It's that time of year again people! Uber 1099 time! That's right, all of you Uber drivers will be getting 1 of 2 forms in the mail, depending on the revenue you generated.Some Uber drivers will be getting the 1099-MISC if they generated under $20,000 in income for the previous year. Those who generated over $20,000 in income + at least 200 trips will be getting the 1099-K.Let's talk more about these 1099 forms and how Uber taxes work, but before we do we need to make it clear that this post is not to be construed as tax advice. There is no substitute for speaking with a certified tax specialist and you should always consult a pro if you have specific tax questions.
Uber Tax Classification: Employee or Independent Contractor?
Similar to any other type of freelancing position, Uber drivers are treated as 1099 contractors, or what is classified by the IRS as an Independent Contractor.Although you may drive for Uber, you are not classified as an employee (Form W-2) and instead are deemed an independent contractor.Of course, this independent contractor status with Uber has been disputed in the last few years, even going so far as several famous court cases from ex-Uber drivers claiming they were treated as employees, but as it stands - you're all still technically classified as independent contractors, so that is what we'll go with.For those that may be confused about taxation on earnings from companies like Uber, the IRS has a specific section on their website dedicated to what they call the "Sharing Economy Tax Center" - which is really just the IRS's way of making sure that those who make money in the sharing/gig economy (Uber, Lyft, AirBnB, .etc) understand that there are taxes due if earnings were made even if an official form such as a 1099 or W-2 was never given to you.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. The self-employment tax structure for 2017 is:
- 15.3% on the first $127,200 in net self-employment income.
- 2.9% on any net self-employment income above $127,200.
There are more details to self-employment tax, such as Medicare and the exact amount that falls under the tax cap (92.35% of your total taxable income, actually) - but your tax professional, or tax software will be perfectly capable of computing the amount owed.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?
Technically, there's no such thing as an Uber 1099 of any kind. A 1099 is a type of tax form that is given to independent contractors for the previous year's taxes. Uber, like every other company in the US, has an obligation to send out 1099's to all applicable independent contractors for the previous year.Notice that we say "applicable". This distinction is important as we noted earlier. If you've earned less than $600 in the previous calendar year Uber would not be required to send you a 1099!This fact is super important because even if you don't receive a 1099, if you made money you have to report the income on your tax return.When Does Uber Send Out 1099's? By law the IRS requires all companies that are issuing 1099's and W-2's have them filed no later than January 31st, 2018. If you're reading this post the day it was written (Feb 1st, 2018) that date was yesterday.What this date means for you is that Uber has already filed all W-2 and 1099 forms with the IRS and employees and independent contractors are now waiting to receive these forms in the mail.Typically by the 2nd or 3rd week in February you will have all of the 1099's from the previous year from all of the companies in which you had earnings in the previous calendar year at-or-above the amount of $600.1099-MISCIf Uber sent you a 1099-MISC form, which stands for miscellaneous, you've made at least $600 in prior year earnings from one source. In this case, if you receive a 1099-MISC from Uber you've made at least $600 the prior year, all the way up to $19,999 in earnings and less than 200 transactions, or "rides".1099-KIf you've received the 1099-K form from Uber you've earned over $20,000 AND generated more than 200 transactions. Transactions in this instance would be "rides". Each ride you complete for Uber is essentially a taxable event because you've earned money. If you complete 200 or more rides in the previous year and over $20,000 in earnings you will be receiving the form 1099-K.
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.The average Everlance user finds over $6,500 per year in deductions and saves hundreds of hours on tax preparation. Why use a pen-and-paper mileage log when you can have it done automatically? Everlance tracks over 1,000,000 miles every single day, and there are thousands of Uber drivers just like you that use and love our product.Everlance is free for up to 30 rides per month, and the first time you download you get access to Everlance Premium for 7 days.You can download Everlance (iOS & Android) for free and get started immediately.