[ad_1]
When driving a carpool company such as Uber, Lyft, Juno or any other carpool service, the most important to understand about your taxes is that you're probably not an employee of Uber, Lyft or Juno. The drivers of these companies are generally independent contractors, which has tax implications, both at the time of filing returns and throughout the year.
You are the boss AND the employee
Being an independent contractor means that you are independent. With respect to the carpool company, you own a separate business that it uses to provide driving services. So when you receive a payment, understand that this is not a traditional "paycheck", and probably no taxes have been withdrawn.
This is at you take over federal and state income taxes, as well as social security and health insurance. Combined, these taxes can easily reach 30 to 50% of your income, so be sure to set aside money to pay for them.
If you agree to more carpool rates from time to time, you may need to file a quarterly income tax return. In the tax return season, each spring, you will report your income and self-employment expenses to Schedule C, in addition to completing Schedule SE for tax on income tax. Self employment if your net income from work is $ 400 or more.
You can also use TurboTax Live when tax experts are available on demand via one-way video throughout the TurboTax experience. They provide not only personalized advice and answers, but also an individual examination of your tax return – including the ability to sign and file if necessary – so that your taxes are properly calculated.
Tax deductions for your car
Since you are an independent business owner, any money you spend as a carpooling driver is a tax deductible business expense. The first thing that probably comes to your mind is your car. There are two ways to deduct the use of your car for business purposes:
- Deduct the actual operating expenses of the vehicle for business, including gasoline, oil, repair, insurance, maintenance and other payments. depreciation or rental.
- Take the standard IRS mileage deduction. Starting in 2018, the rate is 54.5 cents per mile for business use.
If you use your car in both carpooling and private transport, you can deduct only the part of your expenses corresponding to your professional use. And whatever type of deduction you claim, it is essential to keep complete records. The IRS can refuse any tax deduction that you can not bear with:
- receipts
- Mileage Logs
- Any other documentation
Other tax deductions for carpooling drivers
The commissions you pay to the carpool company are a business expense, as are any costs you may have to pay for the technology installed in your car. Other tax deductions include:
- Water, gum or snacks for passengers
- Tolls and parking fees
In addition, carpooling companies generally require the use of a smartphone.
- The portion of your mobile phone expenses attributable to your carpool job can be used to reduce your self-employment income.
- For the sake of simplicity, it may be wise to have a dedicated phone at work.
Give meaning to your 1099 forms
As an entrepreneur, you will not receive a W-2 form from your operator, but you will likely receive one or more 1099 forms. Carpool companies generally share these forms according to the same criteria:
- Payments for processing your customers' payments are reported on Form 1099-K. The amount shown in Box 1a of this form represents all the money that the carpool operator has collected from customers for the trips you have provided.
- This will probably be more than what you actually received in payment, as this includes commissions and other expenses of the carpool company. Your carpool operator will provide you with a tax summary that you can use to convert the 1099-K information into a portion of the revenues and expenses to be reported in Appendix C.
- Payments for other activities, such as sponsorships or non-driving bonuses, are reported on Form 1099-MISC. This money is an income to report in Schedule C.
If the trip sharing operator has processed for you more than 200 transactions and $ 20,000 in payments, you should get a 1099-K; Likewise, if your un-driven income was less than $ 600, you might not get a 1099-MISC. Even if you do not receive 1099, however, you are responsible for reporting and paying taxes on any income you receive.
Do not forget that with TurboTax Live, tax experts are available on demand via a one-way video throughout the TurboTax experience. They can provide personalized advice and individual review of your tax return, including the ability to sign and file if necessary – so your taxes are done right.
Presented by TurboTax.com
[ad_2]
Source link