Pay $0 or Minimal Taxes Driving for Uber/Lyft

John Thomas

Member
Many/most Uber/Lyft Drivers do no realize that they are subject to Federal, state, and local income taxes, along with 15.3% Self Employment tax. Almost all of the Uber/Lyft Drivers I run into that realize they have to pay these taxes wait until the end of the year to collect gas receipts, maintenance receipts, and other documentation that they think they can deduct, along with trying to calculate the amount of depreciation of their car they can deduct - all of this based on an estimated % of business use v. private use (which the IRS always will question).

If Uber/Lyft Drivers want to pay $0 (or close to it) taxes, all they need to do is set up an Excel spreadsheet with the following columns for daily amounts:
1) a) Beginning Mileage when you turn on your app - even if at home (zero based on your trip odometer at zero); b) Ending Mileage - when you turn off your app - even if that is arriving home (based on your ending trip odometer); c) Deductible Miles (same as b)); d) Tolls; e) Other Deductible Expenses.

2) Total Expenses (Deductible Miles x $.54 ($.575 in 2015) plus Tolls and plus Other Deductible Expenses)

3) a) Uber Revenue; b) Uber Tips; c) Lyft Revenue; d) Total Revenue.

4) Taxable Income/Loss (Total Revenue minus Total Expenses).


Taxable Income will almost always be near $0 or less. The IRS will rarely question a contemporaneously prepared document (Excel spread sheet or manual), while they will almost always question expenses and the allocation of such expenses between personal and business).

Note that:
1) The Standard Mileage Rate will almost always be more beneficial and questioned less by the IRS.
2) Other Expenses can include car washes (inside and out), drinks/snacks for passengers, cell phone allocation of business use, etc. (Note that the IRS will question the allocation).
3) Use Schedule C to list these revenues and expenses.
a) The 1099 will include revenue that you did not receive from Uber/Lyft ("Gross amount"), which you list on Line 1 of Schedule C.
b) List the total "Fees" from Uber/Lyft on Line 10 (the net of these two amounts should be the amount you received.
c) List the calculated car mileage expense and other non-maintenance car expenses on Line 9 and complete Schedule IV.
4) All miles driven from home (beginning work) to back to home (ending work) are arguably tax deductible. This includes miles to your first pick-up and "dead-end" miles.
a) This is substantially more than the miles provided by Uber/Lyft.
b) The miles driven from home to the first pick-up may be questioned; however these miles should be deductible as the pick-up is a "temporary" destination and not subject to the "business stop rule" where the first stop is considered a non-deductible commuting expense.
5) Make sure that the total miles deducted do not exceed the miles the IRS could calculate using other information - like recorded miles on oil changes, etc.

Since most Uber/Lyft Drivers are substituting short-term cash for long-term negative equity, it is important not to lose more money by paying taxes on this short-term cash.
 

Papa Sarducci

Well-Known Member
When a customer gets their bill does it say sales tax on it?
Don't know, I'm a driver, do you see anywhere on your pay statement where it was taken out? It is information that we don't need and therefor are not provided with. Sales tax is between the merchant (Uber) and the purchaser (pax) it is out if our control.

Update: I looked at the CSV version of a pay statement and there is a column called Tax on Fee so Uber must take it out in some places, mine is blank in that column.
 
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Undermensch

Well-Known Member
Only one suggestion: use Google Sheets for free backup and no need to buy any licenses. Works great. The sheets I posted earlier (find a link on my profile) have all the data you're looking for and can be copied and modified for others to use.

Also, for those lucky punks that maxed their social security contribution at their primary job, they only have to pay half (the self employment half since the personal half was already paid) of the social security, they don't get hit for the double. Anyone who hasn't maxed gets hit with the double.
 

Atom guy

Well-Known Member
Exactly. Total miles driven including dead miles is easily double what you see on your pay statement. So by the time you get dome with all the deductions, your taxes should be close to zero.
 
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