The Uber & Lyft Driver Tax Deduction Guide.
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If you drive for Uber, Lyft, Doordash, or another independent contractor service, there are many expenses you incur which may be tax deductible. This is true whether you own or lease a vehicle.
Lyft & Uber Taxes For Drivers Explained
Below, you’ll find a few app recommendations for tracking your mileage and expenses. Then, I’ll go over the tax deductions available to all rideshare and delivery drivers. Finally, I’ll cover the standard mileage tax deduction (54.5 cents for 2018, 58 cents for 2019), actual vehicle expense deductions, and which deduction you should take.
You can only elect to deduct mileage, or actual vehicle expenses.
Also, if you lease your vehicle and choose to deduct mileage in your first year, you cannot switch to deducting actual vehicle expenses later in the lease.
Expense Tracking And Tax Software For Uber & Lyft Drivers
Keeping records and tracking your mileage and expenses is crucial to decreasing your tax liability. So, here are the best available expense tracking options for rideshare drivers:
- QuickBooks Self Employed (Recommended!)
- Hurdlr
- Mile IQ
- Stride Tax
Ok, on to the deductions!
Deductions available to all Uber & Lyft drivers
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Rider Amenities
If you provide waters, candy, or chargers for your riders, you can deduct the cost. Since you’re a driver in the service industry, it is considered an ordinary and necessary expense to keep your riders happy and your ratings high.
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Cell Phone Expenses
The cost of your cell phone, as well as cell phone accessories such as chargers and mounts are ordinary business expenses and are 100% deductible. Your cell phone service is deductible up to the percentage you use it for business.
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Dashcams and external GPS
The cost of a dashcam or GPS system, as well as any subscriptions required by those items, are fully deductible. Dashcams are considered a security precaution while a GPS system is often necessary to successfully complete rides.
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Vehicle Inspections
The cost of the annual inspections required by Lyft and Uber are fully deductible.
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Parking & Tolls
Tolls are deductible only if they were not reimbursed. If you have to pay for parking to go to the bathroom, that’s fully deductible.
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Paid Apps (including music)
If you use paid apps (expenses tracker for example) exclusively for your rideshare business, they are fully deductible. The same goes for paid music apps that you use for your rideshare business.
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Deep Vehicle Cleaning (not regular car washes)
If you have to get your car deep cleaned because of a less than 5 star passenger, the unreimbursed portion of the cost is deductible.
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Vehicle Accesories
If you purchase all-weather floor mats, a seat pillow, a tip jar, or a seatback organizer to hold your rider amenities, those items are ordinary and necessary expenses and you can deduct the costs.
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Roadside Assistance
If you pay for AAA or another roadside assistance program, the cost is deductible.
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Food and Drink (not everything you eat and drink on the road)
If you work more than a normal workday (read:over 8 hours) and need some food to keep you going as you’re pulling a twelve hour shift, you can deduct 50% of the cost of that meal. Also, if you have a meeting with a potential rider or driver and you discuss business, that meal is fully deductible.
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Health Insurance
Your health insurance premiums are deductible. However, if you are eligible for health insurance though work or your spouse, you cannot take this deduction.
Uber & Lyft Taxes: The Standard Mileage Deduction
The standard mileage deductions allows you to deduct 54.5 cents for every mile you drive while working. This includes driving around waiting for a ping, driving your riders to their destinations, and driving home after your last ride.
A good way to think of the mileage tax deduction is that for every 1,000 miles you drive for work, you get a $545 tax deduction.
Uber & Lyft Taxes: Actual Vehicle Expense Deductions
If you take the standard mileage deduction, you cannot also deduct these items. In most situations, taking the standard mileage deduction results in a lower tax bill. It’s also a lot easier, since you don’t have to track the expenses below.
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Oil Changes
If you don’t take the standard mileage deduction, the cost of oil changes are deductible.
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Gas
If you don’t take the standard mileage deduction, the cost of your gas is deductible.
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Auto Insurance
If you don’t take the standard mileage deduction, the cost of your auto insurance premiums are deductible
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Lease or Car Payments
If you don’t take the standard mileage deduction, your lease or car payment is deductible. If you take the standard mileage deduction, your loan interest (purchased vehicle) is still deductible.
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Car Repairs
If you don’t take the standard mileage deduction, the cost of repairs to your vehicle are deductible.
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Depreciation
If you don’t take the standard mileage deduction, you can deduct the annual depreciation of your vehicle. However, if you use your vehicle mostly for personal use, the total amount of the depreciation deduction may be limited.
For more detailed information on gig economy taxes for Lyft, Doordash, and Uber drivers, be sure to check out:
Disclaimer: Nothing in this post should be construed as tax advice. Always consult a professional tax advisor.
