Tax tips for Uber & Lyft drivers

The taxes you need to pay and the deductions you can claim

Zack SigelDerek Silva

By 

Zack Sigel

Zack Sigel

Managing Editor

Zack Sigel is a former managing editor at Policygenius who oversaw our mortgages, taxes, loans, banking, and investing verticals.

 & Derek Silva

Derek Silva

Senior Editor & Personal Finance Expert

Derek is a former senior editor and personal finance expert at Policygenius, where he specialized in financial data, taxes, estate planning, and investing. Previously, he was a staff writer at SmartAsset.

Updated December 30, 2021 | 7 min read

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Drivers for Uber and Lyft are considered independent contractors, meaning the ride-share company doesn’t automatically withhold taxes from your income as they would if you were a regular employee. But you still need to pay income taxes if you’re an Uber or Lyft driver. One way to avoid any surprise tax bills is by paying estimated taxes — covering income tax and self-employment tax — to the IRS each quarter.

When it comes to tax season, Uber and Lyft will report your income on Form 1099-K if you earned at least $20,000 and made at least 200 rides. You may also receive Form 1099-NEC if you earned over $600 from non-driving payments, like referrals and bonuses. If you don’t receive either form, you can also download an annual summary of earnings to help you file your federal income tax return.

Uber and Lyft drivers are also eligible for certain tax deductions when they file their taxes, like a reimbursement for the mileage they drove and deductions for business expenses. These tax deductions may be generous enough that some Uber or Lyft drivers will pay very little tax.

Key Takeaways

  • Uber, Lyft, and other ride-share drivers still need to pay taxes but may need to make quarterly estimated tax payments since the company won’t withhold any payroll taxes.

  • Ride-share drivers who make at least $400 must also pay the 15.3% self-employment tax, though half of it is deductible when filing an annual tax return.

  • Your annual income is usually reported on Form 1099-K if you made $20,000 or more over at least 200 rides. You’ll also get a Form 1099-NEC if you had non-ride income from bonuses, referrals, or similar payments.

  • Ride-share drivers can get multiple tax deductions for their annual mileage, for other business expenses, and potentially for health insurance payments or retirement account contributions.

Do I have to pay taxes if I drove for Uber or Lyft?

Yes, you need to pay tax if you drive for Lyft, Uber, or similar companies like Uber Eats, and other ride-share companies. The main exception is that you don’t have to pay income taxes if your total annual income is less than the standard deduction, which is $12,550 if you’re a single-filer for 2021 taxes (what you file in early 2022) and $25,100 for married couples filing jointly. But even if you don’t have to file a tax return, you may still want to in case you qualify for tax credits that give you a refund.

There are two main types of taxes that ride-share drivers need to pay: income taxes and self-employment taxes.

Income taxes for ride-share drivers

Uber and Lyft drivers must pay income tax just like regular employees. You’ll use the same main tax form (Form 1040) and your income will be taxed according to the same tax brackets as other employees. Just like any other taxpayer, you will be able to claim any tax deductions or tax credits for which you qualify, and you will get a tax refund if you overpaid on your taxes. One difference for ride-share drivers is that you don’t have an employer to withhold taxes form your income, so you will need to pay estimated taxes each quarter during the year to ensure you don’t underpay your taxes and owe a tax bill.

Self-employment tax for ride-share drivers

If you made at least $400 working as an independent contractor, the IRS considers you to be self-employed and you will need to pay self-employment tax in addition to your regular income tax. The self-employment tax pays for the Social Security and Medicare taxes and it is a flat rate of 15.3%.

The self-employment tax is similar to the FICA taxes that employers usually withhold from their employees’ paychecks. FICA taxes are also worth 15.3% but normally an employer would pay half and employees would pay half. Independent contractors don’t have an employer to withhold tax, so they must pay the full amount. However, you can deduct half of the self-employment tax when you file your taxes.

Tax forms that Uber & Lyft drivers need

Your 2021 ride-share income should be reported to you on a copy of Form 1099-K, Form 1099-NEC, or both. You need these forms to file your taxes because they list exactly how much income you earned. If you drove for multiple companies, each company will send you a separate 1099 form.

Here’s a brief explanation of each 1099 form you may receive:

  • Form 1099-K: This form shows your total income as a driver. You should receive it if you gave at least 200 rides and earned at least $20,000 during the year. Some states require the company to send you this form even if you are below those thresholds.

  • Form 1099-NEC: This form reports non-ride earnings you received, including from bonuses, referrals, and other promotions. You may only receive it if you made at least $600 from these types of payments.

  • Form 1099-MISC: Most people won’t receive this form for 2021 or 2022. This form used to be more common but was mostly replaced by Form 1099-NEC. You may still receive it if you made at least $600 from other miscellaneous payments, like if you got a legal settlement from the company.

Get a full breakdown of these forms in our guide to 1099 forms.

When will I get my 1099 forms?

Uber, Lyft, and other ride-share companies must share your 1099 forms by Jan. 31, 2022. So if your online account doesn’t have all your 1099 forms by first thing on Feb. 1, you either didn’t meet the income thresholds to receive those forms or you should contact the company to ask when you’ll get your forms. If you’re waiting for a physical copy, the company must have it in the mail by Jan. 31.

What to do if you don’t get a 1099 form

If you don’t get a 1099 from Uber or Lyft, then you likely earned less than $600 as a driver for the company. However, you can still file your taxes without a 1099 form as long as you have your Tax Summary from Uber or your Annual Summary from Lyft. These summaries aren’t official tax documents but should list the main information you need for your taxes:

  • Gross earnings (ride payments)

  • Non-ride earnings, like referrals and bonuses

  • Operating and vehicle expenses

  • Total online miles

What if my 1099-K lists too much income?

