How to Make the Most Money with Delivery Services and Rideshare Apps
Logging Rideshare and Delivery Income
You can see your earnings in the apps for ridesharing or delivery services. But, make sure to log your business income accurately. If you earn a lot, you might get tax forms like the 1099-NEC or 1099-K. You’ll need to report these on your taxes.
Tracking Business Expenses for Tax Deductions
You also need to track your business expenses. This includes things like car upkeep, gas, insurance, phone bills, and more. Many drivers use apps or software to track these expenses. These can then be deducted from your income.
It’s vital to keep good records of your income and expenses. This way, you can get the most out of your tax deductions. It also helps you avoid fines and pay the right taxes all year.
Paying Quarterly Estimated Taxes as an Independent Contractor
If you drive for rideshare or delivery services, you’re seen as an independent contractor. This means you must pay your taxes during the year. Unlike being an employee, where taxes are taken out of your pay.
The self-employment tax rate for 2023 is 15.3 percent. Uber and Lyft drivers must file taxes if they earn over $400. You might get a Form 1099-K if you give over 200 rides in a year, or a Form 1099-NEC for other income if you earn at least $600.
To avoid a big tax bill and penalties, you must pay estimated taxes quarterly. If you think you’ll owe more than $1,000, you’re considered self-employed. You need to pay estimated taxes. These are due on April 15, June 15, September 15, and January 15 of the next year.
You can pay online or by mail using the Electronic Federal Tax Payment System. It’s a good idea to talk to a tax expert or go to a free tax workshop. They can help you understand what you need to pay and when.
Handling your quarterly estimated taxes, independent contractor taxes, and self-employment tax requirements right can prevent surprises and keep you in line with the IRS.
Filing Annual Tax Returns and Claiming Deductions
If you work as a self-employed rideshare or delivery driver, filing your taxes is key to getting a big refund. Uber, Lyft, and DoorDash will give you tax forms like 1099-K, 1099-NEC, and 1099-MISC. These show how much you made from driving or delivering.
