How to Profit from Paying Your Rideshare Taxes
Below is a post on how to earn cash back from paying your rideshare taxes. Here are the various payments rideshare drivers need to pay:
- Yearly Tax Bill Owed on April 15 (if your quarterly payments do not cover your tax liability)
- Quarterly Estimated Taxes in April, June, September, and January (if you owe more than $1000 in taxes per quarter)
Some drivers end up paying thousands in taxes each year, and you can earn a profit by just paying your taxes!
So there are four ways to pay your taxes:
- Sending in a check
- Paying online via direct debit from the IRS website
- Paying online via digital check through a number of companies
- Paying with a credit card
The last option is often overlooked because normally, websites charge about 1.8% in fees to pay with a credit card. Here is the list of companies and fees from the IRS website:
One of the old ways to profit from paying taxes was with a debit card that earned airline miles. You can charge it as a debit, and then earn airline miles by making the payment. You can see the only charge $2.75 for a debit transaction, so anything over $5 you can make a profit on. There aren’t any debit cards you can use anymore that earns airline miles. The Delta Suntrust Debit card still exist but you can no longer sign up for it.
The only way now is to pay with a cash back card. Many cards offer 1% cash back. With the 1.87% fee, you are losing 0.87% on the payment, so that is a loss. There are a handful of cards that pay 2% cashback, which will net you a total profit of 0.13% profit. Here are the list of cards below:
- Barclay Arrivals Mastercard
- Citi Double Cash Card
- Capital one Venture Card
- Capital one Spark Card
Make sure to look for cards that have UNLIMITED cash back and also a double cash back (or 2 points per dollar) on all spend, not just bonus categories. There are a few cards that have higher rewards but either it is categories based (gas, grocery, office supply stores) or it is capped at only a few thousand dollars a year. Often these cards don’t have higher bonuses for tax payments.
Now, there is another card that has a limited time promotion:
- Discover IT miles
Make sure to look for discover IT miles, not Discover IT cash rewards. The promotion is double cash back or double miles after your first year. So they add up all the miles or cash back you earned and double it after your first year.
What makes the Discover IT miles so good is that they pay 1.5 miles for every dollar you spend. Its not a whole lot, but when you combine it with the double miles promotion, you are getting 3 miles for every dollar you spend. The Discover miles pays out 1 cent per mile on your statement, so essentially it is a 3% cash back card. The other great thing is that there is no annual fee with this card, compared to about $80 for the 2% cash back cards above.
If you don’t have any of these cards, you can sign up for these cards at the below link under Cash Back Card:
I just signed up for the Discover Card and will be using to pay my tax bill come April, along with the estimate taxes I have to pay quarterly. I should net a few hundred dollars in cash back.Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course!