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Today, we’re going to walk you through how to prepare for filing taxes as a Lyft driver. 

We’ll tell you the forms you need, how to maximize your tax write-offs, if you owe quarterly taxes, and if your tips are taxable income.

Our goal is to make your tax prep easy and straightforward, and walk you through the prep process step-by-step—let’s dive in!

Step 1: Collect and fill out relevant tax forms

There are various forms you’ll need to file your taxes. Let’s get organized!

Filing forms

To file taxes as an Lyft Driver (a.k.a. an independent contractor), you’ll need to fill out the following forms:

You’ll report income through the standard tax return, Form 1040. You’ll use Schedule C to list your income and expenses (and expenses = write-offs!).  Plus, there may be additional state and local tax forms you’ll need as well—check with your tax service or professional.

Forms from Lyft

You should receive your income information from Lyft. This may come in the form of:

  • A 1099-K form—you’ll receive this from Lyft if you earned more than $20,000 in on-trip transactions and provided over 200 rides. Learn more here
  • A 1099-NEC—you’ll receive this from Lyft if you received at least $600 in non-rider payments (e.g., referrals, on-trip promotions). Note: Certain states have implemented lower reporting thresholds. Learn more here

Note: You’re still required to report your rideshare and delivery income to the IRS even if you don’t receive a 1099.

 

Step 2: Calculate your write-offs/tax deductions 

Passenger Fees

Lyft provides a tax summary that should show the total amount passengers paid for fees, like tolls, book fees, etc.—these are business expenses deductions to list on your Schedule C and deduct. 

Mileage

You can write-off miles you drove waiting for a trip, en-route to a rider, and on a trip.  However, it’s crucial to keep careful and detailed records of off-trip mileage ( a mileage tracker like Everlance makes this easy and automatic!).

There are two ways to calculate your mileage deduction: 

  • Actual Expense Method: you calculate and deduct the actual expenses of operating your car. These expenses include gas, oil, insurance, registration, repais, lease payments, or maintenance. For more information on the Actual Expense Method, visit the IRS’s guide
  • Standard IRS Mileage Deduction: This is the easiest method and can result in a higher deduction. To use this method, multiply your total business miles by the IRS Standard Mileage Rate for business. In 2021, this would look like: 10,000 work miles x $0.56 mileage rate = $5,600 deduction. 

Pro Tip

Do you use the same car for work and personal transportation? If so, then you’re required to keep detailed and accurate records that separate these uses. If you don’t have mileage logs, receipts, or other documentation, the IRS may disallow any business expenses you list. That’s why a mileage tracker is so important (Everlance is the #1 mileage and expense tracker, and it makes mileage logs easy and automatic!). 


Smartphone

You are required to have a smartphone in order to do rideshare or delivery—so certain phone costs count as business expenses! Expenses that are deductible can include:

  • Smartphone cost
  • Essential phone accessories (e.g., chargers, mounts, etc.)
  • Carrier billing charges for work use

Pro Tip

Do you use the same phone for work and personal? If so, then you’re required to keep detailed and accurate records that separate these uses. Many Lyft drivers end up buying a new phone that is only used for their business. Then, this business phone’s costs are deductible. 

 

Other common deductions

Many costs associated with ridesharing and delivery can qualify as a write-off. In addition to work mileage and phone costs, other common deductions include:

  • In-car supplies: bottled water and snacks for customers; floor mats; car tool kit; first aid kit; flashlights and flares; tire inflator and pressure gage; 
  • Driving fees: city and airport fees; freeway, highway, and bridge tolls; business taxes and licenses 
  • Roadside assistance plans
  • Office supplies

Remember, Everlance doesn’t offer tax advice. Please refer to your tax professional or service for more information about your specific deductions. 

 

Do you owe quarterly taxes?

Since you’re an independent contractor, you might be responsible for estimated quarterly taxes—especially if Lyft is your sole source of income. 

Make sure to pay estimated taxes on time. Each quarter, you're expected to pay taxes for that quarter's payment period. Here are the due dates for 2021:

1st Quarter:

  • Payment period: January 1 – March 31
  • Tax payment is due April 15, 2021

2nd Quarter:

  • Payment period: April 1 – May 31
  • Tax payment is due June 15, 2021

3rd Quarter:

  • Payment period: June 1 – August 31
  • Tax payment is due September 15, 2021

4th Quarter:

  • Payment period: September 1 – December 31
  • Tax payment is due January 15, 2022

For more information, visit our Quarterly Taxes Guide.

What about tips?

Your tips are part of your gross earnings total and are taxable income. Talk to your tax professional or service for more specific answers regarding your specific tax situation.


That’s all there is to it! That’s how you can easily prepare for your next tax filing. 

If you found this guide helpful, share it with your fellow Lyft drivers! Our goal is to make Lyft driver tax prep easy and straightforward.

We hope that you found this guide useful! Happy filing!


Resources to check out:

Gig Economy Tax Center

https://www.irs.gov/businesses/gig-economy-tax-center 

Tax Professional or Service

We recommend that you seek guidance from a qualified tax professional or service like Block Advisors or contact an independent tax professional for information about your specific tax situation.  If you’d like to learn more, the IRS website has information about the 1099-K, 1099-NEC, and 1099-MISC.