The tax season is just around the corner, and with that, you can think of ways you can save your taxes. As an Uber driver, you are generally considered a contract employee or an independent worker. While some states are trying to change that, Uber retains its autonomous drivers. As a self-employed taxpayer, you can claim tax deductions that can reduce your tax bill. These common tax deductions can significantly reduce your tax liability. So now we will talk about Uber driver tax deductions UK.
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What is Uber’s tax deduction?
A tax deduction is a cost that you can subtract from your gross income at the time of taxes. Deductions help you offset business costs by reducing your taxable income. To qualify as a deductible cost, the cost must be considered normal and necessary for your business operations. For example, Uber drivers can claim the deduction of miles to offset the cost of wearing their vehicles.
Taxpayers have two options. They can take the standard deduction or break down their costs. To take advantage of tax deductions, you must inform. The decision to break down or take the standard deduction will depend on the amount from which your total deductions are made. To make sense of the confusion, the deductions must be greater than the standard deduction, equivalent to $ 12,200 for individual taxpayers, $ 18,350 for the head of household and $ 24,000 for joint taxpayers. It is advisable to discuss what makes your tax advisor meaningful.
Uber’s best tax deductions
Uber’s income is subject to taxes, including income tax. Even if you are only driving to Uber on the one hand, the income is still considered taxable. Everyone wants to earn more money, so it is better to minimize your tax bill. Acute drivers need to understand some important things about taxes. First, revenue from shared trips is taxable and must be declared. If you do not get 1099-K, you must report your income. You can also be responsible for taxes on your own. New Uber drivers may be surprised without poor tax preparation.
Uber drivers can take the deduction of miles to compensate for the wear and tear of their vehicles. Drivers can also deduct the costs directly associated with the operation of their vehicle. This includes things like gasoline, insurance, DMV rates and other expenses. Alternatively, the standard mileage deduction provides a flat compensation rate based on each mile traveled.
What is the standard military rate?
The IRS takes into account the average operating costs of your vehicle, as well as depreciation when it reaches the standard mileage rate. In 2019, the standard mileage rate increased to 58 cents per mile. If you take the standard mileage rate, you cannot deduct the actual costs associated with your car. You can take one or the other, instead of both. In some cases, actual costs may exceed the standard mileage deduction. It is important to weigh your options before choosing.
Should I follow my miles?
In any case, you should always track mileage. Uber will only record your mileage when you have a passenger in the car, but you can start counting a mile as soon as you leave your home. The mileage count continues to enter the house, so drivers must follow their own mileage separately. Mileage applications can help drivers drive miles and qualify. Options include applications such as MileIQ, TripLog and Stride. Most of these applications integrate easily with most accounting software.
What are the potential costs of drivers?
Can you choose any cost you incur while driving for Uber and Lyft? Unfortunately not. There are specific rules about the costs you can cancel. First, for the purposes of this section, we are discussing business costs. There are other deductions available, but they are not relevant here. We are interested in the operating costs of your Uber or Lyft business.
What types of costs qualify? In general, you can deduct the necessary costs for the normal course of business, as long as it is not reimbursed by another person. Since Uber and Lyft do not reimburse drivers for costs, you do not have to worry about the reimbursement item. You are more likely to get into trouble when you try to eliminate unnecessary costs from your shared travel business. To better understand the costs you can and cannot deduct, we look at some common tax deductions from Uber:
1. Vehicle costs actually
2. Standard military deduction
3. Cellular expenses
4. Service charges
5. Supplementary items for passengers
6. Eating while working/subsistence
7. Accounting fees and tax preparation fees
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