Uber/Lyft & Taxes?
Hello, I live in the US and I am about to start delivering for ridesharing companies. My father is strictly against this saying that I am too young and I won't know how to do my taxes correctly. I believe he's just playing the concerned parent and worried it might cost him in the end.
So, I wanted to get some information and to help me plan for what I need to do. What I understand is that taxes are due in March. I don't understand the tax year from what months to what months. I read somewhere that the tax season stops in January and then in March you pay for that year.
So we are in November right now. If I work for the next two months in March I should only have to pay about 2 months of taxes, is this correct? Then going forward the next year I would pay from January 2021 to January 2022, is that correct?
I'm trying to plan to save money and if the two months I work are due in March I need to be careful with my money.
I'd appreciate any advice you could offer on this subject.
- JohnLv 62 months agoFavorite Answer
Your tax return for the calendar year 2020 (1/1 through 12/31) would be due on 4/15/21. When you file for 2020, your return will be based on your entire circumstances for the year, not just the last 2 months. You would include Schedule C with your return, on which you will report your business income and expenses. If you have business profit of at least $400, you must also include Schedule SE. I would strongly advise you have a local accountant complete your tax return. US tax law is complex, and being self-employed makes it considerably more so. For your 2021 (return due 4/15/22) taxes, you may need to make quarterly estimated tax payments during 2021.
- AmyLv 72 months ago
Estimated tax payments are due 4 times per year. The tax on your November-December income will by due in January. The tax on your January-March income will be due in April.
Those are estimates. What's due in April (but you can do in February or March) is your accounting of the exact amount you owed during the previous year. If you paid too little you have to pay the rest; if you paid too much they will send you a refund.
Rideshare companies have successfully established that they are not employers; each driver is self-employed. That makes your taxes higher and more complicated.
- Anonymous2 months ago
1.Download Turbo Tax.
2.Gather Your Documents from Uber and Lyft.
3.Calculate Your Deductions.
4.Input Your Revenue.
5.Input Your Mileage Deduction.
6.Input All Your Other Deductions.
7.Conduct An Audit Test.
8.File Your Taxes.Source(s): https://heetsabudhabi.ae/
- Anonymous2 months ago
Thanks John, you're about the only one who really answered my question and it did help clarify what I knew but I wanted a second person to really nail it home. Thank you very much!
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- Max HooplaLv 72 months ago
With few exceptions working for ride share companies gives you none of the benefits of being self employed but all of the headaches. You will bust your butt and have nothing to show for it but a busted butt.
- A HunchLv 72 months ago
First off, your regular car insurance does not cover ride share so you have to increase your insurance which will increase the cost.
Then your have to take all that you earned and even before paying for this increased insurance = say "wow" those rideshare drivers don't make s h i t . I could make more working a minimum wage employee at a 2nd rate fast food restaurant.
Then if you are still interested in doing this job, google how to keep records as an independent contractor and file taxes.
- ?Lv 72 months ago
No offense, but your Dad seems lazy. He wants you to skip out on the opportunity to make money simply because he can't be bothered to understand how the taxes work. You're doing the right thing to seek out information you need rather than just passing up the opportunity.
As for age - all the ride share and delivery companies have their own requirements for age, vehicle type, length of driving history etc. You can easily find the requirements for each company on their websites.
Mercedes makes a good point as well that you need to make sure you have the right insurance. Standard car insurance does NOT cover you while driving for rideshare/delivery services so just verify your coverage before you start.
As for taxes, its all really simple once you learn how it works. You will be considered a self employed independent contractor. At the end of the year each service that you worked for will give you a tax form called a 1099-misc. This form is very basic and will list how much they paid you.
You will need to add up the total amount you earned from all of these companies and put that onto a tax form called Schedule C. Then you will subtract your expenses, and at the bottom of Schedule C you will end up with your net profit. Your net profit is your personal income, and goes onto your personal 1040 tax return along with any other income you may have.
Additionally you will file schedule SE. On this form you use your net profit from schedule C to compute your self employment tax. This 15.3% tax covers the social security and medicare taxes that would have been paid by you and your employer if you had earned the same amount of money at a traditional job.
You can do all of this quickly and easily using Turbo Tax home & business edition which costs about $60, or on any other tax software program as long as you select the version/level that allows for self employment and 1099-misc forms.
You will want to keep track of your expenses - primarily keep a log of every trip with the date, mileage, and business purpose. There are lots of apps that do this for you by tracking the location on your phone, or you can just keep a spreadsheet. I suggest using the flat-rate mileage deduction instead of trying to keep track of your vehicle expenses and pro-rate the deduction for personal vs business use.Source(s): Here's the IRS website with info about being a self employed independent contractor: https://www.irs.gov/businesses/small-businesses-se... Here's the IRS publication about business deductions for business use of your personal car: https://www.irs.gov/publications/p463
- TavyLv 72 months ago
Surely even in such a wonderful country as the US you can look this up online. Or perhaps not.
Here in the U.K. our government has a website about taxes, what to pay, when to pay and how to pay it.
Perhaps you could google it.
- mercedesLv 72 months ago
By delivering for ride sharing companies you are putting yourself at risk in case you get into an accident and your insurance does not cover business use. If you have any profit--and as a tax practitioner I have found that, figuring time spent, you will end up with approximately what you would earn working for minimum wage (that doesn't count the ones who ended up in the hole) and you will have to save enough to pay both halves of Social Security and Medicare tax. If you can get a job punching the clock for minimum wage you will be safer and better off.