How to File Schedule C for Uber Drivers

As an Uber driver, you operate as an independent contractor, which means you are considered self-employed for tax purposes. This requires reporting your business activities to the IRS on Schedule C (Form 1040), Profit or Loss from Business. This form is an attachment to your personal tax return, Form 1040, and is used to calculate the net profit or loss from your driving business. This guide provides a walkthrough of Schedule C for your rideshare operation.

Information and Documents to Gather

Before beginning your Schedule C, gather your business information. You will need details like your business name and address, which for most drivers is their own legal name and home address. You will also need to provide the business code for ridesharing, 485300. While most sole proprietors use their Social Security Number, you may need an Employer Identification Number (EIN) if you have hired employees.

Gather your income documentation. Uber will provide you with a Form 1099-K, which reports the total gross transaction amounts processed through their platform. You may also receive a Form 1099-NEC if you earned over $600 in non-driving income, such as referral bonuses. You must report all income, including cash tips or other payments not reflected on these forms.

Meticulous record-keeping throughout the year simplifies claiming deductions. These records should include receipts, bank statements, and credit card statements that show your business-related purchases. This documentation substantiates the expenses you claim in Part II of Schedule C.

A detailed mileage log is a component of your expense documentation. The IRS requires a contemporaneous record, meaning you must log your miles as you drive them. This log must contain the date of each trip, your vehicle’s starting and ending odometer readings, the total mileage driven, and the business purpose of the trip. This record is the basis for the largest deduction for many rideshare drivers.

Reporting Your Uber Income

Part I of Schedule C is for reporting the income your business generated. The primary figure comes from your Form 1099-K, and the total gross payment amount on this form is entered on Line 1, “Gross receipts or sales.” This number represents the total amount passengers paid, including Uber’s commissions and fees, not just your bank deposits.

Line 2, “Returns and allowances,” is not applicable to an Uber driving business and can be left blank as it is for businesses with product returns. Similarly, Line 4, “Cost of goods sold,” should be left as zero. This line is for businesses that sell physical products and need to account for the cost of inventory.

The fees and commissions that Uber withholds from your gross fares are not subtracted from the income you report in Part I. Instead, these amounts are deducted as a business expense in Part II of the form. This distinction is important for ensuring your gross income reported to the IRS matches the figures on your Form 1099-K.

Common Deductible Expenses for Drivers

In Part II of Schedule C, you subtract business expenses from your gross income. For Uber drivers, car expenses on Line 9 are the most significant deduction. You have two methods for this deduction, the standard mileage rate or the actual expense method, and you must choose one. The standard mileage rate is a simplified approach where you multiply your business miles by a rate set by the IRS. This rate accounts for gas, maintenance, insurance, and depreciation, so you cannot deduct those costs separately.

The actual expense method requires more detailed record-keeping but can yield a larger deduction. With this method, you track and deduct the business-use percentage of all your vehicle-related costs, which include:

• Gas
• Oil changes
• Tires
• Insurance
• Registration
• Repairs
• Depreciation

You must calculate the percentage of time you used your car for business and apply that percentage to your total vehicle expenses. If you choose the actual expense method in the first year you use your car for business, you cannot switch to the standard mileage rate for that same vehicle in later years.

On Line 10, “Commissions and fees,” you will deduct the service fees, booking fees, and other charges withheld by Uber. This is the entry that reconciles the gross income on your 1099-K with your actual take-home pay. Another common deduction is a portion of your cell phone bill, which can be claimed under Line 18, “Office expense.” You must determine the percentage of your phone usage that was for business and deduct that portion of your monthly bill.

You can also deduct the cost of items provided for passengers or used to maintain your vehicle. These are reported on Line 22, “Supplies,” and can include:

• Bottled water
• Snacks
• Car cleaning supplies
• Phone mounts
• Hand sanitizer

Finally, Line 27a, “Other expenses,” is a catch-all for costs that do not fit into other categories. Here, you can deduct expenses such as road tolls, parking fees incurred while on the job, and the cost of a roadside assistance membership.

Calculating Net Profit and Self-Employment Tax

After listing all your deductions in Part II and totaling them on Line 28, you subtract this total from your gross income (Line 7). The result, entered on Line 31, is your “Net profit or (loss).” This figure represents the amount of your business income that is subject to taxation.

This net profit from Line 31 is transferred to your main tax return, Form 1040, and included with any other income you may have. This integration of your business profit with your personal income helps determine your overall income tax liability.

The net profit from your driving business is also subject to self-employment tax if your net earnings are $400 or more. This tax covers your contributions to Social Security and Medicare. The self-employment tax rate is 15.3%, composed of 12.4% for Social Security and 2.9% for Medicare.

To calculate this tax, you must use your net profit from Schedule C to complete Schedule SE, Self-Employment Tax. This form calculates the precise amount of self-employment tax you owe. The tax code allows you to deduct one-half of your self-employment tax from your gross income on Form 1040.