Tax season is here, and you might have a lot of questions about how to incorporate your rideshare (or delivery) income on your taxes. Here, senior RSG contributor Jay Cradeur shows us how to file your Uber and Lyft taxes in 2019 using TurboTax.
It is that time of the year again – time to do your taxes. Fortunately, with all the information you get from Uber, Lyft and The Rideshare Guy, it shouldn’t take you more than a few hours to get those taxes done.
Let’s get these taxes done today! I will break our tax project into eight easy and digestible steps.
Note: I am not a tax expert. You should definitely do your own due diligence before turning in your tax return.
Watch Jay prepare his 2018 taxes in action with the video, and follow along with his step-by-step instructions below.
1. Download Turbo Tax
There are a few ways you can obtain Turbo Tax. Both Uber and Lyft offer Turbo Tax for free to drivers who qualify on the respective partner dashboards. It’s important to note, however, the version of Turbo Tax offered is the online version. Personally, I don’t like my tax information flying around the Internet. Therefore, I pay the $20 to download the software on my trusty MacBook Pro and then I can do my taxes offline.
2. Gather Your Documents from Uber and Lyft
Both Uber and Lyft sent out an email to drivers alerting us that the tax documents are ready. Lyft sent this:
Uber sent this:
If you drive for both Uber and Lyft, there are at most 6 documents you will need:
- 2 x 1099K
- 2 x 1099 M
- 2 x Tax Summary. Let me show you what they are and what they look like:
The 1099K is the document that shows you the gross amount of revenue you generated driving and only for driving.
If you earned less than $20,000, then you will not receive a 1099K from Uber. Your driving revenue will appear on the tax summary below.
The 1099 M shows you revenue you earned from non-driving activities such as earning a bonus or referral fee.
This document is very important because it provides a detailed list of some of your substantial deductions. Remember, the 1099K is providing you with gross revenue. That means it shows all the money your passengers paid. You did not get to keep all of that money. Uber and Lyft took their 20 – 25%. We will use the information on the Tax Summary to adjust our revenue figures so we can pay less in taxes.
Here is the first page of Lyft’s tax summary:
Here is Uber’s 2-page summary. The first page will show you your driving revenue. As you can see, even though there was no 1099K (because driving revenue was less than $20K), there was nearly $5,000 in driving revenue.
The 2nd page shows us our deductions similar to Lyft’s summary:
3. Calculate Your Deductions
We are almost ready to start working with TurboTax. The last thing to do is make a list of all your deductions. Mileage is most often your biggest deduction.
For each mile you drove for work, you can write off 54.5 cents per mile (for your 2018 taxes). If you didn’t keep track of your mileage, use your best estimate. Then make sure to download a mileage tracking app, like Stride, for 2019!
Look at an average day. Let’s say, for example, an average day is 250 miles. If you drive 6 days per week, that is 1,500 miles per week. If you worked for 50 weeks, then you have a total of 75,000 miles.
75,000 x 54.5 cents = $40,875 Tax Write Off!
In addition to mileage, there are many other things you can deduct. Lyft’s tax summary (Page 2) provides a nice list of things you should consider as write-offs:
4. Input Your Revenue
There are two parts to the revenue. First is the 1099M. Take the information provided by Uber and Lyft and input the revenue.
The second part is all the other revenue. This is the 1099K information, other driving revenue, and any other revenue you may have earned that was not included in a 1099K or 1099M. For example, if you have a side gig and earned an extra $15,000, this is where you would input all that revenue.
When you are done, it will look something like this:
5. Input Your Mileage Deduction
This is the big one. Put in the mileage figure and you will see a massive reduction in your tax liability.
6. Input All Your Other Deductions
Here is where you can input your business deductions.
As you can see in this example, we are writing off a cell phone and Spotify under Communications. We are writing off Water, Snacks, Car Cleaning materials under Supplies, and under Other Miscellaneous Expenses, we can input all the Uber and Lyft deductions from the Tax Summary documents.
Once you have put them all in, you are ready to move on to the next step.
7. Conduct An Audit Test
This is very important. You don’t want an audit on your taxes. It is a slow and painful process. TurboTax will tell you your risk category based on the information you have provided.
Keep your risk at Low. If you are showing a higher risk assessment, I suggest you do some more work on your taxes and adjust as necessary.
8. File Your Taxes
I prefer to print out my taxes and mail them in. Some people don’t mind e-filing through the internet. It’s up to you. You can file up to April 15th.
If you are not ready, or you would rather wait, you can file an extension. You will then have an extra 6 months before you file, on October 15th. You will have to pay interest on your tax liability if you use this strategy. Better to file on time, but it is good to know you can buy yourself some time.
There are a few other deductions you may take on a personal basis. Turbo Tax will ask you all the necessary questions to see if you qualify for any further deductions. If you have any issues not covered here, then you should really consult a tax professional, like Joe Starzyk of Starzyk CPA.
Fortunately, we only have to deal with taxes once per year. Good luck with your taxes. Be safe out there.
Readers, have you filed your taxes this year? Are you using tax software or hiring a CPA?
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-Jay @ RSG