Preparing to file 1099 taxes
Early each year, Uber drivers start getting their 1099 forms for their previous year earnings and that can only mean one thing...it's tax time!
If you drive for Uber you'll be getting your 1099 form soon, but which one will you get?
Some Uber drivers will be getting the 1099-MISC if they generated under $20,000 in earnings for the previous year. And those drivers that generated over $20,000 in income (and at least 200 trips) will be getting the 1099-K.
However, let's dive in a little deeper to understand how Uber drivers are classified for tax purposes and what those different 1099 forms really mean. As always, this post is not to be considered tax advice. For specific advice regarding your tax return, you should speak directly with a tax professional.
Uber Tax Classification: Employee or Independent Contractor?
Those who drive for Uber are classified as independent contractors. They are not considered employees of Uber, they are considered self-employed. You are essentially your own business whether you drive for Uber, Lyft, or any other ridesharing service.
We won't go into the whole debate over self-employed vs. employee, the different benefits or the laws that are or aren't in place to protect your employment. Instead, we'll focus on the tax classification, which is an independent contractor. According to the IRS independent contractors are deemed as self-employed and their earnings are subject to self-employment tax.
For more information on ridesharing taxes, feel free to browse the page the IRS setup for people to understand the taxation of earnings from the sharing economy. To be self-employed, which you've probably noticed by now, means Uber isn't taking out a percentage of your paycheck for taxes. Instead, paying the appropriate taxes on time becomes your job!
NOTE: If you earned less than $600 from any company they are not required to send you a 1099! However, you are required to pay taxes on any earnings regardless of size. This means that if Uber didn't send you a 1099, yet you still earned money, you absolutely must claim those earnings on your taxes!According to the IRS independent contractors are deemed as self-employed with their earnings subject to self-employment tax.
For more information self-employment, please check out the Self-Employed Individuals Tax Center at the IRS. There is a wealth of information regarding self-employment taxes, quarterly payments, home office deductions, standard deductions, .etc. This truly is the definitive resource on self-employment taxes.Now that we understand the tax classification of Uber drivers (Independent Contractor!) let's talk about the forms that will be issued to you.
What Is An Uber 1099?
There is no specific 1099 form called the "Uber 1099 Form", it's actually a standard form 1099, either 1099-MISC or 1099-K, and the one you get is going to be based on both your earnings from the previous year and the number of "transactions" (a.k.a. rides) that took place in that time frame and which you were paid a fee.
We'll cover that in more detail below, but first, let's find out when we can expect Lyft to send out these 1099 forms.
When does Uber send 1099 forms?
Uber, not unlike every other US company that has independent contractors to pay, is required to submit all 1099 forms for non-employed compensation and W-2 forms for employees. The deadline for sending these forms to both employees (W2) and independent contractors (1099) is January, 31st. Often companies like Uber won't have to file the forms with the IRS until a later date, such as the end of February, but by law they are required to get these forms out no later than January 31st so employees and independent contracts have ample time to receive them and file their tax return.
Have you received a 1099-MISC form? If so, the MISC which stands for miscellaneous, means you've made at least $600 in prior year earnings from one source. In this case, if you've received a 1099-MISC from Uber you've made at least $600 -and no more than $19,999 in earnings for the previous year.
If Uber has sent you the 1099-K form you've earned over $20,000 and have more than 200 transactions (rides)with them in the previous year. Every ride you made and earned money on last year is treated as a taxable event. If you have more than 200 rides, plus $20k+ in earnings, you get the K form.
As an Uber driver you are
- An independent contractor that is classified as self-employed.
- Will receive either a 1099-MISC or a 1099-K.
- Will owe self-employment taxes on all earnings for the previous year.
Uber taxes aren't any more complex than other 1099 jobs. When you receive your 1099 in the mail your tax professional or tax software will quickly walk you through the numbers they need. It's less complex than it might sound because 1099's are designed to make that process easy.
However, there is more to taxes than just reporting earnings. There are also deductions. Uber is not going to send an accounting of your deductions, such as gas, insurance, mileage, etc. This is your job as an independent contractor to identify and keep track of your deductions.
If you want to get the most of out of your deductions each year you should be using Everlance to automatically track your business mileage (using the Standard Mileage Deduction), expenses (vehicle inspections, fuel, tickets, tolls, parking, .etc) and revenue (amount earned per trip, tips, .etc) so at the end of the year you can have a detailed snapshot of your deductions that you can present to your tax professional, or upload into your tax software. You can download Everlance (iOS & Android) for free and get started immediately.