How to Win Tax Season as a Rideshare Driver

Do Rideshare Drivers Pay Taxes?

Yes! As an Uber or Lyft driver, you are classified as a 1099 independent contractor, meaning you are self-employed. Since taxes are not withheld from your earnings, you must report your income to the IRS. To minimize your tax liability, keep track of your annual earnings, mileage, and expenses. This applies to drivers for most gig platforms like DoorDash, Instacart, and Shipt as well.

Disclaimer: TripCity is not a tax professional. This article provides general guidance, and you should consult a tax professional for personalized advice.

Understanding Your Tax Forms

Uber and Lyft will send you one or both of the following 1099 tax forms:

• 1099-K: Reports the total amount passengers paid for rides.

• 1099-MISC: Reports additional income such as bonuses or incentives.

These forms are automatically sent to the IRS, but you must report your income on a Schedule C (Form 1040).

File Your Taxes Yourself or Hire a Professional

Online tax software can simplify filing, but a tax professional can help you maximize deductions. If you hire a tax preparer, check reviews and ask for referrals to find a reliable expert.

Deduct Business Mileage

Rideshare drivers can deduct miles driven for business purposes. As of 2025, the IRS allows a 70 cents per mile deduction.

Example Calculation:

• Business miles driven: 5,000 miles

• Parking & toll fees: $300

• Total deduction: (5,000 miles x $0.70) + $300 = $3,800

Use a Mileage Tracking App

Proper record-keeping is key to maximizing deductions. Without accurate records, you risk losing out on valuable tax write-offs.

How to Track Your Mileage and Expenses Efficiently

The best way to stay organized is by using an expense-tracking app. Popular options include:

• Hurdlr: Tracks mileage automatically and provides real-time tax estimates.

• Gridwise: Helps monitor rideshare earnings, mileage, and expenses.

• Stride: A free app that logs mileage and business expenses.

Deduct Car-Related Expenses

If you don’t use the standard mileage deduction, you can write off specific vehicle-related costs:

• Gas & Maintenance (oil changes, tires, repairs)

• Insurance & Registration Fees

• Car Washes & Detailing

• Auto Loan Interest (if used for business)

Write Off Cell Phone Expenses

Your phone is essential for ridesharing, and you may deduct:

• New Phone Purchase (if used for rideshare work)

• Monthly Cell Phone Plan (percentage used for business)

• Accessories (chargers, mounts, Bluetooth headsets)

Deduct Passenger Comfort & Entertainment Costs

Some Uber and Lyft drivers offer small perks for riders. These can be partially deducted:

• Snacks, water bottles, gum

• Satellite radio subscription

• First aid kits

• Flashlights, umbrellas

Invest in Safety Equipment

Your safety matters! Many rideshare drivers install a dash cam, which is a tax-deductible business expense. It helps protect against false claims and ensures rider accountability.

Report Net Earnings 

Uber and Lyft report gross earnings (before their fees) to the IRS. You should only report your net earnings (after commissions and fees) to avoid overpaying taxes.

• Report gross earnings on your 1099

• Deduct Uber/Lyft fees on Schedule C, Line 10

File Your Taxes on Time

Avoid late fees and penalties by filing before the IRS deadline. If needed, apply for an extension, but be aware that any taxes owed are still due by April 15.

Conclusion

Tax season can be stressful, but understanding your deductions and filing correctly can save you thousands. Track expenses, use deduction tools, and consult a tax pro to keep more of your hard-earned money!

Happy tax filing from TripCity!