Here's John, our average rideshare driver from the US. He earns $0.95/mile when he rideshares as an Uber partner or a Lyft driver.
A full-time Lyft or Uber driver can easily put nearly about 1,000 miles a week. Which makes it almost 50,000 miles every year. Now, these numbers can vary significantly between drivers. But yes, this is an average statistic we found on gridwise.io
Calculating the annual average earning would be
$ 0.95 x 50,000 miles
= $ 47,500/- per year
You gotta pay Taxes:
Uber, Lift and other ride-sharing platforms consider their drivers as independent contractors that are people like John are considered self-employed. Needless to say, self-employed individuals have certain tax deductions entitled to them.
Know how any category of self-employed or business can have mileage tax deduction here.
While for Uber drivers there are many tax deductions. More substantial deductions are primarily of two categories:
- Actual car expenses deduction
- Standard mileage deductions
Actual Car expenses are pretty tricky to calculate and thus require professional help which in return costs you more.
Also, if an individual deducts the actual car expenses in the very first year of the car purchase, he or she has to continue with it for as long as the vehicle is driven by him or her, whereas that's not the case with standard mileage deductions. So I recommend you to have a standard mileage deduction for the first year. This will give you enough time to understand the complexities of Actual car expenses deduction while also allowing you to have choices of going with the best deduction for the year!
What is the standard mileage deduction?
The standard mileage deduction is based on the business miles driven. The business miles driven are multiplied to the standard rate per mile (which was 58 cents per mile for 2019).
The standard rate per mile includes gas or fuel costs, driving costs, repairs or maintenance and also depreciation costs. However, parking and toll fee can also be included. So, it becomes easy to calculate instead of deducting separately.
If you opt for the standard mileage deduction in the first year of your car purchase, you will still have the two mentioned options of the tax deduction for the coming two years.
But, not every mile can be deducted:
You'd know how uber and Lyft release annual reports where they give details of the miles driven in your app. Also, the uber gas card provides the miles driven. But these are not the exact miles which are to be calculated. There are some additions and subtractions here.
Following are the miles which are necessary to consider:
- Miles drove to pick up passengers, i.e., right from the time you log in to the distance you've travelled to pick the passenger.
- Miles drove with a passenger in the car.
- Miles drove while returning home after the last drop.
- Extra miles that are driven related to the business (e.g. to the workshop for maintenance).
Keep things simple:
Now to have this standard mileage deduction, you've to maintain a log of your travelled business miles. IRS, the Internal Revenue Service, require this data for a proper collection of income taxes.
But, don't you think keeping a manual log or tracking all your miles could be a tedious task considering the period of 365 days. Also, just in case you forgot tracking your miles a couple of times, 58 cents on every mile can sum up to 100 dollars, for a no track record of 200 miles.
So, start tracking now:
Our mileage tracker (Simply Auto) makes it very easy for you to track your miles. Once you sign in and done with the setup, you'll find an option to add a trip on the bottom right of the dashboard.
- Here you can choose which type of trip you are starting. As a rideshare driver, most of your trips would be considered business trips, which is set as a default option.
- To keep you away from typing in the details of date, time and location, we feed them on the departures and arrivals whenever you start and end your trip.
- Now, as mentioned earlier, if there are any toll and/or parking charges during your trip, they can also be included for a deduction. So, we provide you with these two options wherein you may feed any such applicable charges.
Why Simply Auto for mileage tracking?
All these records are not easy to maintain and especially if you are one who records it in a mileage logbook. Another task you have for yourself is to get it in a document form to submit it to the IRS.
So, instead, all you need is to adopt a habit of starting and ending your business trip on Simply Auto. A bonus for you here is, you can get a report of all your trips, be it business, medical, charity and personal on your mail-ID with only a single click.
For our new blogs wherein we will discuss more of "How Simply Auto can be used more effectively" and do not forget to leave a comment below. We are open to discuss any doubts!