Filing Uber Taxes

Becoming an Uber driver gives you a level of autonomy far beyond what most employees can hope for. You get to decide when you work, and you can also choose how much or how little.

However, increased autonomy tends to bring increased responsibility. In this case, that comes in the form of your tax return. Filing it is more challenging as an Uber driver than a 9-to-5 employee, especially with no boss to help you figure it out.

That’s where our step-by-step guide to filing Uber taxes comes in handy. Let’s explore what you should know about your tax obligations and how to stay on top of them.

Understanding Uber Taxes

Driving for Uber makes you an independent contractor, and independent contractors are self-employed. Since you don’t have an employer, you can’t benefit from the convenience of automatic tax withholding.

Instead, you’re responsible for making quarterly payments toward the taxes you expect to owe each year. That includes self-employment taxes (for which the rate is 15.3%) on top of the ordinary income taxes everyone has to pay.

You’re also responsible for calculating the taxes you owe and completing extra tax forms to show your work. That requires subtracting your tax-deductible expenses from your business income to find your net earnings from self-employment.

Fortunately, Uber keeps records of pretty much everything for you. Instead of the Form W-2 that employees get, you should receive the following documents each year:

• An official Form 1099-NEC and/or Form 1099-K (depending on your earnings, activities, and the tax year) that displays your gross business income

• An unofficial tax summary that shows your gross and net earnings, total business mileage, and potentially tax-deductible platform expenses

Uber vs. Uber Eats Taxes

As a gig worker, providing services on multiple apps can help maximize your earnings. However, it also tends to complicate your taxes. Not only does it force you to track a second income stream, but you may also have to record twice the tax deductions.

Fortunately, neither issue applies when the two apps in question are Uber and Uber Eats. Though they were previously separate, you can now accept rideshare and food delivery requests on the Uber Driver app thanks to a recent update.

Assuming you use the same account, the platform will track your earnings for both types of work simultaneously. It’ll combine them when it creates your tax documents at the end of the year, so both will be represented in your 1099 and unofficial tax summary.

In addition, you’ll incur the same vehicle expenses during both business activities. As a result, you won’t have any additional tax deductions to keep track of, and your bookkeeping responsibilities shouldn’t be any more intensive.

Ultimately, the process of filing your Uber and Uber Eats taxes should be identical whether you accept orders for one, the other, or both.

Let’s take a closer look at what all this means to ensure you understand your Uber tax responsibilities and how to satisfy them.

Uber Driver Tax Documents

Self-employed people are sole proprietors by default. You must pay hundreds of dollars and do a lot of paperwork to change that. Assuming you haven’t done so, here are the extra tax forms you must file as an Uber driver:

• Schedule 1: This is the form where you must report your net business earnings and any other income that isn’t wages.

• Schedule C: This form is where you must provide the details of your business income and expenses. It shows how you got to your net business earnings shown on Schedule 1.

• Schedule 2: On this form, you must report the self-employment taxes you owe for your net business earnings. You must also report the taxes you owe for any other income that isn’t wages.

• Schedule SE: This is where you show how you calculated the amount of self-employment taxes shown on your Schedule 2.

These are various types of supporting schedules that accompany your individual tax return, also called Form 1040. That’s the document every individual with enough taxable income must file to summarize their tax situation each year.

The supporting schedules show tax agencies how you arrived at the numbers on your Form 1040, which helps them find and investigate mistakes or potential tax evasion.

Reporting Uber Income

Knowing your business income is essential for filing your Uber taxes. Fortunately, it’s not too tough to figure out. You can generally treat your base fare, surge promotions, and tips the same for tax purposes. There’s no need to separate them into different categories.

In addition, you should receive a 1099-NEC and/or 1099-K form by January 31 that will display your gross business income from the previous year. Uber will make an electronic copy available through the website or mobile app.

You can elect to get a paper copy instead, but it’ll take longer to show up, arriving in the mail sometime after February 1. Either way, you shouldn’t take Uber’s information on faith. Always keep your own records and double-check that you have the right amounts.

Also, be aware that the numbers shown in Uber’s official tax documents won’t match the deposits that hit your bank account due to the fees the platform charges you. You’ll need to reconcile the two amounts to be sure you’re reporting your income correctly.

Claiming Uber Tax Deductions

A “tax deduction,” also known as a “write-off,” is an expense you incur in the normal course of business. It must be “ordinary and necessary,” which means it has to be commonly accepted in your industry and beneficial to your business. 

Self-employed people, including Uber drivers, can subtract tax deductions from their business income to reduce their annual net earnings. That lowers your taxable income, indirectly saving you money on your tax bill.

Let’s explore some of the more common Uber tax deductions to help you understand what qualifies.

Examples of Uber Tax Deductions

Owning, using, and maintaining a vehicle is easily the most expensive aspect of being an Uber driver. Since you need one for the gig, the costs associated with it are generally tax-deductible.

For example, here are some vehicle expenses that you may be able to claim:

• Auto insurance

• Depreciation of the asset

• Gas and fuel costs

• Interest on an auto loan

• Lease payments

• Parking fees and tolls

• Registration costs

• Repairs and maintenance

However, you can only write off the business portion of these expenses. Unless you have a car you only use for Uber, you must figure out which percentage of your costs is personal and which is deductible. There are two different ways to do so.

