All rideshare drivers must report their income to the IRS whether or not they receive a 1099-K or 1099-MISC from the companies they are working for. Here are tips on how to report your rideshare income without these tax forms.
Taxes for the self-employed
Congratulations on your own rideshare business. Now it is time to settle up with the IRS. Some rideshare drivers will receive official tax forms (1099-K/1099-NEC) from companies such as Lyft, but not in some cases.
- You may not have the income/transactions that call for a 1099-K or the miscellaneous payments that call for a 1099-NEC.
All rideshare drivers, however, should receive a yearly summary which will tell you all the income you earned regardless if it is reported on a 1099 or not. The same summary will also give you information on some of your expenses as well as the mileage you drove as a rideshare driver.
The yearly summary
All ride-share drivers should get yearly summaries that will have all the information they need to report their rideshare income and expenses as self-employment income (Schedule C). This summary will have information such as:
- Gross fares (how much you collected from riders)
- Fees such as airport fees or booking fees
- Lyft service fees
- On-trip mileage and referral/incentives paid to you
Even without any official tax documents, you can use the information in your yearly summary to prepare your self-employment taxes for your rideshare business.
Most companies will send you your tax forms regardless of how much you make but they only required to send one or both of the following occurs:
- For tax year 2023 and earlier, if you generated more than 200 transactions and more than $20,000 in gross ride income paid through third-party payment processors, you should receive a 1099-K.
- There is no threshold for payment card transactions, such as credit card swipes, for receiving a 1099-K.
- If you received at least $600 from non-driving earnings, such as incentives/bonuses or referrals, you should receive a 1099-NEC or 1099-MISC.
The IRS planned to implement changes to the 1099-K reporting requirement for the 2023 tax year. However, the IRS recently delayed the implementation of the new $600 reporting threshold for goods and service transactions from third party processors like Venmo and Paypal, reverting tax year 2023 back to the previously higher 1099-K reporting threshold (over $20,000 in payments and more than 200 transactions). If you don’t receive a 1099-K, the IRS still expects you will report all your income, regardless of the amount.
Using the Yearly Summary to Report Your Earnings and Expenses Without a Form 1099
No 1099-K or 1099-NEC? You will still need to report any income earned as a rideshare driver to the IRS. You can find your yearly summary through your online account with Lyft. It may also be mailed to you by January 31st.
Your income will be reported on a Schedule C as self-employment income. You will need your yearly summary from your rideshare company and any personal records you have of deductible expenses.
You will enter the gross ride payments amount and any non-ride payments such as referrals, incentive and/or bonuses you received as your business income. Once you have this amount entered it is time to start deducting! Look at your yearly summary to get your commissions and fees Uber/Lyft took, other fees you paid and your mileage for the rides you provided. You may also have personal records for a portion of your wireless plan, passenger treats, parking/tolls, fees, phone accessories and your vehicle expenses.
Speaking of vehicle expenses, your yearly summary may only provide you with the mileage for the actual rides with a passenger. Keep personal records of the mileage you drive when driving to your first passenger, between passengers and on the way home at the end of the day. Those are also miles that are deductible for your rideshare business.
If this is your first year driving for Uber/Lyft you can deduct the cost of your initial inspection and background check that was required for you to start driving.
If rideshare driving is something you do on the side, part-time or occasionally to make some extra income and you don’t drive enough to generate official tax forms, you can still file your income and expenses with your taxes. Your yearly summary from Uber/Lyft and your personal records are all you need!
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