Uber is a household name among commuters across the country and beyond. But it remains an untapped revenue-generating opportunity for drivers.
Keep reading to learn what it means to drive for Uber and how to work for Uber as a driver.
Uber is a worldwide, on-demand ride-sharing service that allows riders to request rides from local drivers much like a taxi cab service. That said, there are some key differences between Uber and your typical taxi service:
Uber operates in the U.S. and abroad. If you're in a service region and need a ride, download and launch the Uber rider app on your smartphone. You can then enter a pick-up location and request a ride. The app will match you with a nearby driver who will then accept the ride and pick you up and drop you off at your desired destination.
The app will tell you when to expect the car, what the car will look like and who your driver will be. When the ride is over, the app will automatically charge your stored credit card for the fare and any tips you might want to include. Uber fares consist of a base rate plus a rate that accounts for travel time and distance.
Uber is as lucrative for drivers as it is convenient for riders. Driving for Uber allows you to make money on a part- or full-time basis giving lifts to locals wherever you live and whenever it's convenient for you. You will need to complete a driver application on the Uber website to become an Uber driver. Additionally, you will need to meet a minimum set of Uber driver and car requirements to be approved as a driver.
You should also consider buying ridesharing insurance to protect yourself, your car and your passengers in the event of an accident. Approved drivers can use the Uber driver app to search for and fulfill ride requests.
The key takeaway relating to taxation is that Uber drivers are currently classed as independent contractors rather than employees. What this means for Uber is that the company will report your earnings from the service on a 1099-MISC and/or 1099-K form to the IRS if you earned more than $600 driving in a given year.
As a driver, you'll need to report this income on your tax return and pay federal, (if applicable) state and self-employment taxes (Social Security plus Medicare tax) on your net income. You will be wholly responsible for paying the Social Security and Medicare tax. Simply, because Uber won't pay for half of it as they would for an employee. Most people need to pay their self-employment tax in four installments known as quarterly estimated taxes.
Tax deductions can help reduce your taxable income and lower your overall tax liability. Key deductions for Uber drivers include: