How to File Taxes as an Uber Driver

Uber drivers typically operate as independent contractors, not employees. This classification means they are self-employed for tax purposes, with different responsibilities for income reporting, tax payments, and deductible expenses.

Your Income and Self-Employment Status

As an independent contractor, an Uber driver’s income is subject to self-employment tax, which covers Social Security and Medicare contributions. This tax rate is 15.3% on net earnings, comprising a 12.4% component for Social Security and a 2.9% component for Medicare. Unlike traditional employees whose employers pay half of these taxes, self-employed individuals are responsible for both the employer and employee portions. For 2024, the Social Security portion applies to net earnings up to $168,600, while there is no earnings limit for the Medicare portion.

Uber reports driver earnings using specific tax forms. Drivers may receive Form 1099-NEC (Nonemployee Compensation) for earnings from services provided directly to Uber or its users. Alternatively, or in addition, they might receive Form 1099-K (Payment Card and Third-Party Network Transactions) which reports gross payments processed through Uber’s payment system. The specific form received depends on the driver’s earnings and payment methods.

All income earned from Uber driving, including cash tips, must be reported, even if not detailed on a 1099 form. These forms are informational; drivers are responsible for accurately reporting all gross income.

Claiming Business Deductions

Independent contractors, such as Uber drivers, can claim ordinary and necessary business expenses. These expenses are directly related to operating their driving service and are deductible from their gross income. Meticulous records, including mileage logs and receipts, are important to substantiate these deductions.

Vehicle expenses represent the largest deduction for Uber drivers, with two primary methods available. The standard mileage rate method allows a deduction for each business mile driven, which for 2024 is 67 cents per mile. This rate accounts for costs like gasoline, oil, maintenance, insurance, and depreciation; individual costs cannot be deducted separately if choosing this method. This method primarily requires tracking business mileage.

Alternatively, drivers can opt for the actual expenses method, deducting the costs of operating their vehicle. This includes expenses like fuel, oil changes, repairs, tires, vehicle insurance premiums, registration fees, car washes, and the business portion of depreciation or lease payments. If a car loan is in place, the interest paid on that loan can also be deducted proportionally to business use. This method requires detailed record-keeping for vehicle expenses and prorating costs based on business versus personal use.

Other deductible expenses include Uber’s service fees, booking fees, and commissions deducted from driver earnings. A portion of a personal cell phone and data plan can be deducted if the phone is used for business purposes, such as navigating or communicating with riders. Supplies purchased for passengers, like bottled water, snacks, or first-aid kits, along with cleaning supplies for the vehicle, are also deductible. Any tolls or parking fees incurred while driving for Uber are deductible. Professional tax preparation fees related to the Uber business, and health insurance premiums (if self-employed and not eligible for an employer-sponsored health plan) are also deductible.

Estimated Tax Payments

Since Uber drivers are independent contractors, no employer withholds income taxes from their earnings. This means drivers are responsible for paying their income and self-employment taxes directly to the IRS throughout the year through estimated tax payments. This requirement generally applies if an individual expects to owe at least $1,000 in tax for the year.

To calculate estimated taxes, drivers first determine their estimated net earnings by subtracting anticipated business deductions from their projected gross income. They then use this net figure to estimate their self-employment tax and income tax liability. Form 1040-ES, Estimated Tax for Individuals, includes worksheets designed to assist in this calculation.

Estimated tax payments are typically due in four quarterly installments:
April 15 for income earned January 1 to March 31.
June 15 for income earned April 1 to May 31.
September 15 for income earned June 1 to August 31.
January 15 of the following year for income earned September 1 to December 31.

If any of these dates fall on a weekend or holiday, the deadline shifts to the next business day. Payments can be made electronically through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), or by mail with a payment voucher. Failure to pay estimated taxes sufficiently or on time can result in underpayment penalties. Paying estimated taxes throughout the year helps avoid a large tax bill and potential underpayment penalties.

Required Tax Forms and Filing

Accurately completing and submitting required tax forms is the final stage of tax compliance for an Uber driver. The information gathered regarding income and expenses from the year is used to populate these forms. The primary form for reporting business income and expenses is Schedule C, Profit or Loss from Business (Sole Proprietorship), which is part of Form 1040.

On Schedule C, drivers report their gross income earned from Uber, including amounts reported on their 1099-NEC and 1099-K forms, as well as any other unrecorded income. All deductible business expenses are then itemized on this schedule, leading to the calculation of the driver’s net profit or loss from their Uber activities. This net profit or loss figure is used for other parts of the tax return.

The net profit from Schedule C is then used to calculate self-employment tax on Schedule SE, Self-Employment Tax. This schedule determines the amount of Social Security and Medicare taxes owed by the driver. The calculated self-employment tax from Schedule SE is reported on the main Form 1040, U.S. Individual Income Tax Return, along with the net profit or loss from Schedule C. One-half of the self-employment tax is deductible as an adjustment to income on Form 1040.

Drivers have several options for filing their tax returns. Many choose tax software, which guides self-employed individuals through inputting income and expenses and automatically populates the necessary schedules. Engaging a tax professional, such as a Certified Public Accountant (CPA) or an Enrolled Agent (EA), can assist with complex situations. Additionally, the IRS Free File program is available for eligible low-income taxpayers, offering free tax preparation and e-filing services. The general tax filing deadline is typically April 15 of the year following the tax year, with an option to file for an extension if more time is needed.