All right, let me just tell everyone. I did it! I got myself a side gig. With inflation at a staggering 5%, it isn’t unheard of to pick up a side hustle or two.
After some research on the best side hustles, I picked one that seems to be the best for me. Don’t we all love food? Well, most of us do. What better way to make an extra income than delivering food to customers? So, I signed up for Uber Eats!
It was all fun and games till I was faced with something that’s the opposite of fun: Taxes! Just like that, my sunny skies were overrun by dark clouds. As an Uber Eats driver, I now have to pay taxes just like everyone else!
Speaking of which, here are a few more tax resources for you to check out:
Disclaimer: I am not a tax consultant. I am only sharing my knowledge of Uber Eats taxes. For specific personal tax advice, please consult with a professional.
Do I owe taxes working for UberEats?
The answer is yes! A thousand times yes, sometimes quite literally. The amount owed changed person to person. I personally racked up a lot of miles and made over almost $7,000 in a year. So, I owed a little over $1,000 working for Uber Eats.
To cut to the chase: yes. If you made more than $600 working for UberEats in 2021, you have to pay taxes.
When in a fix, I love playing the blame game. Let us all blame the school system! We learned algebra, photosynthesis, the French Revolution, and some Shakespeare. But did we learn something as fundamental as taxes? I know, I didn’t. I made a mental note to write a letter to the school boards addressing my grievances.
Coming back to the present, I did what I do best. Google! When in doubt, go on Google. This has been my mantra for as long as I can remember. Now, not everything on the internet is accurate. Search for a common ailment and you’ll stumble on a page listing it as a symptom of some life-threatening condition. I’ve been there and have been petrified. But taxes are different.
Does UberEats take out taxes?
Uber Eats drivers are independent contractors that provide a service. They are not employees of the company. Therefore, as an Uber Eats driver, you do not automatically have tax withholdings deducted from your pay throughout the year. So come tax season, you’ll owe the government taxes.
How do taxes with UberEats work?
The first thing you need to know about being an Uber Eats driver is that you are an independent contractor. This means you don’t receive a W2 as part of your Ubereats tax documents.
Instead, you’ll receive a 1099 tax form from the company to do your taxes. To access your 1099 form, log in to drivers.uber.com. You can download the form once you go to the “Tax Information” tab. As an independent contractor, you are required to file taxes quarterly.
Your quarterly payments are to cover your self-employment tax and income tax liability for the year. The first quarterly payment is due April 15th for each tax year. The remaining payments are due June 15th, September15th, and then January 15th of the following year.
Don’t fret if you didn’t pay quarterly taxes throughout the year. A lot of people don’t know to do that. Simply pay your taxes in full this upcoming season. Going forward though, you’ll want to make quarterly tax payments on your side-gig.
Am I eligible for tax deductions with UberEats?
Yes, you are! All Uber Eats drivers and independent contractors are eligible for tax deductions. There are expenses that are business-related. This includes car expenses, cellphone expenses, equipment costs, cleaning, repair costs etc. However, you can’t claim expenses like the fees to get a normal driver’s license or fines due to speeding.
How much will I owe in taxes working for UberEats?
The amount you owe in taxes working for Uber Eats differs from person to person. You’ll need to understand what you’re getting taxed on and then do the math. The expenses you incur can have a positive impact on your taxes if you know how and what to claim.
The first step is to know what you’re getting taxed on. Your Ubereats taxes depend on your profit, not on what you get paid by the company. For every dollar you earn in profit, you will pay 15.3% self-employment income tax.
Let’s dig deeper. Assume that you earned $15,000 from Uber Eats. You are not going to be taxed on the entire sum of $15,000. Your expenses will have to be subtracted from the total amount. Let us assume that you incurred $6,000 in expenses. Then you will be taxed on your profit of $9,000 ($15,000 – $6,000 = $9,000). This makes it important for you to keep track of your expenses.
Let’s dig deeper…
As an Uber Eats delivery driver, your major expense is the cost of using your car. A mileage tracker like Hurdlr could be helpful.
You can claim businesses expenses if you can prove that they were legitimate. We recommend making a spreadsheet to record your expenses. Remember that every dollar you can account for as an expense is a dollar off your taxable income. Keeping records will help simplify your Uber Eats taxes.
In addition to miles, you also incur expenses like parking and tolls. According to IRS Publication 463, you are allowed to deduct business-related parking fees and tolls.
Do you have an auto loan on the car you use for deliveries? If yes, you can claim the business portion of your auto loan interest as an expense. Be mindful that this holds good only for the interest and not the principle.
Few Uber Eats drivers are aware that property tax on your car is an expense. This means that the business portion of your property taxes on your car can be claimed as a business expense.
Other costs that constitute your actual expenses are auto insurance, maintenance, new tires, vehicle depreciation etc.
Along with using your car, you also use your smartphone as an Uber Eats driver. This means that at least part of your phone or data plan is a business expense and does not count towards your Uber Eats taxes.
Adulting is a survival skill when you live in today’s world. Nothing is certain. None of us saw the pandemic coming. Part of being an adult is to be prepared. Luckily, some things in life are a guarantee. Growing older, losing touch with friends, and moving on to the next thing are all guaranteed to happen. So are taxes!
We recommend having a plan for when tax season arrives. It may not be the easiest of times, but you’ll get through it. In the meantime, learn more about loans for gig workers. If you ever find yourself in a financial fix, or strapped for cash, let us help you!