If you're accepting ride-sharing fares more than
occasionally, you may be required to file quarterly
estimated income taxes. At tax-filing season
each spring, you'll be reporting your self-employment income and expenses on Schedule
C, as well as filling out Schedule
SE for self-employment tax if your net income
from the work is greater than $400.
To input your receipts not reported on a 1099-MISC
Type “Schedule C” in
the Search box and then select the “Jump to” link. This will take you to where
you can enter any cash, personal checks or credit card payments (Form 1099-K)
related to your self-employment. You may be asked some general questions about
your business. After you answer them, you’ll be taken to the Your Business
screen where you can enter this income as Additional Income under Business
Income.
Tax deductions for your car
Since you're an independent business owner, just about
any money you spend on your gig as a ride-share driver will be a tax-deductible
business expense. The first thing that probably comes to mind is your car.
There are two ways to take a deduction for the business
use of your car:
- Deduct the
actual expenses of operating the vehicle for business, including gas, oil,
repairs, insurance, maintenance and depreciation or lease
payments.
- Take the standard IRS mileage
deduction. As of 2016, the rate is 54 cents per mile driven for
business use.
If you use your car for both ride-sharing and personal
transportation, you can deduct only the portion of your expenses that apply to
the business use. And whichever type of deduction you claim, it's critical that
you keep thorough records. The IRS could disallow any tax deductions you can't
support with:
- Receipts
- Mileage logs
- Any other documentation
Other tax deductions for ride-share drivers
Commissions you pay to the ride-share company are a business
expense, as is any cost you may have to pay for technology installed in your
car. Other tax deductions include:
- Water, gum or snacks for
passengers
- Tolls and parking fees
In addition, ride-sharing companies typically require use of a
smartphone.
- The portion of your mobile
phone expenses attributable to your ride-share work can be used to reduce
your self-employment income.
- For simplicity's sake, it may
make sense to have a dedicated phone for work.
