Share:

Working for a ride-hailing service is a simple way to make extra money. Since you are considered an independent contractor instead of an employee, however, taxes are not automatically withheld from your earnings. Here's what you should know about tax preparation to file your returns accurately this year. 

What to Know About Tax Obligations as a Ride-Hailing Driver

Do I have to include ride-hail earnings on my return?

Yes. You must report all income, even if you have another full-time job. In addition to your earnings from part-time gigs, you have to report investment dividends, long-term disability benefits, alimony, and lottery winnings.

How much should I set aside for taxes?

tax preparationSince everyone’s financial situation is different, there’s no set formula for determining how much you will pay. To ensure you don't wind up with an unmanageable bill, however, it's advisable to set aside about 30% of your earnings for tax purposes throughout the year. 

Which form do I need to complete?

All individual taxpayers must use Form 1040 for their income tax. Whether you’re only an independent contractor or also an employee, you’ll use this form to state your income and deductions for the given tax year.

As a ride-hail driver, you’ll need to supplement this with a Schedule C form to report your earnings and business expenses, and a Schedule 1 sheet for additional income. 

What kinds of deductions can I take?

Drivers are entitled to take deductions that apply to independent contractors. For example, you can take the standard mileage rate deduction, which is 57.5 cents per mile driven. You may also deduct a portion of your cellphone expenses, the depreciation of your vehicle, parking fees, and commissions the service you work for charges. 

 

If you drive for a ride-hailing service, turn to Engelson & Associates for help with tax preparation this year. They will assist with making estimated payments, maximizing applicable deductions, and filing your returns. With offices in Wisconsin and Minnesota, they've been serving the Tri-State Area since 1963. Their knowledgeable team is backed by more than a century of combined experience. Learn more about what they do on their website or call (608) 526-3437 to schedule a tax preparation appointment. 

tracking