Do Uber Drivers Need an Employer Identification Number to File Taxes?
Understand when Uber drivers need an EIN for taxes, how self-employment status affects filing, and the steps to obtain necessary tax documentation.
Uber drivers are independent contractors, meaning they handle their own taxes. Unlike traditional employees who have taxes withheld, rideshare drivers must track and report earnings accurately to the IRS. A common question is whether an Employer Identification Number (EIN) is needed for tax filing.
Circumstances That Require an EIN
An EIN is primarily for businesses, but not all require one. Uber drivers operating as sole proprietors without employees can use their Social Security Number (SSN) for tax purposes. However, an EIN is necessary if a driver sets up a business entity, such as an LLC taxed as an S corporation, or hires employees.
Hiring employees requires an EIN for reporting payroll taxes, including Social Security, Medicare, and federal unemployment taxes. Some banks also require an EIN to open a business account, which can help track deductible expenses like vehicle depreciation, fuel, and maintenance.
Self-Employed Tax Status vs. Employer Status
As independent contractors, Uber drivers are considered self-employed for tax purposes. Unlike employees who receive a W-2, drivers receive a Form 1099-NEC or 1099-K, depending on their earnings and payment methods. These forms report gross income but do not account for expenses, making record-keeping essential.
Self-employed individuals must calculate and pay self-employment tax, covering Social Security and Medicare. The 2024 rate is 15.3%, with 12.4% allocated to Social Security (on income up to $168,600) and 2.9% to Medicare. Earnings above $200,000 for single filers ($250,000 for married couples) incur an additional 0.9% Medicare tax. Quarterly estimated tax payments using Form 1040-ES help avoid underpayment penalties.
Deductions reduce taxable income. Drivers can deduct costs like mileage, maintenance, tolls, and Uber’s commissions. The IRS standard mileage rate for 2024 is 67 cents per mile, often more beneficial than tracking actual expenses. Keeping receipts and mileage logs is necessary for substantiating deductions.
If a driver hires employees, tax obligations change. Employers must withhold federal income tax, Social Security, and Medicare from wages and pay the employer’s share of payroll taxes. They must file IRS Forms 941 or 944 for payroll reporting and issue W-2s to employees. State employment laws, such as workers’ compensation and unemployment insurance, may also apply.
Steps to Obtain an EIN
Obtaining an EIN is straightforward through the IRS website, where applicants can complete an online form and receive their EIN immediately. This service is available to business owners with a valid Taxpayer Identification Number (TIN), such as an SSN or Individual Taxpayer Identification Number (ITIN). The online application must be completed in one session.
Alternatively, applications can be submitted by fax or mail using Form SS-4. Fax submissions typically receive an EIN within four business days, while mail applications take up to four weeks. International applicants without a U.S. TIN must apply by phone through the IRS’s dedicated line for foreign entities.
Some business owners use third-party services, such as accountants or legal professionals, when forming an LLC or corporation. While these services charge a fee, they ensure proper entity classification and compliance with tax regulations. Some states also require businesses to register for state tax identification numbers, separate from the federal EIN, for sales tax collection or employer withholding obligations.
Potential Paperwork for Rideshare Income
Accurate tax reporting requires maintaining financial records. Uber provides a 1099-K or 1099-NEC if a driver meets IRS reporting thresholds. In 2024, a 1099-K is issued if gross earnings exceed $600, regardless of transaction count. The 1099-NEC applies to non-ride-related earnings, such as bonuses or referrals. These forms report total income before expenses, making additional documentation necessary for calculating taxable profit.
Drivers should keep records of deductible expenses, including fuel, insurance, repairs, and app-related fees. Those using the standard mileage deduction must maintain a log detailing dates, miles driven, and business purpose. If deducting actual expenses, receipts must be categorized properly to avoid disallowed deductions during an audit.
Bank and credit card statements help reconcile earnings reported by Uber with actual deposits. A separate business account simplifies tracking taxable income. Quarterly estimated tax payment records, generated from Form 1040-ES, verify compliance and help avoid underpayment penalties.