5 Rideshare Tax Deductions You Might Miss (But Definitely Shouldn't)
March 10, 2020
If you earn income by transporting strangers from point A to point B, chances are you are already aware of the most common tax deductions for car drivers: mileage in your car, filling your tank with gasoline, insurance etc. But let's talk about the savings you may be missing - just in time to file your next income tax return. It's time to get creative with what you claim on your tax return.
Everyone knows that "extras" are what good tips are made of. Water bottles, snacks, gum, candy, phone chargers - as long as they are for your passengers, they are all tax-deductible.
Commissions and fees
Whether you work at Uber, Lyft, or another shared ride service, these companies receive a cut from all their fares. The 1099 form(s) you receive in the mail should list all fees and commissions taken from your earnings, and there is no reason to pay taxes on the money you did not receive. You can also view these numbers in your online account or on the driver dashboard.
The cost of cleaning
Keeping your vehicle clean is significant to your business. Passengers tend to notice even the smallest details, so take advantage of this often missed deduction. Keep your car wash receipts, details, air fresheners, and other expenses that contribute to your brilliant rating - there is a deduction for that.
Cell phone and service
If you have a separate phone, keep these charges and receipts on file. If you used (or use) your personal cell phone for your ridesharing business, you could deduct the business use percentage the bill come tax time.
Have you ever had a flat tire on the way to work? Or run out of gas in the middle of a trip? If you pay for roadside assistance (think of AAA or a similar service), this is another deduction in the books.
You are the owner of your company, so file like a boss
As an independent contractor, you are responsible for putting money aside that would typically be taken from your salary by an employer, for example, Medicare and Social Security.
Deciding to hire an accountant is the first step in appropriately managing your finances. Our team at Bounds Accounting & Tax Services, LLC, offers tax preparation and planning services for individuals, businesses, trusts, and non-profit organizations. We strive to minimize liabilities and maximize returns. If you have received an IRS or state notice, we can contact the IRS on your behalf to help resolve your tax problems. Contact us to schedule your tax preparation appointment.