Contributed by: TriciaD, FreeTaxUSA Agent
If you are a contractor for Uber, Lyft, or other ride share companies, you are considered self-employed. This means you are responsible for paying taxes on your net income (income minus expenses) from your ride share business.
You must also pay self-employment tax, which covers Social Security and Medicare taxes for self-employed individuals. The IRS requires self-employment income to be reported on a Schedule C.
What is Schedule C?
A Schedule C is a form you attach to the federal tax return. It is used to report income and expenses from your business or profession as a sole proprietor.
A sole proprietor is someone who owns and operates a business by themselves, without forming a corporation, partnership, or LLC. Find a Schedule C here: 2023 Schedule C (Form 1040) (irs.gov).
Do I need to use a Schedule C?
If you have income and expenses from driving for a rideshare company, you must complete a Schedule C.
If you make money from more than one rideshare company in a year, you can add up what you earned from all of them and put the total on one Schedule C. Or, if you want to keep things separate, you can fill out a different Schedule C for each company you worked with. Either way, you need to tell the IRS about the money you made or lost when filing your return.
What income should be included on Schedule C?
A Schedule C should include these kinds of income:
- Form 1099-K: Shows payments from online platforms or payment apps and from cards like credit, debit, or prepaid.
- Form 1099-NEC: This form shows non-employee payments to individuals who are not classified as employees.
- Form 1099-MISC: Reports rents, royalties, prizes and awards, and other fixed determinable income.
- Income from rideshare services NOT reported on a 1099-NEC: Any other money earned (cash or check payments) for the rideshare work.
The amount of income you earn may determine if you get a 1099-NEC or 1099-K form.
Did you incur any costs for your rideshare service?
Keep track of your business expenses. Since you are responsible for all expenses and aspects of running your business, you may be eligible to deduct some of your expenses. This reduces your net profit and the amount you owe in both self-employment and income taxes.
For example, business-related vehicle costs like mileage, fuel, maintenance, insurance, and depreciation can be written off as deductions.
Where do I find rideshare documents for Schedule C?
- Platforms for ride sharing, like Uber or Lyft, typically provide an income summary of your earnings. If you earn $600 or more from a rideshare platform, you can expect to receive a 1099 form. The IRS requires these forms to be distributed by January 31st.
- Should a 1099 not be provided, you'll have to rely on rideshare resources and your personal records to calculate your earnings.
- Write down any other documentation, such as deductions for specific costs, by hand, on a spreadsheet, or use a mileage tracking app.
How to add Schedule C to FreeTaxUSA-prepared tax return?
FreeTaxUSA software makes this process easy. To add rideshare business details to your FreeTaxUSA account, follow this menu path: Income > Business Income (Schedule C) and click “+Add a Business.” We fill out Schedule C based on information entered in the Business Income section of the software. Your tax return will include a Schedule C form.
Other helpful resources for Rideshare drivers
Reporting vehicle expenses for one vehicle used in multiple businesses - FreeTaxUSA Community
Business use of vehicle overview - FreeTaxUSA Community