Uber promises its drivers the opportunity to work whenever they want and only as much as they want so they have more control over their earnings.
Most income, however, is taxable and if you’re wondering whether this also applies to Uber, read this article to learn everything you need to know!
Do Uber Drivers Pay Taxes In 2023?
Uber drivers pay taxes whether they provide rides or deliver via Uber Eats. Uber drivers are considered self employed so they need to report earnings that are above $400. If an Uber driver earns more than $20,000 they get a form 1099-K. Uber sends all its drivers a tax summary every year with information about their earnings and expenses.
Continue reading to find out all you should know about how Uber handles taxes, including what you can deduct, what forms you should expect and more!
How Do Taxes On Uber Work?
Taxes on Uber work under the following general guidelines:
- Both ride and Eats delivery drivers need to pay taxes
- All drivers get a tax summary every year before January 31st detailing their activity, expenses and earnings on the platform
- Drivers that made at least $20,000 and provided 200 rides/deliveries or more get a form 1099-K
- Drivers that made $600 or more from Uber sources other than rides, like referrals and bonuses, will receive a 1099-NEC
- Drivers that made $600 or more from other sources like legal settlements get a form 1099-MISC
- As independent contractors, the drivers have to file their taxes themselves. Uber only sends the 1099 forms out to the IRS to report what was paid out
- Even if a driver doesn’t get a form 1099 because they made less than the minimum amount, they’ll still need to file their taxes
- Drivers have the option to get the 1099s sent in the mail rather than electronically
If you don’t receive a 1099 from Uber, experts recommend that you get the information about your income from elsewhere, your tax summary in this case, and use that for your tax filings.
Do Uber Drivers Pay Taxes On Tips?
Uber drivers pay taxes on tips because they’re considered earnings, even if they weren’t paid out by the company itself.
When Uber sends a tax summary, the gross earnings will include everything the driver made, including their tips.
What Can You Write Off On Taxes For Uber?
When filing your taxes for what you earned on Uber, you can write off your expenses, i.e. the money you spent for the job.
One of the most straightforward things you can write off are the expenses outlined in your tax summary, i.e. the fees you were charged for using the platform.
You can also write off expenses that aren’t included in the summary but you would need to have kept records of exactly what you spent, i.e. receipts.
Some of the things you could write off if you have a solid record like receipts include:
- Money you spent on gas
- Car repair and maintenance costs if they’re significantly higher than they were before you started ridesharing
- Your phone bill
- Equipment you bought for the job, e.g. a hot bag for Uber Eats
This information is strictly for illustrative purposes and we recommend consulting a tax expert for advice.
Does Uber Track Mileage For Taxes?
Uber tracks mileage for taxes, presented on each driver’s tax summary every year.
This mileage tallies distances traveled for trips, including driving to meet the rider, during the trip itself and driving around looking for a trip.
For the latter, Uber tracks the distance if the driver was online on the app.
However, this total might be lower than the actual number, which also includes the distance you travel for the job when you weren’t online, e.g. driving to get gas or to the auto shop.
You should track your mileage when you can but, if you don’t, Uber’s own numbers could still come in handy.
You can use this information to calculate how much you can deduct in expenses using a standardized IRS formula for this exact purpose.
For the 2022 tax year, the IRS set a rate of 58.5 cents per mile. You’d have to look up what the rate is for the year when you’re filing.
To know more, you can also read our posts on Uber Green, Uber X, and can Uber be booked in advance.
Uber drivers pay taxes on their earnings, including tips. Uber sends a tax summary to its drivers and delivery people every year, along with different form 1099s depending on how much they earned. Because they’re considered independent contractors, they have to report their earnings and calculate how much they owe.
Uber drivers can write off the expenses listed on their tax summary, which are primarily composed of fees they were charged. They can also deduct mileage by using an IRS formula to determine how much it cost them.