The first is the actual expense method. It requires that you track your personal and business mileage and vehicle costs. Divide your business miles by your total mileage and multiply your vehicle expenses by the resulting percentage to find your deduction.

Alternatively, you can use the simplified method, which only requires that you track the miles you drive for business. Just multiply that amount by the standard rate, which is 65.5 cents per mile in 2023.

Whichever option you choose, Uber makes it easy to keep track of your business miles. The unofficial tax summary the platform sends you should include the miles you drove while waiting for a trip, picking up a rider, and dropping someone off.

Of course, vehicle costs aren’t the only expenses you can claim as tax deductions. For example, the business portions of your phone bills are also write-offs since you need the Uber app to receive trip requests, navigate, and communicate with users.

In addition, you can probably claim the business expenses that are generally deductible for self-employed people in every industry, like health insurance premiums and the cost of hiring an expert to prepare your tax return.

How to Make Quarterly Estimated Tax Payments

Driving for Uber makes you a self-employed person, not an employee. As a result, Uber won’t withhold money from your earnings to cover your taxes. Instead, you must make quarterly estimated tax payments unless you owe less than $1,000 in taxes for the year.

Aim to pay 25% of your ordinary income and self-employment taxes on the following due dates:

• April 15

• June 15

• September 15

• January 15 (of the following year)

The easiest way to make these quarterly estimates is through your Internal Revenue Service (IRS) online account. To avoid penalties, pay on time and make sure your total equals 90% of the amount you owe or 100% of the taxes you owed in the previous year.

How to File Your Uber Taxes

To file your Uber taxes, you need records of your business income, tax-deductible expenses, and quarterly estimated tax payments. Use them to complete your Form 1040 and the necessary supporting schedules.

With that done, you must file your tax return and pay any remaining taxes you owe by April 15. Otherwise, you’ll incur late-file and late-pay penalties. Filing an extension pushes your return’s due date to October 15, but it won’t give you more time to pay.

Generally, it’s easiest to file your tax return electronically. Not only will you get confirmation that the IRS received it, but they’ll process the return and any tax refund you’re eligible for much faster.

You can use tax software to file your return solo, but getting help from a tax expert like a Certified Public Accountant or an Enrolled Agent may be better. They can prepare your return and ensure you comply with all the necessary regulations.

Another great way to streamline the filing of your Uber taxes is to use Found, the checking account designed to make life easier for the self-employed. It's packed with features that can help with tax matters, including mileage tracking and auto-categorizing expenses.

For example, Found can track your income and expenses to estimate your tax liability in real time. It can also set aside the perfect portion of each deposit you receive to ensure you have enough funds to cover your quarterly payments.

To top it all off, you can get started for free! Sign up for Found today and start making your tax headaches a thing of the past.

FAQ

Do I Need To Do Taxes for Uber?

When Uber gives you your 1099 form, whether electronically or through traditional mail, it will also send a copy to the IRS. As a result, the IRS knows how much gross business income you should report for the year.

If you don’t file a tax return that matches their expectations, they’ll send you a letter to demand that you fix the issue. You may be subject to penalties, and interest will accrue on any taxes you owe until you pay off your balance.

Does Uber Take Out Taxes?

Uber drivers are considered self-employed individuals. Unlike employees, they’re not subject to tax withholding, which means Uber won’t take out taxes from your paychecks to cover the amount you owe.

Instead, you’re responsible for setting funds aside to cover your Uber taxes and using them to make quarterly estimated tax payments. These go toward the ordinary income and self-employment taxes you owe.

Does Uber Track Mileage for Taxes?

Fortunately, Uber does track your business mileage for taxes. In the unofficial tax summary it provides at the end of each year, you should find a record of the miles you drove for the platform over the last 12 months.

However, Uber doesn’t track your personal mileage. If you want to use the actual expense method to claim your vehicle deductions, you’ll need to keep track of those miles on your own.

How Much Do Uber Drivers Pay in Taxes?

Uber drivers have to pay ordinary income and self-employment taxes on their net business earnings. That equals your business income minus any tax-deductible business expenses you incur.

Ordinary income taxes have a progressive structure. The more money you make, the more taxes you pay on your most recent dollar earned. The federal tax brackets currently range from 10% to 37%.

Meanwhile, the self-employment tax is a 15.3% flat tax composed of Social Security (12.4%) and Medicare (2.9%) taxes. The Medicare portion applies to all your net business earnings, but the Social Security aspect only applies to the first $160,200.

Uber vs. Uber Eats Pay: Which is Better?

Whether Uber or Uber Eats pay is better depends significantly on your circumstances, especially when and where you work. Generally, it’s best to try them both for at least a month to determine the most lucrative option for you.

That said, the advantage of completing rideshares for Uber is that more of your income is guaranteed and known to you before you accept requests. Most of your earnings will come from your base pay for miles driven, and rides tend to be longer than deliveries.

In contrast, drivers who complete orders for Uber Eats usually have less guaranteed income. Their trips tend to be shorter, and their base pay is lower as a result. However, they often earn more money via tips, and driving fewer miles means lower vehicle costs.

Disclaimer: The information on this website is not intended to provide, and should not be relied on, for tax advice.