With the rise of ridesharing apps like Uber and Lyft, thousands of drivers now have reliable sources of supplementary income. But whether you drive for these services full-time or use them solely as side income, drivers are now faced with an unexpected burden: taxes.
Lyft drivers fall under the rules for a 1099-K for their driving services and a 1099-MISC for any other payouts (e.g. new city bonuses, mentoring, referral fees, etc.). Follow along as we outline how to read and file your Lyft 1099.
How Do I Report My Lyft 1099 Income?
First, let’s go over the types of IRS forms you may receive:
- A 1099-K is issued if you received over ,000 for driving and gave over 200 rides.
- A 1099-MISC is issued if you received over 0 in other types of income (e.g. referral bonuses).
Even if you don’t receive a 1099, you still need to self-report the income. You are required to pay taxes on any 1099 income you have. There is a misconception going around the Lyft community that no 1099 means no taxes; this is very incorrect and will lead to a lot of headaches for Lyft drivers. Keep in mind the IRS can audit you for up to three years (or six years if you have understated your income by 25% or more), regardless of the dollar value.
Keep in mind that “gross ride earnings”:
- Does include Lyft’s commissions
- Does not include the Trust and Safety fee (so this amount is not included in the numbers in your driver dashboard and should not be recorded as an earning or expense on your Schedule C)
How and Where Do I Record the Amounts From My Lyft Driving?
You’ll record your earnings and expenses on the Schedule C, which is where you calculate your business profit.
You’ll then use this business profit on:
- Schedule SE (for calculating self-employment taxes)
- Form 1040 (your personal tax form, where you consolidate your income from all types of work you do: W-2/employee work, other contract work, unemployment, etc.)
Other 1099 FAQs
Will I Need to Fill Out a Separate Schedule C or SE for the 1099-K and 1099-MISC?
You only need to prepare one Schedule C since these both fall under your “driving services business.” That one Schedule C will also include any other driving services, such as if you worked for Uber or Sidecar.
You’ll need to complete a separate Schedule C for other types of businesses you run (e.g. Homejoy would be “cleaning services”). You’ll consolidate all profit from your Schedule C’s and use this number on both the Schedule SE and Form 1040.
What Mileage Can I Write Off for My Lyft Driving?
Lyft’s mileage breakdown will give you all mileage you drove while you had driver mode on (meaning you were willing to work and accept rides). This will be the total mileage you’re able to write off for the year, since you aren’t generally allowed to write off commuting costs. This isn’t the only deduction you can claim. For a list of deductions common to the self-employed, click here.
What Other Tax Forms Should I Know for My 1099 Income?
Why Is There Both a 1099-K and 1099-MISC?
This relates to the U.S. tax law requirements for both of these types of forms. It’s mostly out of Lyft’s control.
If I Received a 1099 From Lyft, Do I Send It to the Government?
Just keep the 1099 for your records, and make sure your stated income matches the amount. If you didn’t receive a 1099, keep a screenshot or printout of your driver dashboard totals. You do not need to send a copy to the IRS.
Any More Tax Tips?
Taxes are never fun, but when you’re well-prepared, they can be much easier. Use tax software like QuickBooks Self-Employed to get your books in order throughout the year. Software can help you separate personal and business expenses, automate your deductions, calculate estimated taxes and more. Then, when April comes around, you’ll be completely prepared to file your year-end taxes and avoid any IRS penalties.
The post Taxes for Drivers: How to Read and File Your Lyft 1099 appeared first on QuickBooks.
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