Uber has a relative new thing called UberPool, which combines Ubering and car pooling. Widespread sentiment among the drivers where it exists (it’s not in Madison) is that they hate it and it reduces their income.
Just started driving for Lyft tonight. It went as well as I could have hoped. I’m 15 minutes from Blacksburgh VA where VaTech is. I had a passenger as soon as I got there and every time I dropped one off I had another request. I got stated late and only drove for 3 hours and grossed $61. I only want to clear $100 a week, this is supplemental to some retirement income, and I also work at another part time job, taxes are taken out by my employer. I clear about $200 a week there. So the quick question is, if I drive until I have grossed $120, will I be OK on taxes?
ETA - I went to the Credit Karma website, and according to them I should multiply gross by 92.35%, effectively giving myself a self-employment FICA deduction, then multipy by 15.3% to get self-employment tax. For $120 that comes to about $16.
I learned one thing about driving in Blacksburgh. Don’t accept a ride if it’s 10 minutes or more away from where I am. All my rides except one were between 1 and 2 miles. You don’t get paid driving to your passenger. It would be nice if the app told me where they were going, but it only shows how far away they are.
The students will be going home by the end of the week, so there will probably not be as much demand, but I bet there will be a fair amount when the basketball team is playing. In the fall I could really clean up after Hokie football games, I got an Uber this season and it was $22 just for a few miles. If I drive on Friday and/or Saturday nights starting about 9pm when the students are in, should be plenty of demand.
No, but the miles are tallied up by Uber as part of their mileage report. So if you drove 10 miles to pick up someone and take them 1 mile, you get to deduct 11 miles from your taxable income (around $5.50).
Your taxes will be on your profit. Easiest expense method for driving/delivery gigs is to use the mileage deduction. For 2021 it’s 56 cents for mile. For example, if you make $100 for driving 10 miles, then your profit is $94.40. Uber/Lyft will 1099 you for over $600 in a year.
Total tax situation outside of gigs (including your other jobs and W2 income) varies widely due to so many other factors for an individual. For example, I am in some groups with gig drivers who end up paying $0 in SE taxes because it’s pretty much a wash (or better) due to some combination of W2 job withholding, spousal income or lack thereof, certain refundable tax credits that increase as you earn more before falling off, and so on. For many years I was self-employed with kids and a low income, so while I did pay SE taxes on paper I did not have to do additional withholding and still got a significant tax refund. I would say for most people with a typical w2 mainstream wage life as an individual you should prepare to pay SE taxes on the profits.
I am confused. If I drive 100 miles and make $100 ( I think you have a misprint) , how is my profit $94.50?I would think it was $85, 100 x .15 percent in taxes.
But as far as how much money I should set aside each week for taxes, I was planning on 15% of each week’s gross. But when I file taxes, I have the standard deduction of $12,500. My total income from Lyft, for a year, I am planning on driving until I gross $150 each week. $7800 a year. WIth the mileage deduction, I pay taxes on $3510. Add the projcted earnings from my other part-time job at 7-11, $11,960, total AGI is $15, 570.
SoI thiink my auto transfer from checking to savings (saving for tax man) of $15 a week will cover me
The IRS is actually semi-reasonable how it treats businesses (unlike how it treats individuals). Businesses pay income tax only on their profit. You figure your profit by subtracting your cost of doing business from your gross income.
For 2021, the IRS has calculated that driving a vehicle for business has a cost of $0.56 per mile. This is an example of what you subtract from your gross income to find out what your profit is. Thus, in the example above: $100 - (.56 x 10) = $94.40.
Unless something has changed recently, this is immaterial. Your Lyft driving is a business, and business income (loss) goes on Schedule C. Don’t panic - Schedule C can be pretty easy to complete. Your gross pay from Lyft goes on the sales/revenue line, and your deductions (like the 0.56/mile) go on one of the various Costs lines. The net then gets transferred to your 1040.
RIght and added to my other part time income from a W2, then I take standard deduction to see my taxable income
Lyft doesn’t do that, only miles with a passenger. DoorDash, who I have just started driving for, doesn’t track either. But I have an app that I will use to track all miles when I am online with both companies. Many days I will have both company’s apps open at the same time, but of course will only count total mileage once.
Yeah, the tax issue is why I only drive for Uber. Uber corporate has gone to the effort of working with the IRS (and TurboTax) to make sure their drivers get their allowed deductions.
As I said elsewhere I ubered the fuck out of 2019 and 2020 to pay for divorce expenses I didn’t want coming out of savings (I paid off the car too). Uber gives not only the tax forms and schedules needed, they also provide an easily-read summary of your allowed tax deductions.
So let’s go through them.
This first doc is my activity summary for 2019: 1,600+ rides, 21,000 miles.
It also includes a summary of your pay, allowable expenses, fees, and errata, giving you a net (to that point) taxable income:
The second page gives a detail of those deductions. As I hinted above, if you use TurboTax (TT), these numbers will automatically load if you link your TT account with your Uber account (and note that Uber promotes TT as well):
Starting, I made 24k. I then get to deduct the above 9,800, leaving me with 14,700 of taxable income. But from here I can now deduct my 21k of miles (or my gas receipts and Repair & Maintenance expenses, whatever is greater)… assuming $.55 mile this comes to $11,600 in mileage deductions, leaving me a final taxable income of $3,100.
I had my taxes done by my CPA that year and she was very pleased that Uber was able to get this done. Made her job much easier, she said.
Gonna cc: @Max_S because he was asking me about Uber finances in another thread.
Max, look up 1.
In short, on $24,000 of Uber income, I paid about $900 in federal income taxes. And $0 in Texas income tax.