Is Uber tax-free? (all you must know)
As Uber has grown to millions of ordinary users around the world, it has become a financially heavy platform.
So if you’re wondering if your finances on Uber are tax-deductible, we did the research and found out everything you need to know!
Could Uber get a tax cut in 2022?
Uber may be tax-free for both riders and drivers, depending on what you focus on in 2022. If you are considering the portion of the service that is a business expense, then you may write it off. In order to successfully deduct Uber fees from your taxes, you’ll need to prove these numbers with verifiable documents such as receipts.
Read on to learn everything you should know about deducting Uber from your taxes, including what you can sign out of, how to do it, and more!
Can I write off Uber rides on my taxes?
As a passenger, whether you can write off taxes on Uber rides depends on the purpose of the trip.
Unfortunately, if the travel is part of your work commute, you cannot write off travel as these are considered personal expenses.
However, you can log out of an Uber trip as part of your business, such as when you leave during a work trip or to meet a client.
A general rule of thumb is that if you ride them after you start your business, you can write them off.
However, commuting isn’t eligible because the business doesn’t start until you go to work, and it stops when you leave.
If you’re reimbursed, or you’re using a system like Uber for Business, your company covers the costs and you may not be able to write them off.
Will Uber give me 1099?
Uber will give you a 1099, and the form you get will depend on different factors of your activity, like this:
- 1099-K – This is for drivers who earn more than $20,000 and provide more than 200 rides.Depending on your location, you may get a
- 1099-NEC – This is for drivers earning $600 or more from sources other than riders (such as promotions, bonuses, and referrals)
- 1099-Miscellaneous – This is for drivers earning $600 or more from other sources (such as legal settlements)
By default, Uber emails drivers 1099, but you can choose to have a physical copy sent to you by mail.
To do this, follow these steps:
- Visit drivers.uber.com and log into your account
- Select “Tax Settings” at the top of the page
- Get rid of “Go green! Download 1099 forms electronically!”
Does Uber report miles to the IRS?
Uber doesn’t report miles to the IRS, but drivers get a summary in their annual tax summary.
In its report to the IRS, Uber reported only the amount paid to drivers, the same information included in the 1099.
You can use the information in the tax summary to calculate how many miles to write off, which we discuss below.
How do I apply for the Uber mileage tax?
To claim your Uber miles for tax, you can start by looking at the numbers quoted in the tax summary.
The number will be labeled “Online Miles” and your mileage will only be displayed when you are active on the app, such as driving to pickup locations and during rides.
You can then use the IRS’ standardized rates to calculate the resulting amount and write it off.
Every year, the IRS calculates the tax rate and makes it public. For example, for tax year 2022, it was 58.5 cents per mile.
If you also keep track of numbers at work rather than online, you may write off more miles.
Some of these situations include:
- Driving to and from the gas station
- Driving back to your city after your last ride puts you farther than you can get a request
- Drive to other work-related locations, such as the Green Light Center
If you choose to do this, you will need to thoroughly, record accurate odometer readings before and after, what you are doing, and the address.
How do you log out of Uber?
As a driver, you can sign out of Uber if you have a detailed and verifiable record of your performance expenses.
If you have nothing, your tax summary is a good place to start, as it provides solid numbers, including mileage and fees charged for using the platform.
Because these are straight-forward expenses, it’s easier to write off.
Other business expenses you may be able to write off if you keep track of them include:
- gas
- Commercial or carpool insurance
- Part of the phone bill for communicating with passengers
- Equipment you buy for work, such as a dash cam
As with the other information in this article so far, this information is for illustrative purposes only, and we recommend that you consult a tax professional to understand your options.
To learn more, you can also read our posts on Uber’s lowest fares, whether Uber drivers pay taxes, and how Uber insurance works.
in conclusion
If you look at costs that are purely business expenses, Uber may be tax-deductible. For riders, commuting doesn’t work, but work trips do.
If drivers use receipts or Uber’s tax summary to track the exact amount they spent, they can write off miles, gas, commercial insurance and other expenses.
