Those who work as rideshare drivers — from Uber to Lyft to local rideshare companies — know that while their anti-9-5 lifestyle is undeniably freeing, the tax burden that comes with that freedom makes for a pretty frustrating ordeal. But, the truth is, taxes don’t have to be such a headache for rideshare drivers. In fact, by taking the right deductions, you can actually save thousands of dollars each year.
Whether you’re driving full-time or part-time, if you’re new to the world of deductions and aren’t sure where to start, don’t worry. The following are a few deductions we recommend every rideshare driver take to save thousands on their taxes each year:
The Mileage Deduction
The mileage deduction is one of the most valuable deductions that rideshare drivers can take. By simply tracking your business mileage, you can save more than $10 per 20 business miles tracked. One helpful tool for tracking business mileage (and saving money) is Hurdlr’s built-in mileage tracker. The app helps rideshare drivers track their mileage, so they can maximize their deductions when tax time rolls around.
Wondering how the mileage deduction can work for you? Consider the case of Uber driver, Richard Jones. By tracking his mileage with Hurdlr, Richard has maximized his deductions, saving him over $4,000 on his taxes. Those are some pretty serious savings!
The Expense Deduction
While you may not be inclined to save your paper receipts for business supplies, car washes, or new tires (or whatever business expense you have for your rideshare business), the expense deduction offers a major incentive to finally get those receipts in order. Deductible expenses are another excellent way that rideshare drivers can save thousands on their taxes. Tracking business expenses allows workers to claim these valuable deductions and ultimately save money on their taxes.
Using Hurdlr, workers can simply link their credit card to the app and it will automatically capture all of their expenses, so they never miss a deduction. For example, Amy Miller is a Lyft driver and uses Hurdlr to track her business expenses. By using the app, Amy can keep all of her expenses and receipts for her passenger snack and maintenance in one place, so she can easily export a report for her accountant. While receipt-tracking isn’t the most fun thing in the world, the expense deduction makes your efforts worthwhile.
The Self-Employment Tax
When you’re self-employed, it’s critical to know how much to set aside for taxes. In order to avoid penalties, drivers and other gig economy workers should make accurate quarterly tax payments each quarter. Of course, remembering to pay quarterly is easier said than done! But with Hurdlr’s tax estimates, which can help you know when and how much to pay for your quarterly taxes, you’ll never forget to pay your quarterly taxes again.