Don't fall for these traps!
Whether you drive part-time or full-time or drive food, people, or things any of these traps for rideshare taxes could apply.
Not knowing your business miles.
Your records should be made at or around the time of business use. Activity logs help but your business miles are more than just your passenger or delivery trip miles. Got an oil change, trip to the car wash,etc..? Drivers have commute miles which are not business miles.
Not using two cars if you have them.
If you have two cars you will have more deductions even if you drive the same mileage on just one car.
You need to deduct the larger of actual expenses or the IRS standard rate.
Do you know what your gas, wash, fluids, depreciation, insurance, repairs, tolls, interest, taxes and registration fees were (hint: these are common tax write offs for uber drivers)? Even if you use the mileage rate, you can still deduct your business use of interest, taxes, and tolls. The mileage method is generally better for older cars where you have at least 15,000 business miles per year - but there are some limitations we can go over with you.
Leasing an expensive car for a long lease.
You lose depreciation deductions. There are scenarios where leasing can work but generally it doesn't.
Not calculating depreciation correctly or at all.
You might not even be deducting depreciation at all! Use lower of cost or market based on when you convert from personal to business use. Some repairs, like engine rebuilds, could also be depreciated = more deductions for you! SUVs treated differently.
Doing trade-in's vs. selling at a loss
If you've taken depreciation you might be at a gain or a loss depending on how much depreciation you have taken, the cost, and what the sell price is. If you have a gain on a trade in, you pay no tax. If you have a loss, better to sell it and take the loss (and get a fatter refund) since you can't claim either gains or losses on trade-in's.
Not knowing which Uber tax form or Lyft tax form to use
What is the uber tax form or lyft tax form used to report your income? It is 1099 from Uber and you report on Schedule C. What is the uber tax classification for uber income tax? It's generally self employment tax unless you are organized as a corporation.
Uber reports your gross income to you on 1099 which will be very different (and much more) from what you receive from them in your bank. The main difference is Uber's commission but there are other deductions you have to count. The "cash due" column where your car rental fees, tolls, gas, late car return fees, 5% on credit, to name a few.