Every wonder about becoming a rideshare service driver? Maybe you are looking for a creative way to add extra income? This article will share with you, my experiences as a rideshare service driver, which include:
- Lyft Drivers Wages
- Uber Drivers Wages
- Federal Tax Forms
- Extra Tax Deductions
- Self-Employment Tax Tips
Are you looking for more deductions? You can read more about deductions you may qualify for by viewing this post: Mileage or Depreciation Deduction for your Uber and Lyft Taxes?
Lyft Drivers Wages
Lyft drivers wages differ between drivers. On average Lyft drivers make between $15-$25 per hour. If you work power hours, as I did, your average wage is closer to $25 an hour.
Normal weekday and even weekday nights are slower than the weekend (Friday and Saturday). During the normal hours, you can roughly make $15-20 an hour.I have talked with some drivers who make up to $35 an hour (including tips).
Friday and Saturday is a whole different ball game. Drivers who work the weekend can average $25-$30 an hour (including tips). For myself, I average around $40 an hour (including tips) quite often on the weekends, as these are my busier nights. A few times I have even hit $50 an hour (including tips). But these are rare nights.
Uber Drivers Wage
Uber drivers in Boston average $15-$25 an hour (this does not include the Uber surge pricing). The real money during the week is airport runs. Airport runs can boost your hourly wage around $30 an hour. Uber drivers receive an extra $8.50 for dropping off or picking up their client. The downside to picking and dropping off at the airport is the Uber driver must cover the tolls.
Unlike Lyft mornings can make you an average $30-40 an hour. In the mornings, Uber charges a surge price of 1.5-2x included in the fare. On Friday and Saturday (1-2am in Boston as bar last call is 1am), Uber surge price is 2-3x included in the fare. I easily made $50 – 60 an hour during those hours.
Uber wages are based on fares from your trips. Uber also take a 20% fee as well as a $10 weekly Uber phone fee. But if you are well organized and an opportunist at heart, you can earn a few hundred dollars just working some of those key hours.
Lyft Drivers Federal Tax Information
Once you sign up with Lyft or Uber as a rideshare driver, you will be responsible for filing a 1040SE. This form is found under self-employment income (you will be subject to self-employment social security and medicare). You will also receive a 1099 from Lyft if either of these apply:
- You received more than $600 directly from Lyft or Uber (1099-MISC)
- Your Lyft wages exceeded $20,000 and you had more than 200 Lyft’s in one year (1099-K)
- Your Uber wages exceeded $20,000 and you had more than 200 Uber in one year (1099-K)
You will also receive a 1099-MISC if you earn $600 or more from the “Lyft New City Bonus”. The Lyft Bonus is the hourly minimum Lyft wages provided to Lyft drivers in new cities. This wage will be seen on your daily and weekly statements.
A 1099 would make your life easier as you just use this form to fill out your taxes. If you do not receive one, you will need to calculate your Lyft salary. Use your Lyft salary to fill out an 1040SE. This will go under self-employment income, subject to self-employment taxes (social security and medicare)
Looking for extra deductions on your taxes? Here are a few tax deductions you don’t want to miss out on. These taxes are easily deducted if you keep your paperwork organized.
Mileage – Mileage is the use on your vehicle for work purposes that you were not refunded by the company. (This is in place of actual car expenditures – car maintenance, gas, repairs).
Mobile Phone Fees – You can deduct the entire phone bill if it is strictly used for business purposes only. I would recommend you purchasing an additional mobile phone with data specifically for the use of your rideshare services.
Business Expenses – You can deduct items you give to your customers that are not refunded by the company (for example- water, coffee, gum, etc…)
Just as a disclaimer, I am not a tax professional and any numbers and calculations below are just for reference only and cannot be directly applied to all situations.
First you need to take care of the self-employment tax, which is at 15.2%. This is in addition to your state and federal income tax rates. However, half of that is tax deductible, which means you can deduct this amount from your gross Lyft wages and/or Uber wages to get your taxable income.
You can also claim a deduction on the mileage of your car. I choose to take the mileage calculation as it’s much easier to track, compared to keeping track of all your gas and other car expenses for deduction.
So the first step is to look at your marginal tax rate. Here are the rules for singles for the year 2013.
Look at this website for other filing situations (http://taxes.about.com/od/Federal-Income-Taxes/qt/Tax-Rates-For-The-2013-Tax-Year.htm):
- 10% on taxable income from $0 to $8,925, plus
- 15% on taxable income over $8,925 to $36,250, plus
- 25% on taxable income over $36,250 to $87,850, plus
- 28% on taxable income over $87,850 to $183,250, plus
- 33% on taxable income over $183,250 to $398,350
I drove about 900 miles on both Lyft and Uber and made about $1k so far this year. My tax rate for my Lyft wages and Uber wages is hovering around 25%. This included my Uber surge pricing and Lyft PTT (prime time tips). This tax rate was based on 25% marginal tax rate. You could estimate your own tax rate by adjusting your tax rate accordingly based on your marginal tax rate.
When you take the Lyft wage and the uber wage (minus out 20% fee, taxes,) you can figure out your hourly take home wage to be about 60% of the fares you do in any given day. Of course, this number will go up or down depending on the Uber surge pricing or Lyft Prime Time Tips you receive and your own tax rate.
Self-Employment Tax Tips
A note about self-employment income:
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
Here are some key tips:
- You will need to report your Lyft wages and Uber wages even if you don’t get a 1099 tax form. So make sure you keep track of all your wages.
- Make sure you keep good notes and all records to claim a deduction on the mileage. This is very important especially when you are earning over $20k and giving more than 200 Lyft or Uber rideshares.
- Take note that self-employment deductions are the most audited part of any tax return so make sure you have the records to back up your deductions. Keep these records for 7 years minimum. Audits can be done anytime within those 7 years.
Disclaimer: I am not a certified tax consultant so any information above is purely for reference only. Please speak to a certified tax professional about your specific tax situation.