Last Minute Tax Advice for Rideshare Drivers
There is just one more day until 2014 final taxes are due! More importantly, independent contractors (like rideshare drivers) also have their Q1’2015 taxes due.
If you’re scrambling before the due date, here’s what we suggest you do:
Step 1: File for an extension on your 2014 tax return
You can extend the due date of your individual tax returns for 6 months if you file a Form 4868. That means you won’t have to submit your final tax return until October 15th. (Click to learn more about how to file an extension on your 1099 taxes.)
Form 4868 is just for your federal taxes. Your state may have a separate form you need to fill out for an extension on your state return (which you can find with some simple Googling).
An important note: an extension only extends the due date for your tax return (the forms you file); it does not extend the due date for paying your tax liability (the amount you owe in taxes). If you submit your tax liability after April 15th, you’ll be subject to penalties and interest on the underpaid amount.
Step 2: Pay your 2014 tax liability
To reiterate: a payment for your tax liability, even if you file an extension, is due on April 15th.
For your W-2/employee income, your employer has likely already withheld and submitted those taxes, so you don’t need to worry about that. For your 1099 income (which doesn’t have taxes withheld), you’ll need to determine how much you might owe. Our ‘should I pay estimated taxes’ will help give you a rough total.
Once you have an estimate, you can either pay:
- Via EFTPS, the IRS’s online payment system. This requires a one time 5-7 day setup, so if you haven’t paid via EFTPS before and are reading this on April 14th, you should pay by mail.
- Via mail, postmarked on or before April 15th. See Page 4 of the Form 4868 to find out where to send it. Make sure you get a tracking number so you can prove you sent it on time!
- You can pay it instantly via debit or credit card. For debit cards, the fee is just $2.79 for any tax amount, depending on the processor. If you want to earn airline miles or cash back on credit cards, you can choose this option but they usually charge about 2% of the payment as a fee. For a bill that is $1000 dollars in taxes, that is $20, so you can decide if this option is worth it for you. You can see the IRS page for more details: http://www.irs.gov/uac/Pay-Taxes-by-Credit-or-Debit-Card
Step 3: Pay your Q1’2015 quarterly estimated taxes
Paying your quarterly taxes is much easier than paying your year end taxes, since quarterly taxes are just an estimate and don’t require you to file any paperwork. Check out our taxes course for more information on how to calculate your estimated taxes.
Q1’2015 taxes are due on April 15th for earnings made in January, February, and March 2015. The next due date is June 15th for earnings made in April and May 2015 (yes, “quarterly taxes” aren’t exactly “quarterly”).
Step 4: Remember to file your 2014 return!
Don’t forget that you still need to complete your final 2014 taxes! It’s easy to forget as life gets busy. The deadline is October 15th if you filed your extension properly.
Step 5: Set better habits to prepare for next year
90% of the work associated with taxes is organizing everything in one place.
If you’re a rideshare driver, you’re running your own “driving services” business and use platforms like Uber and Lyft to find customers and process payments. Keeping good track throughout the year helps you understand how your business is actually doing, and minimizes your work later. It’ll also help make doing your taxes cheaper, since your accountant won’t have to bill you for all the time they spend sorting through your box of paper receipts!
If you are still lost, you can sign up for Rideshare Dashboard’s online course for Uber and Lyft Driver Taxes! This course will also include a complete video showing you how to use TurboTax to file your taxes!Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions