Do Uber drivers pay taxes?
Uber promises its drivers the opportunity to work when they want, giving them more control over their earnings for as long as they want.
However, most income is taxable, and if you’re wondering if this also applies to Uber, read this article to find out everything you need to know!
Will Uber drivers pay taxes in 2022?
Uber drivers pay taxes whether they provide rides or deliver meals through Uber Eats. Uber drivers are considered self-employed, so they need to report income over $400. If an Uber driver earns more than $20,000, they receive a Form 1099-K. Uber annually sends all drivers a tax summary with information about their income and expenses.
Read on to learn everything you should know about how Uber handles your taxes, including how much you can deduct, what forms you should expect, and more!
How do Uber’s taxes work?
Uber’s taxes follow these general guidelines:
- Both ride-hailing and takeaway drivers are required to pay tax
- Every year until January 31st, all drivers receive a tax summary detailing their activities, expenses and income on the platform
- Drivers who earn at least $20,000 a year and make 200 or more rides/deliveries receive a Form 1099-K
- Drivers earning $600 or more from other Uber sources such as referrals and bonuses will receive 1099-NEC
- Drivers earning $600 or more from other sources, such as legal settlements, receive Form 1099-MISC
- As independent contractors, drivers must file their own taxes.Uber only sends 1099 forms to the IRS to report the amount paid
- Even if drivers don’t get a 1099 because they earn less than the minimum, they still need to file a tax return
- Drivers can choose to send the 1099 by mail instead of electronically
If you haven’t received a 1099 from Uber, experts recommend that you get information about your income from elsewhere, in this case your tax summary, and use it for your tax filing.
Do Uber drivers pay tax on tips?
Uber drivers pay taxes on tips because they’re considered income, even if they’re not paid by the company itself.
When Uber sends tax summaries, gross earnings will include everything the driver has done, including their tips.
What taxes can you write off for Uber?
When filing taxes on the income you earned at Uber, you can write off your expenses, which are money you spent on work.
One of the most immediate things you can write off is the fees listed in your tax summary, the fees you are charged for using the platform.
You can also write off expenses that are not included in the summary, but you need to keep an accurate record of your expenses, i.e. receipts.
Some things you can write off if you have solid records like receipts include:
- money you spend on gas
- If car repair and maintenance costs are significantly higher than before you started carpooling
- your phone bill
- Equipment you buy for work, like a heat pack from Uber Eats
This information is for illustrative purposes only and we recommend consulting a tax professional for advice.
Does Uber track mileage taxes?
Uber displays tax miles in each driver’s tax summary each year.
The mileage records the distance traveled, including driving to meet riders during the trip, and driving around to find travel.
For the latter, Uber tracks distance if the driver is online on the app.
However, this total may be lower than the actual number, and it also includes the distance you travel for work when you’re not online, such as driving to gas or to the auto shop.
You should track your miles as much as possible, but if you don’t, Uber’s own numbers can still come in handy.
You can use this information to calculate how much you can deduct using the standardized IRS formula for this exact purpose.
For tax year 2022, the IRS has set a tax rate of 58.5 cents per mile. You must check the current year’s rate when you submit your application.
To learn more, you can also read our posts on Uber Green, Uber X, and Uber can be booked in advance.
in conclusion
Uber drivers pay taxes on their earnings, including tips. Uber sends its drivers and delivery drivers a tax summary each year and different 1099 forms based on their income. Because they are considered independent contractors, they must report their income and calculate how much they owe.
Uber drivers can write off the fees listed in their tax summary, which mostly consist of the fees they charge. They can also deduct miles by using the IRS formula to determine how much to spend.
