Driving for Lyft? Use This Tax Preparation Checklist
So, you decided to become your own boss (at least part-time) and start driving for a ride-sharing company like Lyft. Use the Lyft tax preparation checklist below to organize your income and deductions to make filing your taxes a breeze. Remember, not all items listed will apply to you, but it will give you a good idea on what you need to report as income and what you can claim as a deduction.
Key Takeaways
- Lyft makes your ridesharing income for the tax year available on the tax information page of your Driver Dashboard.
- You are required to report all of your ridesharing income, even if you don’t receive a 1099-K or 1099-NEC form.
- For 2023, if you receive more than $20,000 and 200 transactions for ride payments during the tax year you should receive a Form 1099-K.
Before you start tax preparation:
- Download and print this checklist as a PDF
- Place the checklist in a file folder, or attach it to the outside of a folder.
- As you receive or locate tax documents, place them in the folder and check them off the list.
- Scratch off anything on the list that doesn't apply to your tax situation.
- Enter information and amounts that are not already available on other documents, such as your bank routing number for direct deposit.
Lyft tax preparation checklist
You’ve spent hours gathering all of your receipts and necessary documents to outline your expenses. Now what? For first-timers, making the adjustment from filing taxes as an employee to an independent contractor can seem like a daunting task. Whether this is your first time or your tenth time, this tax preparation checklist will help you maximize your tax deductions.
Not every category will apply to you, so just pick those that do, and make sure you have that information available. When you're ready to prepare your tax return using TurboTax software, you'll be surprised at how much time you'll save by organizing your information beforehand.
Your Income
__1099-NEC
__1099-K
__Lyft Annual Summary
__Any other income records you may have
Vehicle Expenses
__Mileage (using the Standard Method) OR all expenses such as those below (using the Actual Expenses Method)
__Car tool kit
__Car wash
__Electronic toll transponder
__Flashlights and flares
__Floor mats
__Gasoline
__Insurance
__Maintenance
__Oil change
__Parking fees
__Portable battery jump pack
__Registration fees
__Repairs
__Snacks and refreshments for your passengers
__Tire inflator and pressure gauge
__Tires
__Tolls
__Towing
__Vehicle accessories
__Vehicle purchases
Insurance
__Heath care
__Long-term care
Communication
__Cell phone purchase
__Cell phone service
__Cell phone repairs
__Cell phone accessories
Commission and Fees
__Lyft fees
Legal and Professional Fees
__Attorney fees
__Bookkeeping costs
__Tax professional fees
Miscellaneous Expenses
__Bank charges
__Business memberships
__Business taxes and licenses
__City and airport fees
__First aid kit
__Office supplies
__Other miscellaneous expenses
__Roadside assistance plans
Common tax forms for Lyft drivers
The number of transactions and income your business generated will determine which tax forms you receive. (You can find these forms in the Tax information page of the Driver Dashboard.)
If you earned $600 or more in income from Lyft, you should receive a 1099-NEC. Additionally, you might receive Form 1099-K.
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 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).
However, some individual states have already begun to use the lower reporting threshold. Maryland, Massachusetts, Vermont, Virginia and the District of Columbia have a $600 threshold for requiring 1099-K in effect for 2023. North Carolina and Montana also have a $600 threshold, although state tax officials have said these states may offer relief. If you don’t receive a 1099-K, the IRS still expects you will report all your income, regardless of the amount.
There is no threshold for payment card transactions such as credit card swipes.
Even if you don’t receive a tax form, you will still need to report your ridesharing income.
- All drivers who earned income on the Lyft platform in 2023, regardless of income amount, should receive a 2023 Annual Summary document which has the info you'll need to get your taxes filed.
But don’t let these forms or amounts scare you, you are entitled to several deductions, like the miles you drove.
TurboTax Tip:
As a self-employed business owner, you can deduct expenses, including the business use of your car, business-related cell phone expenses, and even the cost of bottled water and snacks you provide for your business passengers.
Deducting miles
Lyft may provide you with your mileage information; however, it may not contain the miles you drove from one customer to the next. Be sure to check your records, so that this deduction is not understated. There are two options to deduct your vehicle expenses:
- the actual expenses method or
- the standard mileage method
The standard mileage method requires less record keeping and provides a set rate per mile.
- For 2023 the rate is 65.5 cents per mile.
If you choose the actual expenses method, you will need to add all the expenses you incurred in the year, such as gas, repairs, oil change, and anything else related to your vehicle that was necessary to perform your ridesharing activity. If the same vehicle is used for personal reasons, only the business portion is deductible.
Read Maximizing Tax Deductions for the Business Use of Your Car to get the most out of your miles.
Deducting cell phone expenses
Did you know you can deduct your cell phone expenses? In today’s world, a mobile phone can be indispensable to your business. As a driver for a ridesharing company, the use of a smartphone may be required. These can be deductible if used while working for Lyft:
- purchasing a phone
- paying the bill
- repairs
- buying accessories
If you use your phone for business and personal, you would simply calculate the amount of any services or items used to run the business and allocate that amount to your business expenses.
- For example, if you use the phone 60% of the time working for Lyft, then you can deduct 60% of the costs.
- If mobile phone expenses total $1000, then it would be: $1000 x .60 = $600 – this is how much you can deduct as a business expense
If your phone is a dedicated business phone (meaning, it’s not used at all for personal reasons, but for business only), you can deduct 100% of the costs as a business expense.
Other tax deductions
Did you pay a professional to keep track of your transactions or did you seek legal advice related to your activity? These expenses are tax deductible!
As a Lyft driver, you are considered a business owner. That means anything you spend on your business qualifies as a tax-deductible business expense. This can include anything related to your business activity, from paying for bank and software fees to bottled water and snacks.
Read Tax Tips for Lyft Drivers: Ridesharing Taxes for more tips on what you can deduct or use the Tax Preparation Checklist below.
First-year auto depreciation deduction
There is also a first-year auto depreciation deduction of up to $20,200 for vehicles (automobiles that weigh 6 tons or less) for 2023. If you purchased a car that fits this criterion and started using it for business after 2017, you might be able to take advantage of this deduction.
Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service. Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee.
You can also file taxes on your own with TurboTax Premium. We’ll search over 500 deductions and credits so you don’t miss a thing.
