Should you hire a CPA for your rideshare taxes? It’s a complicated question, as everyone’s situation is different. Below, senior RSG contributor Jay Cradeur shares his experience working with a CPA and why it may be in your best interest to check out this tax alternative to using TurboTax or H&R Block.
I have been doing my taxes on my own, using TurboTax, for over 20 years. I know the routine, I know the app, and I know all my revenue streams and deductions. In fact, I have already done my taxes for 2019.
However, for many people, it may be quicker and simpler and more accurate to have a professional do your taxes. Recently, I spoke with Aaron and Yesenia at Actuary Advisors Financial (affiliate link) about their rideshare driver tax preparation service. Read on below to see what it’s like to work with them and what questions you should ask a potential CPA.
If you’re still working on your 2019 taxes, take a look at the resources below:
- Work with a tax professional who specializes in rideshare, like Actuary Advisors Financial
- Check out our guide to rideshare taxes
- Tips on how to quickly and easily file your taxes
Working with a CPA for Your Lyft and Uber Taxes
1. Start with a consultation
Actuary Advisors believes in educating its clients. You can schedule your first consultation at no charge by heading to their site, Actuary Advisors Financial.
During this 5 to 10 minute consultation, the folks at AA Financial will educate you on some of the key elements of a rideshare driver’s tax preparations. They will ask you about your past tax returns and will most likely ask you for a copy so they can review them so as to give you the best tax advice.
Based on what you share, AA Financial will also send you a list of items you will need for your second consultation.
2. Gather all of your driver information
After the first consultation, you will need to gather all the information.
You will need to download your 1099 K and 1099 MISC and yearly summaries from the Uber and Lyft websites.
You will need to calculate your mileage, both business and personal. Haven’t tracked your mileage? It’s not too late – check out our top mileage tracking apps for Uber drivers.
You will need to tally up as many deductions you can think of, items such as cell phone expenditure, supplies for your car, and services like car washes and Spotify. Here’s a list of common Uber driver expenses for reference.
But don’t worry, if you happen to miss any expenses or deductions, Actuary Advisors has your back. Their detailed interview process will highlight any needed or missing documentation. With all that in hand, schedule your next consultation.
3. Schedule a second consultation to go over anything you may have missed
During this phone call, you and AA Financial will take a deep dive into your taxes. You want to be sure that everything is accurate and you are not missing any substantial deductions.
When it makes sense, AA Financial will also share with you the value of becoming incorporated.
I have always run my businesses, including rideshare, through my own corporation. It provides some additional tax benefits as well as protection from legal action.
Here is some useful information Aaron from AA Financial provided for you when evaluating incorporation:
“For years we have presented to business owners the offer to incorporate in Florida. It is a corporate strategy that has for centuries allowed the very wealthy to protect their assets and lower their personal and corporate liability. Incorporating a business is a smart way to reduce individual liability by creating a separate business entity. Most Fortune 500 companies do not incorporate in the state where they do business or where their corporate headquarters are. Small businesses can do the same as these large corporations. In like kind, rideshare drivers do not have to incorporate their business in the state where they live or work in either.”
4. Look for bigger deductions and tax savings
You may also be entitled to a new tax deduction called the Qualified Business Income Deduction (QBI). Here is what the IRS says about the deduction:
“Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called Section 199A – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.”
5. Scheduling your final consultation
Once you have submitted all your information and made a decision on how to structure yourself, AA Financial will then prepare and present your tax return. You can then either print your tax return and mail it in, or have AA Financial file it electronically for you.
Once they have done your taxes the first time, it will be much quicker the second and subsequent times.
What Does A Typical Rideshare Driver Tax Return Cost?
Most tax returns will cost around $300. If you decide it makes sense to opt for incorporation, then the cost may go up to $420.
When I first heard the price, I thought it seemed very reasonable. First, consider that if you do your own taxes with TurboTax, you are going to invest at least $70 to purchase the software, and far more (up to $220!) if you need additional help, worked in multiple states, etc.
Second, consider that if you don’t know much about taxes, AA Financial is going to save you quite a bit of money. There are many things which you may not think are not a deduction but actually are a deduction.
Third, when you see the benefits of setting up a corporation, you may literally be saving yourself hundreds of thousands of dollars should something as bad as a car accident or legal action befall you. Better safe than sorry!
Key Takeaways if You Want an Alternative to TurboTax/H&R Block for Your Taxes
I am a DIY (Do It Yourself) kind of guy. I have been doing my taxes for a long time.
Most people don’t have the time or the inclination to research and stay on top of the latest tax laws and deductions. That is when a company like Actuary Advisors Financial makes tremendous sense.
With AA Financial you will be getting a thorough and professional tax return coupled with the added protection of incorporation (if you decide to incorporate). It is a win-win situation.
But don’t take my word for it. Call them up and have a conversation. Then you can decide if you want to move forward.
Here is the link to set up your first appointment. Be safe out there.
Drivers, how are you filing your taxes this year? With a program like TurboTax or H&R Block or with a CPA?
-Jay @ RSG