receive a W-2 and be under the employee tax rules instead of the independent contractor tax rules.

What 1099 does Uber use?

You receive a 1099-K for your ride earnings and tips. You get a 1099-NEC for payments from the platform, like referral bonuses and special incentives.

The reason for this is it’s part of Uber’s strategy to prove that that drivers are independent contractors not employees. Uber says it’s just a middleman and payment platform, and it’s the customers who are hiring and paying you. That’s why customer payments go on 1099-K, which is for payment platforms, instead of 1099-NEC, which is for payments to your contractors.

How to Find Your Uber Tax Documents

There are two places you can find your Uber 1099 forms. In a web browser, you can go to drivers.uber.com. Look for the Tax Information tab. Your 1099 should be there by January 31st. You can also find a copy of your 1099 in your Uber app by going to Account -> Tax Info -> Tax Forms. Be sure to download and save a copy of your 1099 for your records. You may also elect to receive a physical copy of your 1099 by mail.

What’s your income?

Your income includes all the money you receive while working for Uber. 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 count 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 can separately deduct the corresponding expenses. If the fee is greater than the expense, your taxable income increases. If the fee equals your taxable expense, your taxable income usually won’t change, but you still need to report the income and expense separately. If the fee is less than your expense, the loss on this item can reduce your other taxable income.

If you took out a PPP loan, remember that Congress said PPP loan forgiveness would not be taxable income as part of the COVID-19 relief package.

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 would be nondeductible commuting miles. Even when you have the app on, there is debate on whether mileage between your home and first or last fare counts as commuting or business miles.

Note that many ridesharing apps only track your mileage while the meter is running. You should track miles on your own to account for the off-meter miles. You can either download a separate mileage tracking app or write down your odometer reading at the start and end of your shift.

What expenses does the standard mileage deduction cover?

The standard mileage deduction covers the expenses necessary to keep your car running. This includes:

  • Gas
  • Maintenance
  • Depreciation
  • Insurance
  • DMV fees

You can choose to track your actual car expenses separately and claim that amount instead of taking the standard mileage deduction. This requires you to keep track of all of your receipts and why they were necessary business expenses. In addition to saving that hassle, most people with consumer cars come out ahead taking the standard mileage rate.

No matter which method you choose, you need to keep mileage logs to prove that the miles you claim are appropriate business tax deductions.

Can you deduct your meals while you’re working?

No. Stopping for lunch in the middle of your shift does not make it a business expense. You can typically only deduct meals while entertaining a client or on a multi-day trip away from home.

Uber Driver Tax Checklist of Deductions

The following items are generally allowed deductions.

  • Fees to apply for a platform or for a background check.
  • Water and candy you provide to your riders.
  • Transaction fees (if your income was reported as the gross amount before fees instead of the net amount after fees).
  • Signs or lighting to identify you as a rideshare driver.
  • Business software you use to help you find the best times to drive.
  • Parking fees while you are actively working (such as to pick up an Uber Eats order).

The following items are generally not deductible because they are also for your own personal use.

  • Cell phone bills.
  • Phone chargers, cellphone mounts, and similar accessories.
  • Dash cams (but they’re still useful to protect you from false accusations by riders).
  • Floor mats and other improvements to your car.
  • Roadside assistance plans.
  • Lease payments.

Some of the above items could be partially deductible if you can prove to the IRS what portion of the expense was for business use. This is hard to do because so many people try to deduct personal expenses, and the IRS auditor will be very skeptical.

Are Uber drivers eligible for the 20% Qualified Business Income deduction under Section 199A?

Yes, rideshare drivers are eligible for the new 20% deduction. This means that you will effectively pay income tax on 80% of your net profit instead of 100% of your net profit.

If your total income from all sources for tax year 2021 exceeds $164,900 as a single filer or $329,800 as a joint filer, your deduction may be reduced or eliminated. These amounts go up each year based on inflation.

How much do Uber drivers pay In taxes?

Expect to pay at least a 25% tax rate. This includes 15.3% in self-employment taxes for Social Security and Medicare. It also includes your income tax rate depending on your tax bracket.

You get a deduction for 1/2 of your self-employment tax, so your taxable income for income taxes will be slightly lower than your business profit.

If you live in a state with income taxes, you’ll also need to file a state tax return.

Can Uber drivers open a retirement account to lower their tax bill?

Your net profit counts as earned income. This allows you to contribute to a Traditional or Roth IRA even if you don’t have other income (e.g., students or retirees). As a Schedule C 1099 filer, you may also open a SEP IRA or Solo 401(k). These small business retirement plans allow you to contribute up to 20% of your profits on a tax-deductible basis.

SEP IRAs are usually the easiest to open and have the lowest (or no) fees. The advantage to a Solo 401(k) is being able to make up to $18,500 in employee contributions if you don’t have a 401(k) from a different job or if your main 401(k) has poor investment options.

How do Uber drivers pay taxes?

Uber does not take out withholding tax for you. Rideshare drivers should make estimated tax payments each quarter. If rideshare driving is a small portion of your income, you may be able to increase your income tax withholding at your day job instead of making quarterly payments.

If you wait until April to pay, you could have to pay a penalty if you owe more than $1,000.

What tax software should you use?

Here are some popular options for filing an Uber driver tax return. Each will walk you through adding your income and business deductions. Some services also let you get live help from a tax advisor.

Cash App TaxesTaxSlayerTaxActH&R Block
Best For100% free taxesLower cost DIY softwareDIY with extra helpFull service tax preparers
DIY Software Cost w/ Business Income$0$47.95$64.95$109.99
State Tax Return$0$36.95/state$44.95/state$36.99/state
Live Expert Assistance for DIY VersionNoIncludedIncluded+$85
Physical LocationsNoNoNoYes
Full Service Tax PrepNoNoYes ($279.95)Yes (Starting at $80)
As of 4/14/22

Keep in mind that you’re filing a single tax return with all of your other income, credits, and deductions. This might include work you do for Instacart, an hourly job, or child tax credits. Before you choose which software to use, make sure it can handle everything you need in addition to doing your Uber driver taxes.

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