Tax Guide for Lyft Drivers: How to Report Your Income and Track Deductions

Paying taxes as a Lyft driver

Lyft drivers are self-employed. That means Lyft will not take out taxes from your paycheck or provide other full-time benefits like health insurance or retirement.

You'll need to pay your own income taxes and Social Security/Medicare and may get a 1099 from Lyft at the end of the year. (Unlike employees who get taxes taken out by an employer and receive a W-2.)

On the bright side, you get to deduct expenses on your taxes that are not accessible to regular employees. That includes all those miles you drive.

Taxes Lyft drivers need to pay

Here's a list of taxes you need to pay as a Lyft driver:

• Self-employment tax (15.3%): This covers Social Security and Medicare. You pay your share and the share normally covered by an employer.
• Federal income tax (% depends on total income): Like everyone else, you'll need to pay a percentage of your earnings to the federal government.
• State and local income tax (% depends on income): Applies if you live in a state/city with income tax.

You'll need to pay income and self-employment tax as one payment. These payments are called estimated taxes and you need to pay them every quarter.

For federal income and self-employment tax the payments are due on:

• April 15
• June 15
• September 15
• January 15 (to cover income from Q4 of the previous year)

State deadlines for estimated taxes can differ, so make sure to check with your state tax agency.

Required tax documents for Lyft

You'll get a 1099 if you earned more than $600 per year with Lyft (or any other contractor, like Uber). But even if you earn less and don't get a 1099, you still need to report all your income and pay tax on it.

Want to lower your tax bill with deductions? Then you'll also need records of business expenses you're claiming. Before you sit down to do your taxes make sure you have:

• 1099s from all contract gigs (including Lyft)
• Proof of income for any gigs that paid less than $600/year (invoice, etc)
• Receipts or invoices of purchases for your Lyft business (water bottles, air fresheners, cleanings)
• Business mileage logs (complete with dates, locations, and purpose for each drive)

Common tax deductions for Lyft drivers

Let's talk about tax deductions in a bit more detail. Technically any business expense that is considered "ordinary and necessary" in your industry is deductible. Here are some of the most obvious for Lyft:

• Mileage: You can deduct every mile at a set cents/mile rate (this is set yearly). Use a mileage app to make sure you track every Lyft drive.
• Tolls and parking fees: These apply only if you pay for them while driving for Lyft
• Cell phone bill: You can deduct the business use portion (using the Lyft or other rideshare apps to communicate with passengers, for navigation, etc)
• Vehicle maintenance and repairs costs: If you use the actual expenses method, you can deduct the business use percentage.

Make sure you have proof (receipts, mileage logs) for every business deduction you claim. Otherwise the IRS can deny or make you pay back the deduction.

How to track Lyft mileage for taxes

You'll need to keep a mileage log, whether that's in an app (which tracks drives for you) or somewhere on your phone or a notebook in your car.

Of course, calculating odometer readings between drop-offs and pick-ups is not exactly easy and can eat into your time, which is why an automatic mileage tracker makes the most sense for rideshare drivers.