Uber Eats Taxes: How to File Taxes for Uber Eats and Tax Forms
If you're one of the thousands of Uber Eats drivers who started this year, it may be the first time that you became your own boss, setting your own working hours and making innumerable decisions to boost your business's performance. It will also be the first time that you will have to file taxes for self-employment income.
Therefore, it is nothing new if you ask yourself, “how to file taxes for Uber Eats?” It turns out filling your taxes as an Uber Eats driver, just like Doordash Drivers and many other delivery services, can be a somewhat tricky business. Therefore, there are a number of important things that you must know to file your taxes accurately and, more importantly, to reduce your tax expense.
Do I Need to File Taxes for Uber Eats?
The answer is yes. Uber Eats drivers, being self-employed individuals, are subject to two distinct forms of taxes.
Income Tax
The first one is income taxes, both on federal and state levels. Your federal tax rate may range from 10% to 37%, and your state tax rate can range from 0% to 10.75%. The exact amount you'll pay is regulated by your state as well as your tax bracket, which would depend on your annual income.
Self-Employment Taxes
The second type of tax you're liable for is self-employment taxes. The IRS categorizes an Uber driver as an independent contractor rather than an employee. As a result, Uber will not withhold taxes from your earnings as most traditional companies would.
What Should I Know About Self-Employment Taxes?
It is your responsibility to pay FICA taxes on any self-employment income you earn as a gig economy worker. Medicare and Social Security taxes are both covered by the Federal Insurance Contributions Act (FICA). Medicare is taxed at 1.45%, whereas Social Security is taxed at 6.25%. This totals 7.65 % in FICA taxes. As a self-employed worker, you will be responsible for both the employer and employee portions, bringing your total to 15.3%.
How To File Taxes for Uber Eats?
As a general rule, if you made more than $600 from Uber delivery driving, you'll be required to pay taxes on your earnings for the year. (Note: You must declare your income to the IRS even if you earned less than $600). Here are four simple steps to pay your taxes:
- Look through your 1099 form for information about your income.
- You can either use the standard mileage method or the actual expense method to deduct your car expenses.
- Gather all of your other work expenses and keep track of them.
- Use that information to complete Schedule C (Profit and Loss From Business), which will be attached to Form 1040.
What Uber Eats Driver Tax Forms Will I Need?
You may need three kinds of 1099 forms to accurately report your income.
Tax Summary
This annual summary reveals your gross Uber earnings, as well as the bare minimum of business costs that you can claim, like commissions and fees. We'll go over tax deductions in greater detail later.
Form 1099-K
This is a summary of your gross income from Uber. Your 1099-K will detail the total amount paid to you for each delivery or ride. In most states, Uber drivers only received a 1099-K if they completed over 200 rides and collected more than $20,000 through customer payments. However, in 2022, this threshold is expected to drop - you will need to earn only $600 in deliveries rides or deliveries in a year to receive a 1099-K form.
Form 1099-NEC
1099-NEC replaced form 1099-MISC for non-employee compensation in previous tax years. If you earned more than $600 in ridesharing or non-delivery money, such as through referrals, you'd likely receive a 1099-NEC.
When And Where I Find My Uber 1099 Forms?
Usually, you can find Uber Tax Summary by the end of January. It's available on the Uber website at drivers.uber.com, under the Tax Information tab on Driver Dashboard. If you do not receive your tax information through the end of January, you must still file your taxes with the IRS. To be safe, call Uber's customer service department to find out when your tax forms will arrive.
How Can I Write Off My Car Expenses?
Once you have received the relevant 1099 forms, it's important to compile a list of all your deductible business expenses. This information will be used to complete Schedule C, which describes your Uber Eats business's income and losses. Your car-related expenses are likely to dominate your overall business expenses. You can deduct them using either by using the actual expense method or standard mileage method.
How Does Actual Expenses Method Work?
Your first option is to subtract your actual vehicle operating costs and multiply that by your business usage percentage, which is the percentage of time you use your car for delivery driving rather than personal errands. Using this method, you can write off oil, petrol, car depreciation, insurance, repair and maintenance, and vehicle lease payments. Keep a complete record of all purchases in order to apply the actual expenses method. Another consideration when claiming actual car expenses is that if you choose the actual mileage method the first year of your car's use for work, you will not be able to convert that same car to the standard mileage method.
How Does the Standard Mileage Method Work?
Rather than monitoring your actual expenses, the standard mileage deduction allows you to deduct a flat fee for each mile you drive for work. In 2021, the regular mileage rate was $0.56, but the amount varies each year.
Are There Any Other Tax Write-offs for Uber Eats Drivers?
Yes, there are many other tax deductions available. Unlike petrol and maintenance, these aren't directly tied to your car. Thus, they can be added on top of the conventional mileage method. These include but are limited to at all.
- Fees and commissions charged by Uber
- Plans for roadside assistance.
- Supplies for riders such as water and snacks
- Tolls and parking fees
- Online classes and eBooks for training.
- Uber Eats delivery bags or trunk organizer
- Accessories for your phone
When Should Uber Taxes be Filed: Quarterly or Yearly?
Tax day isn't only a once-a-year occurrence for many self-employed people, including Uber Eats drivers. Instead, they choose to pay taxes quarterly, every three months. Your annual earnings determine whether it's better for you to pay quarterly or annually. If you anticipate owing the IRS $1,000 or more, you should make quarterly estimated income tax payments four times a year.
Conclusion
Knowing how to file taxes for Uber Eats is difficult, and the abundance of information available on the internet on how to do so just adds to the difficulty. However, they are no longer a headache once you understand the basics and become acquainted with the process.