Tax Deductions for Uber, Lyft, and Other Rideshare App Drivers

As a driver for a rideshare app, you are considered self-employed. That means you’re entitled to unique tax deductions that reduce your tax liability. Here is a list of important expenses you can write off when you file your income tax return.

Business-related deductions

  • Membership expenses – AAA is an example of a business-related membership that you can deduct.
  • Cell phone expenses – If you use your cell phone exclusively for your business, you can deduct the entire amount. If not, you can deduct the portion associated with your rideshare business. The same holds true for your wireless plan
  • Refreshments – Snacks or drinks that you provide for your clients are deductible up to 50%.
  • Self-employment taxes – Deduct the employer-equivalent portion of your self-employed taxes when calculating your AGI for personal income tax. Learn more

Vehicle-related deductions

As a rideshare driver, you can claim a tax deduction for the miles you drive on the job. If you use the standard mileage rate, you’ll deduct $0.575 per mile driven for business. If you use the actual expense method to calculate the deduction, you’ll add up all your vehicle-related costs and deduct a certain percent of the total.

  • Fuel – Deduct the cost of gas when you’re driving for work.
  • Maintenance expenses – Includes oil changes, tires, inspections, brakes, and other costs that keep your vehicle in good running condition.
  • Auto insurance
  • Vehicle depreciation 
  • Registration expenses – These may be partially deductible, depending on your state.
  • Car washes
  • Parking fees and tolls – while on the job.

Should you use the standard rate or the actual expense method to deduct your mileage? Read Deducting Business Mileage: The Standard Rate vs. The Actual Expense Method

What records do I need to claim these deductions?

Keep track of any receipts when you spend money on job-related expenses. It’s also a good idea to keep a mileage log that shows list the dates you drove, where you drove, and the total miles driven. By keeping detailed records, you’ll have an easier time filing your tax return, and you’ll be able to prove that what you report on your tax return is true in the event you are audited.

Read also Rideshare Drivers: 5 Tax Mistakes You Must Avoid

How can I get help filing my self-employed taxes? 

Your self-employed tax situation might have you asking a lot of questions:

What tax forms do I need?

Do I have to pay quarterly estimated taxes? 

Do I make enough to pay taxes

Are my taxes too complicated to do myself…? (Hint: they’re not!)

When you use TaxSlayer’s Self-Employed Edition, you’ll have all the instructions, forms, and additional support you need to e-file with a 1099 (or without).  All the calculations on your tax return are automatic, which means you don’t have to worry about doing the math yourself. And if you need more help, you’ll have access to an experienced tax pro specializing in self-employed tax situations. 

The information in this article is up to date through tax year 2020 (taxes filed in 2021).

This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.

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