How To Calculate Rideshare Taxes Without A 1099
Rideshare programs have skyrocketed in popularity and accessibility; for both drivers and customers. The amount of rideshare drivers has increased exponentially since last year and with this explosion of growth has come many questions as they relate to your responsibilities to the IRS.
Uber and Lyft drivers are like any other entrepreneurs out there and most are wanting to keep their financial records and responsibilities above board in all ways. The problem that many are encountering though is that although the rideshare driver industry is an easy one to enter, there are a lot of us who did so without a firm understanding of small business accounting and in particular, tax liabilities.
One of the biggest questions that we see on the boards is “What happens if I do not get a 1099 from Uber or Lyft?”
Let’s start off by saying this very clearly…You must report all earnings to the IRS, regardless of whether or not you received a 1099 or not. If you are considering not reporting or not being completely forthright in your figures, THINK AGAIN. Your sales/fares with these services are all recorded digitally with the provider and this data is directly connected with your social security number. In other words, they can get the info, you might as well give it to them upfront and save yourself the hassle of being audited down the line.
Having said all that, want to know if Uber or Lyft plans to send you one? Here is the basic criteria you can expect: If you made over $600.00 with any entity in a calendar year, you are likely going to receive a 1099 and your income is definitely reportable.
Here are some other things to keep in mind when learning how to operate your business in a sound financially responsible manner in the eyes of the IRS and other tax entities:
- Keep all receipts.
- Maintain a solid record of all miles driven.
- Record all deposits.
- Consider using spreadsheets for affordable organization of data.
- Be aware of deadlines for both reporting and payments.
Both Lyft and Uber offer in depth informational reports which can be accessed online at your convenience. In addition to these sources, there are a few solid third party solutions. Here are a few to consider:
Mint: A completely free service which collects all of your rideshare income and converts it into usable, reportable data.
Zen99: A miracle cure for the freelancer who needs a reliable method of tracking their taxable income. If you have ever worked for yourself before and under reported your tax liabilities, you know all too well the pain of getting that tax bill (with interest and penalties of course). Zen99 is a god send and the best insurance policy against unwanted IRS surprises.