How to File Uber Eats Taxes When You Have a Full-Time W-2 Job

Balancing a full-time W-2 job with an Uber Eats side gig can complicate your tax situation. Understanding how to accurately file taxes for both income streams is crucial to avoid issues with the IRS and ensure you’re not overpaying or underreporting.

This guide provides essential insights into managing your tax responsibilities as an Uber Eats driver alongside regular employment.

Worker Classification

Understanding your worker classification is essential in managing tax obligations as an Uber Eats driver. The IRS classifies Uber Eats drivers as independent contractors, not employees. This distinction affects how you report income and pay taxes. As an independent contractor, you are responsible for self-employment taxes, which include Social Security and Medicare contributions, totaling 15.3%.

Uber Eats does not withhold taxes from your earnings. Instead, you receive a Form 1099-NEC if you earn $600 or more annually, which reports your total earnings for tax purposes. Even if your earnings are below $600, you are still required to report the income. The lack of withholding means you must proactively set aside a portion of your income to cover tax liabilities.

Income and Expense Tracking

A well-organized system for tracking income and expenses is vital for managing your tax obligations. You must record all income from Uber Eats, including bonuses, tips, and incentives. Tools like QuickBooks Self-Employed or Expensify can simplify this process by automating categorization and generating reports for tax season.

Tracking expenses is equally important, as it affects the deductions you can claim, reducing your taxable income. Expenses like vehicle maintenance, fuel, and tolls should be logged consistently. The IRS allows you to choose between deducting actual vehicle expenses or using the standard mileage rate, which is 65.5 cents per mile for 2024. Comparing these methods annually can help you maximize deductions.

Maintaining a separate bank account for Uber Eats income and expenses can simplify record-keeping by keeping personal and business transactions distinct. Retain digital or physical receipts for all business-related purchases to substantiate your deductions if audited by the IRS.

Forms and Schedules to File

Filing taxes as an Uber Eats driver with a full-time W-2 job requires understanding the necessary forms and schedules. The Form 1040 is used to report all income, including wages from your W-2 job and self-employment earnings. Attach Schedule C (Form 1040) to report income and deductible expenses from your Uber Eats activities. This calculates your net profit or loss, which is then entered on Form 1040.

You’ll also need Schedule SE (Form 1040) to calculate self-employment taxes for Social Security and Medicare. This tax is based on 92.35% of your net earnings, and half of it is deductible on Form 1040, reducing your adjusted gross income.

If you’ve made estimated tax payments during the year, Form 1040-ES helps reconcile these payments. Meeting the IRS requirement to pay at least 90% of your current tax liability or 100% of the previous year’s liability can help avoid penalties. Any overpayments may result in a refund when you file your return.

Deductible Expense Categories

Maximizing deductions is key to reducing your taxable income. Below are major deductible expense categories for Uber Eats drivers.

Vehicle and Mileage

The vehicle and mileage deduction is one of the most significant for delivery drivers. You can choose between the standard mileage rate or actual vehicle expenses. For 2024, the standard mileage rate is 65.5 cents per mile. For example, driving 10,000 miles for deliveries could result in a $6,550 deduction. Alternatively, you can deduct actual costs such as gas, insurance, and maintenance. Keep detailed logs of business miles and receipts for vehicle-related expenses, as the IRS requires documentation to substantiate claims.

Phone and Data

Phone and data expenses are deductible since they are essential for managing your Uber Eats business. This includes the cost of your phone, service charges, and additional data plans. If your phone is used for both personal and business purposes, only the business portion is deductible. For instance, if 70% of your phone usage is for Uber Eats, you can deduct 70% of the associated costs. Use apps or logs to track usage and substantiate claims.

Business Supplies

Expenses for business supplies, such as insulated bags and phone mounts, are fully deductible if they are necessary for your delivery operations. For example, a $50 insulated bag and a $30 phone mount would result in an $80 deduction. Keep receipts and detailed records of these purchases to ensure compliance with IRS requirements.

Quarterly Estimated Taxes

As an independent contractor, managing quarterly estimated taxes is critical. The IRS requires estimated payments if you expect to owe at least $1,000 in taxes after subtracting withholding and refundable credits. Payments are due quarterly, with deadlines typically on April 15, June 15, September 15, and January 15. Missing these deadlines can result in penalties.

Use Form 1040-ES to estimate your quarterly tax liability, factoring in income, deductions, and credits. For Uber Eats drivers, this includes net earnings from Schedule C, along with W-2 income and withholding. To avoid penalties, you can pay 100% of the prior year’s tax liability or 90% of the current year’s projected liability. For example, if your prior year’s tax liability was $10,000, you would need to pay $2,500 per quarter to meet the safe harbor rule.

Alternatively, you can adjust the withholding on your W-4 form at your full-time job to cover Uber Eats income. This approach spreads tax payments across your regular paychecks, potentially eliminating the need for quarterly payments. Monitor your total withholding and estimated payments to ensure they cover your tax liability.

Combining W-2 and Self-Employed Income

Filing taxes with both W-2 and self-employment income requires reconciling two distinct tax structures. W-2 earnings are subject to withholding, while self-employment income is not. Combining these income streams can push you into a higher tax bracket, increasing your overall tax liability.

Your adjusted gross income (AGI), which determines eligibility for tax credits and deductions, is affected by combining income sources. Higher AGI could phase you out of benefits like the Earned Income Tax Credit or Child Tax Credit. For example, if your AGI exceeds $200,000 as a single filer, you may be subject to the 3.8% Net Investment Income Tax.

W-2 income is reported on Form 1040, while Uber Eats income flows through Schedule C and Schedule SE. To offset self-employment taxes, you can claim deductions like the Qualified Business Income (QBI) deduction, which allows eligible taxpayers to deduct up to 20% of qualified business income. Eligibility depends on your total taxable income, so accurate calculations are essential.