Deducting Your Business Expenses
As a self-employed driver, you can directly deduct the ordinary and necessary costs of running your business. It is your responsibility to make sure that you take all possible deductions on your yearly income taxes. The most obvious tax-deductible business expenses are the expenses you incur for your car.
There are two ways to take a deduction for the business use of your car:
Deduct the actual expenses of using your car for business — including gasoline, oil, repairs, insurance, maintenance, and depreciation or lease payments
Take the standard IRS mileage deduction for each business mile driven. For 2015 taxes, the allowed rate is 57.5 cents per mile. For 2016, the IRS has announced the rate is 54 cents per mile.
Since you probably use your vehicle for both personal and business use, you can only deduct the portion of your actual expenses that apply to your business use. Be sure to have good records for all of your deductions; good examples of back-up support for your deductions would be receipts and mileage logs.
Your rideshare company will probably directly deduct the commissions you pay to drive for them right from your check. If you make more than $600 in one year as a driver for any ridesharing company, the companies will send you a 1099 tax form. At the end of the year, you will receive a Form 1099 showing the Gross Earnings of your rideshare business. Be sure to access your personal dashboard and capture all of the expenses that have been charged to you and not shown on your 1099.
Other allowable tax-deductible expenses are:
Car washes and interior maintenance
- Water, snacks, and gum for passengers
Tolls and parking fees
- The portion of your mobile phone that is attributable for your business
Only a licensed tax professional can advise you with certainty as to which deductions you can take legally. If you are unsure as to which deductions are allowed, it is best to consult a qualified CPA for assistance with tax preparation.
Read the full story at Complete Tax and Finance Guide to Ridesharing