Lyft Driver: Tax Questions
10/15/13 – Dan Johnson “The Sweet Lyfter”
Q: I’m a Lyft driver and I know nothing about taxes. What should I do first?
A: You will want to keep track of ALL your mileage (i.e. driving in the zone without a passenger, driving back to the hot spots, etc.), treats/water/anything special you do for your passengers. (My understanding is that Lyft will report all miles driven at the end of the year while in a lyft or driving to a lyft. At the beginning and end of EVERY shift be sure to track your mileage.)
Q: Do I need to save my gas receipts and car wash receipts too?
A: You can either keep track of your business miles driven or you can keep track of actual expenses. Actual expenses would include maintenance records (i.e. Oil changes, tires, new brakes, etc.), gas receipts, car washes, figuring out a depreciation for your vehicle (all vehicles differ depending on year/make/model), insurance, etc.
Q: How do I know which is better for me, saving all my receipts or using mileage?
A: This is a tricky question to answer. It varies from situation to situation. Ask yourself, which is easier for you, tracking every expense, documenting it and having the proof to back up the expense if an audit were to occur, OR tracking miles driven. Most people find it very time consuming with very little benefit to tracking actual expenses. Most people are using their car for personal as well; therefore all your gas, car washes, depreciation, insurance, etc. would need to be multiplied by a certain business percentage.
Q: What’s the easiest way to track your mileage and expenses?
A: There are many types of mileage/expense logs. You can find one at Staples or Office Max. (I work for an office products company and I can get ones cheaper than you can find in the store. The one I bought is a combo mileage/expense log for $5. If you would like one I can get it for you at this cost also.)
Q: Can I write-off the new clothes and shoes I bought for Lyft?
A: No. According to Publication 529 this is the description of work clothes/uniforms, “Work clothes and uniforms if required and not suitable for everyday use.”
Q: Can I count driving to the zone as business mileage?
A: Yes. You are considered a subcontractor for Lyft. Therefore you are self-employed and work out of your home. Anytime you are leaving for a shift you are doing so because of Lyft. (Example Q: I live in Surprise and I have to drive 20 miles to get to the zone, can I count that 40 miles round trip as business miles? A: Why did you have to drive to the coverage zone? The only purpose for coming was to drive for Lyft. Yes you can claim this as business miles.[This is only the case for self-employed workers.])
Q: What’s the difference between driving to the coverage zone and driving to my day job?
A: When there is a physical location where you go to an office, the first trip and the last trip of the day is considered your normal commute.
Q: What is the standard mileage rate for 2013?
A: The current IRS rate for mileage is $.56.
Q: How should I detail my items for my accountant?
A: The easiest way is to give one total for each category; there is no need to break it down by month. When listing miles for business you will also need your personal miles you’ve driven too. Mileage logs will get track of all this for you because you are using odometer readings instead of just miles driven.
Q: I read somewhere I might need to pay quarterly estimates. Is this true?
A: It very well could be, it all depends on your specific situation. The rule is you need to pay in 100% of last year’s tax or 90% of the current year’s tax. (I recommend that if you have another job that you increase the withholding on your W-4 by 1. If you normally claim Single 0 then an option would be to have and extra $10-$20 withheld. You probably won’t miss that money and it will be less of a check that you have to send to the IRS come April 15th.)
Q: What if I didn’t change jobs and I will have the same amount withheld so I meet the criteria for 100% of last year’s tax withheld. How much should I save away out of every paycheck?
A: The best route to go is to safe 30% of each paycheck away for taxes. (15% for Federal withholding and 15% for Social Security and Medicare.)
Q: I’m a student and I have no other job. What is the threshold for filing taxes or not having to file?
A: Lyft drivers are self-employed and therefore the threshold is MUCH lower for filing taxes because you will have a self-employment tax to pay. If you made less than $450-$500(NET) with Lyft you don’t need to file.
*Note: Everyone’s tax situation is different and unique. The views and opinions expressed are how I prepare and will prepare taxes using an aggressive yet conservative approach. All tax preparers have their own interpretation of the tax law. Feel free to consult your/another accountant for your specific tax needs. I will be happy to prepare your taxes come filing time, should you choose to use me.
Dan Johnson is known as “The Sweet Lyfter” offering desert desserts to brighten up his rider’s days.
keepingitsimplysweet@yahoo.com
Lyft Driver Tax FAQ's 
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