This is such a new field that even the tax pros scratch their heads. There are a few really great articles I have read that explain how this new economy works for those who work in it and how it affects them in the tax world. Read this article and if you have any questions, I’m always happy to answer.
Oh, I’d like to suggest also a 10.99 a month subscription on your phone for those of you who not only drive for a living, but even for those who see clients out of your office and your either have an accountable reimbursable plan or you work for yourself and you want a good way to help you track your deductible expenses and if you don’t use a program like QuickBooks Entrepreneur or something similar.
I would like to remind you that our tax system has and always will remain a “Pay as you go” system, not a pay when you can afford it system. Keep it in mind if you are self-employed and even if you are an employee who adjusts your exemptions throughout the year. Don’t let yourself get caught short at tax time. The imposed penalties are not worth it.
And now to the article from QuickBooks:
Tax Help for Uber Driver Partners: How to File Your Uber 1099
8 min read
The rise in freelance workers and on-demand services has brought about a new challenge for professionals in these fields: taxes. Like Lyft drivers and other on-demand workers, Uber driver partners must self-report all the income they’ve earned for the year through the app.
Uber driver partners must file taxes as self-employment income, which differs from the taxes of traditional workers. Instead of using a W-2 to report income, self-employed professionals must use a 1099 when filing taxes. Uber driver partners fall under the rules for a 1099-K for their driving services and a 1099-MISC for any other payouts (e.g. new city bonuses, mentoring, referral fees, etc.).
Uber actually does not have to send out 1099-K’s to anyone who made under $20,000 and received less than 200 payments for driving services; they also don’t have to send a 1099-MISC to anyone who made under $600 in referrals. However, they choose to send 1099s so that driver partners remember to file taxes and have a clear summary of their earnings.
Follow along as we outline how to read your Uber 1099 and report it in your taxes.
How Do I Report My Income From Uber 1099s?
Here’s how to decipher the 1099-K and 1099-MISC, and how it relates to the breakdown in your Uber partner portal:
Why Is the 1099-K Amount Larger Than What I Was Paid?
At the end of the day, you are running your own “driving services” business. Uber is just one service that helps you find passengers and facilitate the payment. This second part means they fall under the rules for a 1099-K, or “Payment Card and Third-Party Network Transactions.”
The rules for a 1099-K require Uber to report all of the payments they processed on your behalf, which is the total amount the passenger paid. That means it includes things like safe-ride fees and Uber’s commission, which are costs that Uber took out before paying you.
You’ll include the fees as both an earning and an equal offsetting expense (i.e. fees as income minus fees as expense equals $0 net), meaning you aren’t taxed on the fees, and they won’t affect your tax bracket. These earnings and expenses are recorded on the Schedule C
Will I Need to File a Separate Schedule C or SE for the 1099-K and 1099-MISC?
You’ll only need to file one Schedule C since these both fall under your “driving services business.” If you have other contract work that constitutes a different type of business (e.g. Airbnb would be “hosting services”), you’ll need to fill out a separate Schedule C for that.
You’ll file just one Schedule SE for all types of income you record on Schedule C’s (e.g. both Uber and Airbnb profit would be included on one Schedule SE).
What Mileage Can I Write Off?
Uber’s breakdown in their dashboard gives you the total miles you drove while driving passengers. However, you can also write off mileage from:
· Driving around waiting for ride requests
· Driving to a passenger after receiving a ride request
Uber doesn’t track the mileage for these extra commutes, so you’ll be responsible for keeping records on this mileage through an accounting software or similar service.
Do I Need to Send the 1099s to the IRS With My Taxes?
Nope! They are just for your records. Uber already sent a copy to them.
Any More Tax Tips?
While filing taxes as an Uber driver partner may be more complicated than filing as a traditional worker, being organized and understanding the process can help simplify things.
C.G. Johnson & Company
210 E. 3rd Street, Unit 305
Beach, CA 90802
(818) 817-9312 Fax