Can I Input Lyft Driver's Net Income as Business Income instead of Lyft's Gross Earnings

[ajartax]

I am Lyft Driver.  The Lyft Driver summary report does not provide single figure of net YTD deposits in my bank. There is discrepancy in actual net deposits in my bank account and calculated net deposit derived my Lyft's driver summary report. Lyft is unable to provide support to resolve this discrepancy. So I prefer to input the net deposits in my bank account from Lyft as my "Gross Earnings" and  my mileage log total as my Expenses.  This is instead of inputting Lyft's gross earnings and Lyft's expenses such as platform and service fees from their summary report.  Ultimately the net result is same and theortically the Lyft's reported earnings in their summary report are not my earnings. My earnings are equal to what Lyft deposited in my bank account.  So is it okay to disregard Lyft's earnings and simply input net of deposits I received as my income ?

[Vanessa A]

No, you cannot report your net earnings.  The IRS wants to know how you come up with the numbers for your self-employment income.  So you will need to use the amount you actually earned as your income. Then you will need to enter your mileage and such as your expenses.  

When you start out in TurboTax in the business section, TurboTax has a guided interview section for Lyft and Uber.  You will also be able to deduct the fees that Lyft charges as well, but you must start with the FULL amount you earned.  Then you can start deducting expenses. 

Lyft Drivers TurboTax

[ajartax]

Correct - the amount I actually earned is equal to exact amount Lyft deposited in my account.   Can I use that as gross earnings instead of Lyft's gross earnings in their summary report which include the platform fee, service fee, app fee etc.  Essentially if we report Lyft's gross earnings from their summary report, then we need to subtract their fees from their  summary report as expense to arrive at net earnings. 

[Vanessa A]

Can I use that as gross earnings instead of Lyft's gross earnings in their summary report which include the platform fee, service fee, app fee etc. No, you need to use the amount that Lyft sent you on their summary report.  Then you will report their fees as commissions. This is the amount that they would have reported to the IRS.  If you report a different amount, then this may delay your refund or have the IRS contact you as the numbers wouldn't match.

Did they not send you a 1099-NEC? Just the summary report?

[ajartax]

There is a 1099-NEC and a summary report.  Let us say 1099-NEC has $500 on it and net deposit in the bank is $700 , the additional $200 is from non ride earnings such as bonuses and tips.  So I can input $500 as my 1099-NEC earnings, $200 as my other earnings, which makes $700 as my gross earnings.  The summary report shows higher amount of gross earnings which are actually Lyft's earnings.  So I do not see a need to report Lyft's earnings, and Lyft's service fees, etc on Tax return.  All I need to report is my 1099 earning + my other earning, which is what I received and from that I can expense out my mileage.

[Vanessa A]

Ok, if you have a 1099-NEC, then you will enter the numbers on the 1099-NEC instead of the summary report.  You do not need to report an amount higher than what is on the 1099-NEC. So yes, after you report the 1099-NEC then you would deduct your mileage expense from that.  

The 1099-NEC is what is sent to the IRS.  So your earnings need to match that. 

[ajartax]

That is incorrect.  The earnings that are not reported on 1099-NEC such as Tips , bonuses , incentives are taxable earnings and need to be reported as 'other earnings'. 

[Vanessa A]

Ok...so you are saying that not all of your income from Lyft is reported on the 1099-NEC.  You have some on the 1099-NEC and others on the statement?  Am I understanding correctly now?

If so, then your "other earnings" not reported on your 1099-NEC also must be reported as self-employment income.  It would be reported as Business Income not reported on other forms or General Income.  It still would need to be reported in the business income section. You would not report it outside of the business income as it is still subject to SE Tax, since it was earned while performing self-employment activities. 

So I go back to my original answer.  If Lyft is stating the income is related to you, then you need to include ALL of it.  After you report ALL of it, then you can take a deduction for all the fees.  Adding in ALL of the income, then deducting commissions, is the safest and most accurate way to report your SE income and expenses. 

Please read this article. Lyft Drivers TurboTax. 

It explains in full detail what all you need to enter and how to take the expenses. 

"Self-employed persons.

If you receive tips as a self-employed person, you should report these tips as income on Schedule C. See Pub. 334, Tax Guide for Small Business, for more information on reporting business income." Tip Income