If you’re an Uber or Lyft driver, you probably work for yourself as an independent contractor, which means you’re self-employed. Because you’re self-employed, taxes won’t be withheld from your paycheck—but that doesn’t mean you’re not responsible for paying taxes! There’s a bright side, though. As a driver, you may be able to deduct all those business expenses you rack up. What’s so great about deductions? They reduce your tax bill, which translates to savings.To get those deductions, choose a deduction method for the business use of your car:
1. Take the standard mileage rate (53.5 cents in 2017)
2. Claim actual expenses
Below are some deductions you can take based on the method you choose.
Gasoline expenses associated with the business use of your vehicle. Note: If you opt for the standard mileage rate, you can’t take this deduction.
Vehicle maintenance expenses, including oil changes, tires, inspections, brakes, and other costs that keep your vehicle in good running condition. Note: If you opt for the standard mileage rate, you can’t take this deduction.
Vehicle insurance costs associated with the business use of your vehicle. Note: If you opt for the standard mileage rate, you can’t take this deduction.
If you lease your vehicle, deduct part of your lease payment on your tax return.
If you own your vehicle, take a depreciation deduction.
A portion of your car registration expenses may be deductible, depending on your state. Note: If you opt for the standard mileage rate, you can’t take this deduction.
Car wash expenses when related to your business.
Parking fees and tolls while on the job.
Membership expenses related to your business (AAA, for example).
Cell phone expenses: If you use your cell phone exclusively for your business, you can deduct the entire amount. If not, you can deduct the portion associated with your ride-share business. The same holds true for your wireless plan.
Deduct up to 50% for food and drink expenses for your clients.
What is depreciation?
Depreciation is an amount that reflects the value of your business asset (your car, for example), which decreases over time. On your tax forms, depreciation will be reported as a business expense.
Why should I keep good records?
There are two reasons why you should keep good, detailed records:
You’ll have an easier time filing your tax return.
You’ll be able to substantiate what you report on your tax return if the IRS comes a knockin’.
It’s important to organize and store any paperwork, such as receipts, related to your business income, purchases, and expenses. Your mileage log should list the dates you drove, where you drove, and the total miles driven.
Where do I go for help with my taxes?
TaxSlayer, of course!You probably have lots of questions: What tax forms do I need? Do I have to pay quarterly estimated taxes? Do I make enough to pay taxes?We have the answers to all your questions rolled into one package: Self-Employed.Check it out. Then, go #slayit.