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Do Lyft and Uber Drivers Pay Taxes?

Do Lyft and Uber Drivers Pay Taxes?

[For additional tax resources, check out my newly launched online course for Uber, Lyft and Sidecar Taxes!]

As a self employed employee, you are responsible for your own taxes. Lyft and Uber pays you your full wage and its up to the driver to pay their own taxes.

The Internal Revenue Service (IRS) requires you to make quarterly estimated tax payments for calendar year 2014 if both of the following apply:

Some people may not be required to pay estimated taxes as this year they are paying 100% of the tax shown last year.

When do I need to pay Estimated Taxes?

Here is are some quick calculations to estimate when you will need to pay estimated taxes:

Estimated taxes need to be paid quarterly or there is a small penalty at the end of the year. Below are the payment dates for each quarter:

Payment PeriodDue Date
January 1 – March 31, 2014April 15, 2014
April 1 – May 31, 2014June 16, 2014
June 1 – August 31, 2014September 15, 2014
September 1 – December 31, 2014January 15, 2015*

*You do not have to make the payment due on January 15, 2015, if you file your 2014 tax return by February 2, 2015 and pay the entire balance due with your return.

How do I make federal quarterly estimated payments?

The IRS provides various methods for making 2014 quarterly estimated tax payments:

You can avoid making estimated payments if you increase your W-4 withholding amounts by the proper amount. This is only for drivers who also have a job that gets a W2 at the end of the year.

What if I do not pay enough federal income tax in a timely manner for the calendar year 2014?

If you do not pay enough tax in a timely manner either through withholding or making estimated tax payments, you may be required to pay a small penalty of about 3 percent (Note, it is not a simple calculation. You need to calculate it for every quarter as the amount can change every quarter, or goes up every quarter if you didn’t pay it at all all year).

The rates for the calendar quarter beginning Jan. 1, 2014 will be:

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Please refer to IRS Publication 505, Tax Withholding and Estimated Tax, for a detailed discussion of the underpayment penalty, including exceptions to this penalty.

How do I get more information about quarterly estimated tax payments?

For additional tax resources, check out my online course for Uber, Lyft and Sidecar Taxes!

Please refer to IRS Form 1040-ES Instructions and IRS Publication 505, Tax Withholding and Estimated Tax, for more information about quarterly estimated tax payments or see a licensed tax preparer.

Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions
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