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 to find more deductions, and how to make more money.
Is Uber self-employment or employee work?
Most Uber drivers sign an independent contractor agreement. Generally, Uber drivers get 1099s not a W-2.
Some states have gone back and forth on whether Uber and Lyft drivers should really be classified as employees. It’s something to keep an eye on for your tax planning, but you’ll probably remain an independent contractor unless you’re looking to challenge your status.
What tax forms do you get from Uber?
Uber sends two tax forms. This sets Uber taxes apart from most other gigs that only issue one tax form.
You receive a 1099-K for your ride earnings and tips. These are payments that Uber considers to be from the passenger to you.
You get a 1099-NEC for payments from the platform, like referral bonuses and special incentives. These are payments that Uber considers to be from Uber to you.
Uber uses two tax forms as part of its strategy to prove 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 processing payments between two people, instead of 1099-NEC, which is for payments to contractors of a company.
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.
There’s also an Uber tax summary available in your driver account. While this isn’t your official tax form, you can use the info if you want to file taxes without waiting for your 1099.
Uber Proof of Income
When you’re an independent contractor for Uber or other platforms, you usually have to provide your tax returns as proof of your income. For example, a mortgage will usually go by your last two years of tax returns.
That makes it even more important to report your income and file your taxes properly.
In some situations, you might be able to show your Uber 1099 or account earnings history.
Is Uber Eats considered rideshare?
There isn’t really an official meaning of rideshare for taxes. Since Uber Eats and Uber for passengers get paid together, you can generally safely combine Uber Eats taxes and Uber driver taxes on your tax return.
What counts as income when you’re working for Uber?
Your income includes all the money you receive while working for Uber. This includes both payments through the app and your cash tips.
If you don’t make enough for Uber to issue you a 1099, you generally still need to include that income when you file taxes. The main exception is if you don’t have to file taxes because you had less than $400 total self-employment income.
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 and Other Reimbursements
Cleaning fees, toll reimbursements, and similar payments are also part of your business income. They will be included on your 1099, and you should not subtract them when you enter your income on your tax return.
Don’t worry, you won’t pay taxes on cleaning fees or reimbursements that correspond to business expenses you had to pay.
You can separately deduct cleaning costs, tolls, and other expenses. When you calculate your net income, the income and deductions will cancel each other out.
The only way you would owe taxes is if you spent less than Uber reimbursed you. In that case, you made a profit and would have to pay taxes on the extra amount.
If it cost you more to clean your car than what Uber gave you, you can deduct your full costs and the extra deduction will offset some of your other 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. You don’t have to enter it in the year you received the loan or the year you had your loan forgiven.
Can you deduct mileage?
You can generally take a deduction for all mileage while you are active on the Uber platform or other food delivery services. This includes when you have a fare in your car, driving to pick up a fare, and driving around trying to find a fare.
The one mistake that many drivers make is claiming commuting miles.
Normally, when you drive from home to a business location and from your last business location to home, you can’t deduct those trips. Just like employees can’t deduct their commutes, commuting miles aren’t valid business expenses.
As an Uber driver, you can likely fairly start counting your mileage as soon as you leave home as long as you have the app open and are available to receive passengers.
At the end of the day, you should stop counting miles when you’re done for the day. That could either be after your last passenger or after you’ve gotten tired of driving around with no luck.
Don’t rely on the Uber app to track your miles. It only tracks mileage while the meter is running.
You’re allowed to deduct driving in between passengers or food orders.
You should either get a 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:
- Insurance and roadside assistance plans
- DMV fees
Here are the current standard mileage rates:
- 2023: 65.5 cents per mile
- 2022 July through December: 62.5 cents per mile
- 2022 January through June: 58.5 cents per mile
- 2021: 56 cents per mile
You can also 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.
Because the standard mileage deduction is standard across all classes of vehicle, which one is better varies. Cars with lower costs of ownership usually come out ahead with the standard mileage deduction. Other vehicles can do better using actual expenses.
You can compare the standard mileage rates to this AAA Guide on the cost of car ownership to get an idea of what’s better for you.
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 business trip away from home.
