There are several tax deductions for Uber drivers (or other rideshare companies such as Lyft or Sidecar) drivers need to be aware of when thinking of their taxes and business expenses. The following is a list of the 5 most commonly missed tax deductions for Uber drivers/other rideshare drivers:
Car wash – Taking your car to the wash before heading out for an Uber-filled Saturday? Better hold on to that receipt. A car wash is certainly a reasonable expense for a ridesharing business and should be deducted.
Drinks/snacks – If you provide water, soda, snacks, etc. to your riders, you may be entitled to deduct some of these expenses. I would recommend keeping a separate stash of items (and receipts) that you intend to have for your riders so you don’t have bother with separating the personal vs. business use portion of the items. Of course, taxes are important, but focus on your business first.
Mileage to get to fare destination – Regardless of whether you use the mileage or actual expense deduction method for deducting your auto expenses, you want to track this. Put your car’s trip odometer to good use. As soon as you step into your car, reset the trip meter and you’ll easily know what the total miles were for your trip when you get back.
Cell phone expense – If you use your personal cell phone for finding riders and navigating, a portion of your cell phone expenses are deductible. The amount deductible should be reasonable. For example, if you are ridesharing to try to earn some extra cash on Friday nights, don’t deduct 95% of your cell phone bill as a business expense. I can’t give you an exact % because it largely depends on your usage.
Car insurance – If your personal coverage includes “driver for hire,” you guessed it, a portion of your premiums are deductible. Again, your specific deduction depends largely on your usage, so I can’t give you an exact %. This is used for the actual expense method.
*As a side note, certain insurance companies have a specific ride-sharing policy available depending on the state you live in. In this case, 100% of your premiums for this policy would be deductible against your ridesharing income. You should talk to your insurance provider to see if this is something they provide, and just maybe are not advertising it.
This list is not meant to be all inclusive, but hopefully you can use some of the information presented here in your personal situation to try and save some money on taxes. No one should have to pay more in taxes than what they owe. Be sure to check out some of my other articles for more information. You can also contact me if you need help getting everything together or if you need help filing your taxes.