If you earn income transporting strangers from Point A to Point B, chances are you’re already aware of the most common tax deductions for rideshare drivers: mileage on your car, filling your tank with gas, insurance, etc. But let’s talk about the side hustle savings you could be missing — just in time for filing your next tax return.
Work smarter, not harder: Pay less to the IRS.
It’s time to get creative with what you claim on your tax return. Don’t worry — these lesser-known ridesharing deductions are actually legal.
Everyone knows that the “extras” are what good tips are made of. Water bottles, snacks, gum, mints, phone chargers — As long as they’re for your passengers, they’re all tax deductible.
Commissions and fees
Whether you work for Uber, Lyft, or another rideshare service, those companies take a cut from every one of your fares. The 1099 form(s) you get in the mail should list any fees and commissions they’ve taken from your earnings, and there’s no reason to pay taxes on money you didn’t receive. You can also view these figures via your online account or driver dashboard.
The cost of cleanliness
Keeping your ride clean is critical to your business. Passengers tend to notice even the tiniest of details, so take advantage of this frequently missed deduction. Keep your receipts for car washes, detailing, air fresheners, and other expenses that contribute to your sparkling rating — there’s a deduction for that.
Cell phone and service
If you have a separate mobile phone for work, make sure you keep those charges and receipts logged. If you use your personal cell phone for your ridesharing business, you can deduct the business use percentage the bill come tax time.
Ever had a flat tire on the way to pick up your next fare? Or find yourself out of fuel in the middle of your route? If you pay for roadside assistance — think AAA or a similar service provided by your insurance provider — that’s yet another deduction in the books.
You own your business, so file like a boss.
As an independent contractor, you’re responsible for setting aside money that would normally be taken out of your paycheck by an employer — taxes for services like Medicare and Social Security are still required by good old Uncle Sam.
Fortunately, with TaxAct® Self-Employed+, you can file with confidence backed by a $100k Accuracy Guarantee. We’ll help you get your maximum refund every time — and for way less than the other guys. You want to keep more of that hard-earned cash in your pocket this year. We’re to help you do it.
Source : TaxAct Blog