When Uber or Lyft sends you a 1099-K, the gross payments listed in box 1 will probably be higher than your actual income. The earnings on the form are higher because the IRS requires listing the full value that riders paid, including any commissions or fees. You don’t need to pay tax on any of those company fees, though. You may be able to deduct the extra amount on your taxes as business expenses (on Schedule C). You can find a breakdown of the expenses on your tax summary from the company.

How to file taxes as a ride-share driver

Ride-share drivers, independent contractors, and other self-employed people likely have more complicated taxes than regular W-2 employees. That’s because throughout the year you need to keep track of your profits and losses, business expenses, and any estimated tax payments you make. And if you also have separate retirement accounts or health insurance plans, you’re probably just adding more forms to your return.

Gather your tax documents

Gather all of your tax documents and receipts before you start your tax return. Having everything in one place will make the whole tax filing process easier. Here are some tax documents you should have ready:

  • All 1099 forms (or tax summaries if you’re using them)

  • Estimated tax payments receipts

  • Receipts for car maintenance, including car washes, repairs, oil changes, registration fees, and car insurance payments

  • Receipts for tolls you had to pay while driving for a company

  • Receipts for parking fees you had to pay while driving for a company

  • Receipts for in-car extras you provided your riders, like food and drinks you keep in your car for your passengers

  • Receipts for all other business expenses, such as apps you pay for to track your mileage, accounting services, car maintenance tools like jumper cables, and your cell phone plan

  • A record of your contributions to a retirement plan

  • Record of your payments for health insurance, life insurance, and disability insurance

You may not have or need all of these documents depending on your tax situation, but this is a good starting place for most drivers.

Fill out your tax return

When you have all your tax documents ready, it’s time to fill out your actual tax return. Most Uber and Lyft drivers will need to use at least the following tax forms:

  • Form 1040: This is the main tax form that everyone needs to fill out. Other forms you use will attach to your 1040 when you submit it to the IRS.

  • Schedule C: Tax filers use Schedule C to determine their total profit and losses for the year. Filling out this form will be easier if you have your 1099 forms, receipts for all your business expenses, and a record of how many miles you drove.

  • Schedule SE: After finding your total profit with Schedule C, you need to determine how much self-employment tax you owe using Schedule SE. (This amount then needs to be listed on Schedule 3). Schedule SE also helps you calculate your self-employment tax deduction.

  • Schedule 1: Your business income from Schedule C needs to be listed on Schedule 1 and attached to your tax return. This form also allows self-employed workers to claim certain tax deductions if they qualify, like the self-employment tax deduction, a health insurance deduction, and a deduction for retirement savings.

Lyft and Uber both offer discounts for using TurboTax to do your taxes, but you may be able to save even more by using one of this year’s best tax filing services.

Tax deductions for Uber & Lyft drivers

There are numerous expenses associated with using your car for work and for running a business that happens to be your car. At least some of those expenses are deductible on the taxes you file in early 2022, regardless of whether you take the standard deduction or itemize deductions.

Some common deductions that Uber and Lyft drivers may claim:

  • Deduction for mileage reimbursement

  • Deduction for business expenses

  • QBI deduction, which allows you to deduct up to 20% of your business income

  • Self-employment tax deduction, worth half of your self-employment tax

  • Self-employed health insurance deduction, if you bought health insurance

  • Deduction for contributions to a SEP IRA, SIMPLE IRA, or qualified retirement plan

For more savings, try our list of 53 tax deductions and credits for 2022.

How to deduct your mileage & car expenses

You can deduct the cost of driving your car for your job, but there are two different ways you can determine your deduction: the standard mileage rate method or the actual expenses method.

The easiest option is the standard mileage rate method, which allows you to deduct a certain amount for every mile you drove. For 2021 taxes, the standard mileage rate is 56 cents. If you use the standard mileage rate deduction, you can’t deduct most of your actual car expenses, but it also makes your calculations much easier, especially if you don’t have all your receipts or maintenance records.

The actual expenses method lets you deduct the exact cost of using your car for work, but it requires you keep very good records of all your expenses. Some expenses that you can only deduct if you use the actual expenses method include

  • Maintenance and repairs, including tire and oil changes

  • Gasoline

  • Car insurance premiums

  • Vehicle registration fees

  • Lease payments

  • Depreciation

  • Car washes

Unsure which method to choose? Read our guide to mileage reimbursement.

How to deduct business expenses

In addition to mileage reimbursement, Uber, Lyft, and other ride-share drivers may be able to deduct business expenses related to running a business out of their cars. Business expenses that ride-share drivers can deduct include

  • In-car food and drink items for passengers, like candy and water

  • A cell phone, a wireless plan, dashboard mounts, phone chargers (including extra chargers for your passengers to use)

  • First-aid kits

  • Third-party apps to track your mileage

  • Tools for car maintenance, like tire pumps and jumper cables

  • Roadside assistance services

  • Accounting software

The qualified business income (QBI) deduction

The QBI deduction lets sole proprietors (as Uber and Lyft drivers are classified) deduct up to 20% of their business income from their overall taxable income. For your 2021 taxes, which you'll report during the 2022 tax season, you can claim the full QBI deduction if your taxable income falls within these thresholds:

  • You’re a single-filer or head of household with taxable income of $164,900 or less.

  • You’re married filing jointly, with taxable income of $329,800 or less.

  • You’re married filing separately and have taxable income of $165,925 or less.

Read more about selecting the right tax filing status.