The tax-filing status of a self-employed Uber driver is similar to that of a business. Whether ridesharing is a side hustle or your full-time job, it is imperative to be aware of the tax implications for the upcoming tax season. As drivers have more income documents, tax forms, and expenses than the Average American taxpayer does, they have a mine of information to sort before filing their taxes. It is in such a context that our beginner-friendly guide to uber driver taxes comes to the rescue.
RELEVANT TAX FORMS FOR UBER DRIVERS
Under the eyes of the Internal Revenue Service, an Uber driver is an independent contractor, and the following uber driver tax forms are relevant.
- Form 1040, Individual Income Tax Return to report income through the standard tax return
- Schedule SE (Form 1040) for Self-Employment Tax
- Schedule C (form 1040), Profit or Loss from Business, to report income, expenses, and deductions.
In addition, there may be additional state and local tax forms that an Uber driver has to file. Consequently, you can expect to receive your income information from Uber in the following forms – - IRS Form 1099-K: You will receive this form from Uber if you have earned more than USD 600 in on-trip transactions.
- IRS Form 1099-NEC: You can expect this from Uber if you have received at least USD 600 in non-rider payments, such as referrals, trip promotions, etc.
TOP FOUR TIPS FOR UBER DRIVER TAX FILING
- As an uber driver, you have to be aware of the nitty-gritty of self-employment taxes and income taxes. Therefore, be prepared for a probable higher uber driver tax bill.
- Keeping track of tax deductions is of utmost importance. You can include tax discounts for business expenses, mileage, mobile phone usage, and other miscellaneous expenses incurred for your ridesharing business.
- You are expected to pay an estimated quarterly tax and not a lumpsum amount to the IRS at the end of the year. By doing so, you avoid the risk of tax penalties.
- As Uber does not provide health benefits and insurance, you do not have to fill out the W-4 form for tax withholding.
With a plethora of computations, preparing a tax file is not easy for an Uber driver. The wide range of forms, schedules, and deductions can overwhelm anyone, especially beginners. However, with the assistance of AI-powered financial tools, your life during taxation can become stress-free.
HOW CAN AI-POWERED FINANCIAL TOOLS HELP WITH UBER DRIVER TAXES?
High-tech AI-driven tax deductions and quarterly tax calculators can be an absolute lifesaver for 1099 Uber drivers. By calculating all your deductions, such calculators complete 98 percent of your job so that you can focus on your work. In addition, the estimated quarterly tax calculators, such as those of Flyfin, helps you figure out how much you owe to the state in a timely fashion. Thus, with top-notch financial tools, tax hassles are a thing of the past. Lastly, you can also take the help of Flyfin’s Ultimate Tax Saving Guide to learn the A to Z of Uber driver taxes.