Other Uber Driver Tax Deductions
The following items are also generally allowed tax write-offs for Uber drivers.
- Water and candy you provide to your riders.
- Signs or lighting to identify you as a rideshare driver.
- Subscriptions to mileage apps, accounting software, etc.
- Parking fees while you are actively working (such as to pick up an Uber Eats order).
The following items are potentially deductible business expenses, but you have to be able to prove what percentage you use them for business versus personal use. You can only take a partial deduction on items you also use for personal reasons.
- Cell phone bills.
- Phone chargers, cellphone mounts, and similar accessories.
- Dash cams.
- Floor mats and other improvements to your car.
- Car lease payments.
Are Uber drivers eligible for the 20% Qualified Business Income deduction?
Yes, Uber drivers are eligible for the QBI deduction. This means that you will effectively pay income tax on 80% of your net profit instead of 100% of your net profit.
This deduction only reduces your income taxes. It does not reduce self-employment taxes.
If your total income from all sources is above the following amounts, you may lose all or part of your deduction.
|Single and Married Filing Separately||$170,050||$182,100|
|Married Filing Jointly and Qualifying Widower||$340,100||$364,200|
|Head of Household||$170,050||$182,100|
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 consisting of Social Security and Medicare taxes. 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 that you pay self-employment taxes on.
If you live in a state with income taxes, you’ll also need to file a state tax return. If you drive across state lines, you may need to file state tax returns in both states.
How do Uber drivers pay taxes?
Uber does not withhold taxes 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.
Estimated Tax Requirements
|Based on Current Year Tax Return||Based on Prior Year Tax Return|
|AGI up to $150,000 ($75,000 if married filing separate)||90% of current year taxes||100% of prior year taxes|
|AGI over $150,000 ($75,000 if married filing separate)||100% of current year taxes||110% of prior year taxes|
Deadlines for Quarterly Estimated Taxes
|Action Needed||2022 Tax Year||2023 Tax Year|
|First Quarter Estimated Tax Payment Due||April 18, 2022||April 18, 2023|
|Second Quarter Estimated Tax Payment Due||June 15, 2022||June 15, 2023|
|Third Quarter Estimated Tax Payment Due||September 15, 2022||September 15, 2023|
|Fourth Quarter Estimated Tax Payment Due||January 17, 2023*||January 16, 2024*|
|Receive Your 1099||No later than January 31, 2023||No later than January 31, 2024|
|File Your Tax Return||Tuesday April 18, 2023 (15th is a Saturday; Monday is Washington, D.C., Emancipation Day)||April 15, 2024|
|Extended Filing Deadline||Monday October 16, 2023 (15th is a Sunday)||October 15, 2024|
How much should Uber drivers save for taxes?
A general rule of thumb for self-employment taxes is to set aside about 30% of your Uber or Lyft income for taxes. You can get a better estimate by using an online estimated tax calculator.
Do Uber drivers get tax refunds?
Uber drivers can get tax refunds like anyone else, but it usually depends on how much you paid in estimated taxes during the year. If you didn’t pay enough, you’ll owe taxes instead of getting a refund.
You may also qualify for refundable tax credits like the Earned Income Credit that could give you a bigger refund.
Can Uber drivers open a retirement account to lower their tax bill?
Your net profit counts as earned income which makes you eligible to contribute to several types of retirement accounts.
You can 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 can 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 I file Uber taxes for free?
Uber offers 50% off on TurboTax, but you can probably file for free.
Most online tax filing software charges you if you need to file a Schedule C with Uber income, but there are a few that are completely free such as Cash App Taxes.
If you qualify for the IRS Free File Program, you may have additional options.
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.
Is setting up an LLC for Uber a good idea?
Setting up an LLC for Uber usually won’t be a good idea.
You don’t need an LLC to claim your Uber expenses. You also won’t save much, if anything, if you use an S-corporation because you’ll need to take all or most of your earnings as wages under the reasonable compensation rules.
In terms of potential liability, insurance should cover most situations. Since you’re the one driving, most potential lawsuits could be against you personally even if you have an LLC. Talk to a lawyer or insurance agent to be sure, but an LLC for Uber probably won’t help you.