Uber and Lyft Driver 2015 Tax Rate Calculations
The below post is for tax year 2015 with a tax filing date by April 15, 2016. This should help many drivers find their way through their taxes this year. There are many more new drivers dealing with taxes than last year so hopefully this will be helpful to those who started driving in 2015.
Taxes for Lyft Drivers
You will need to file for taxes (1040SE) regardless of your Lyft salary. This will go under self employment income, subject to self employment taxes (social security and medicare)
Lyft says there are two different situations they will be sending you a 1099:
- Received more than $600 directly from Lyft (1099-MISC) from referrals, mentor payouts, and power driver bonuses
- Lyft Fares exceeding $20,000 and more than 200 Lyfts in one year (1099-K)
You will get a 1099-MISC if you earn $600 or more from Power Driver Bonus and passenger and driver referrals. You will see this broken out on your daily and weekly statements.
A 1099 would make your life easier as you just use this form to fill out your taxes. If you do not receive one, you will need to calculate your Lyft salary. Use your Lyft salary to fill out an 1040 Schedule SE to find out your net earnings and then use Schedule C to list deductions. You can view the below post for help on how to calculate your taxable income from Lyft:
Taxes for Uber Drivers
You will need to file for taxes (1040SE) regardless of your Uber salary. This will go under self employment income, subject to self employment taxes (social security and medicare)
Uber is nice enough to issue both 1099-K and 1099-MISC for every driver, which makes filing taxes much easier. Use your Uber salary from the 1099s to fill out an 1040 Schedule SE to find out your net earnings and then use Schedule C to list deductions. Remember that the Uber Commission goes under Commission and Fees in line 10 of the Schedule C.
Generally, it is easiest to deduct these items:
- Mileage on your car (read below on instructions). (This is in place of actual car expenditures, such as car maintenance, repairs, and gas)
- Mobile Phone fees (note: it is recommended you get another mobile phone with data just for Lyft and Uber so you can deduct the entire phone bill, or you will need to itemize how much for personal use or business purposes)
Just as a disclaimer, I am not a tax professional and any numbers and calculations below are just for reference only and cannot be directly applied to all situations.
So the first step is to look at your marginal tax rate. Here are the marginal tax rates for tax year 2015:
|Tax rate||Single filers||Married filing jointly or qualifying widow/widower||Married filing separately||Head of household|
|10%||Up to $9,225||Up to $18,450||Up to $9,225||Up to $13,150|
|15%||$9,226 to $37,450||$18,451 to $74,900||$9,226 to $37,450||$13,151 to $50,200|
|25%||$37,451 to $90,750||$74,901 to $151,200||$37,451 to $75,600||$50,201 to $129,600|
|28%||$90,751 to $189,300||$151,201 to $230,450||$75,601 to $115,225||$129,601 to $209,850|
|33%||$189,301 to $411,500||$230,451 to $411,500||$115,226 to $205,750||$209,851 to $411,500|
|35%||$411,501 to $413,200||$411,501 to $464,850||$205,751 to $232,425||$411,501 to $439,000|
|39.6%||$413,201 or more||$464,851 or more||$232,426 or more||$439,001 or more|
Self Employment Tax
First you need to take care of the self employment tax, which is at 15.3%. This is in addition to your state and federal income tax rates. However, half of that is tax deductible, which means you can deduct this amount from your gross Lyft salary and Uber salary to get your taxable income. You can also claim a deduction on the mileage of your car. I choose to take the mileage calculation as its much easier to track, compared to keeping track of all your gas and other car expenses for deduction.
Half of the self employment tax applies to your gross income (Lyft salary and Uber salary).
My Tax Formula
Below is the formula I used to calculate my tax rate. You may not be able to use this verbatim as every tax situation is different:
- G1 is my total Lyft and Uber net income for the year (net income is Uber and Lyft fares minus commission)
- M1 is my mileage for the year
- T1 is my marginal tax rate (taking into account all your total income for the year, including Uber/Lyft/Sidecar)
- 0.575 is the federal mileage rate for 2015
- 0.0765 is 1/2 of the self employment tax for 2015
- 0.153 is the social security and medicare portion of your taxes, which is usually considered as self employment taxes
I drove about 12000 miles on both Lyft and Uber and made about $18k last year. My tax rate for my Lyft salary and Uber salary is hovering around 25%. With more Uber surge pricing or Lyft Prime Time Tips, that number goes up as my Lyft salary and Uber salary to mileage ratio is much higher. This tax rate was based on 25% marginal tax rate. You could estimate your own tax rate by adjusting your tax rate accordingly based on your marginal tax rate.
Uber and Lyft Driver Salary Chart
Your take home Lyft salary and Uber salary after taxes and Uber/Lyft 20% fee from your hourly wage is about 60% of any fares you take in on any given day. This can go up or down depending on the Uber surge pricing or Lyft Prime Time Tips and your own tax rate. This left over 60% will also go towards maintaining and running the car for Uber and Lyft. According to my simplified calculations, a realistic figure for car maintenance, fuel cost and depreciation is about 33-37 cents per mile. Here is a pie chart showing where every cent goes from an Uber fare, including a commission of 20% (this figure will be different on a 25% or 28% commission).
General Tax Tips
A note about self employment income:
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
So make sure to keep track of your Uber salary and Lyft salary. You will need to report your Lyft salary and Uber salary if you don’t get a 1099.
Make sure to have good notes before attempting to claim a deduction on the mileage for your Uber salary or Lyft salary. If you are looking to earn a sizable Uber salary and Lyft salary (>$20k), I would highly recommend you claim a deduction. This year, I have been taking more careful notes whenever I drive on Lyft and Uber so I can claim mileage as the tax deduction. Take note that self employment deductions are the most audited part of any tax return so make sure you have the records to back up your deductions.
Need additional tax help?
For additional tax resources, check out my Rideshare Taxes Course for Uber and Lyft Drivers!
Disclaimer: I am not a certified tax consultant so any information above is purely for reference only. Please speak to a certified tax professional about your specific tax situation.Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions