Hi.

Welcome to my blog. I document my adventures in travel, style, and food. Hope you have a nice stay!

Ultimate Rideshare Tax Deduction Guide

Ultimate Rideshare Tax Deduction Guide

These days, it feels like every Uber and Lyft driver is also expected to be a tax accountant, in order to juggle all your tax deductions. Our mission at Stride is to simplify the regulatory pains (like taxes and health insurance) that come with being an independent contractor. Below is a list of the most common rideshare expenses, and when they should be considered tax deductible. We hope it'll help you spend less of your time studying accounting and more time earning money on the road.

If you find this content helpful, you may like to try our FREE app, Stride Drive, which makes it easy to record tax deductible milage and expenses year-round.


Mileage

✅   DEDUCTIBLE

The following mileage is tax deductible at 54 cents per mile in 2016: (Learn more here)

  • driving in search of a passenger
  • driving with a passenger in the car
  • returning home from having dropped off the last passenger

There are a few deductions you cannot take if you choose to deduct your mileage. See those here. (Schedule C/Part IV)

Car Cleaning

✅   DEDUCTIBLE

Keeping your car clean is important to keep your ratings up. Most car washes are covered by the standard mileage rate for maintenance. However, those deep clean car washes that are a result of a passenger leaving you a special gift are an additional deduction, in addition to cleaning supplies to use as you go. (Schedule C/PartV)

Passenger Goodies

✅   DEDUCTIBLE

Goodies you keep in your car, like bottled waters or mints, are deductible as long as they are offered exclusively for your passengers! Working in the service industry means needing to keep your customers happy, and small snacks are considered both ordinary and necessary. (Schedule C/PartII/Line 22)


Cell Phone Accessories

✅   DEDUCTIBLE

Your cell phone holder, charger, aux cord, and any other accessories that are ordinary and neccessary to run your rideshare business are all tax deductible. (Schedule C/PartV)

cell phone.png

Cell Phone Purchase

✅   DEDUCTIBLE

You need a nice phone to run all of those rideshare apps! It qualifies as a business asset, which you can either deduct or depreciate over several years. The deduction for a cell phone is based on use. If you bought a new phone to use for work this year, it's 100% tax deductible. (Schedule C/PartII/Line 13)

Cell Phone Service

✅   DEDUCTIBLE

You need a lot of cell phone data to run all of those rideshare apps. Your monthly cell phone bill is deductible in the percentage that you're using those minutes and data for work. (Schedule C/PartV)


Dashcam

✅   DEDUCTIBLE

As a rideshare driver, you might find yourself in some sticky situations. Dash cams used exclusively as a security precaution are deductible or depreciable as business assets. (Schedule C/PartII/Line 13)

Haircut

❌   NOT DEDUCTIBLE

A haircut is considered a personal hygiene expense and is explicitly deemed a non-deductible expense for rideshare drivers.

Inspections & Background Checks

✅   DEDUCTIBLE

Payments made for background checks, vehicle inspection required by Uber, Lyft, Instacart, etc. can be deducted 100%. (Schedule C/PartV)

 

Parking Fees

✅   DEDUCTIBLE

Sometimes you have to pay for parking in the city while working, like running to the bathroom or picking up some food. That’s tax deductible! (Schedule C/PartV)

Tolls

✅   DEDUCTIBLE

Sometimes, driving for work or on your way to your first passenger means needing to pay a road toll. If that toll fee isn’t already reimbursed, it’s deductible! (Schedule C/PartV)

Music and Paid Apps

✅   DEDUCTIBLE

If you exclusively use music apps and other paid apps for your ride share business then those subscription costs are deductible. The deduction should be limited to the percentage used for business. (Schedule C/PartV)


Roadside Assistance

✅   DEDUCTIBLE

You might find yourself in need of roadside assistance. Monthly and annual fees for AAA or other roadside assistance programs are tax deductible! Roadside assistance is deductible based on the percentage for business use. (Schedule C/PartV)

Clothing

❌   NOT DEDUCTIBLE

Because driving rideshare does not require a work uniform, clothing is considered a personal hygene expense and is explicitly deemed a non-deductible expense for rideshare drivers.

Car Mat

✅   DEDUCTIBLE

Driving rideshare, your car gets really dirty with so many people getting in and out. You need to keep your car clean to keep ratings high. As a result you can deduct the cost for mats based on the percentage for business use. (Schedule C/PartV)

 
 

Do you do other jobs besides Uber or Lyft?

Unlock more expenses if you do other kinds of independent work with Stride's free tool.

 
 

Car Seat Cushion

✅   DEDUCTIBLE

Sitting for long periods of time is a consequence of your business. It is ordinary and necessary to have a car seat cushion to help your back and it's deductible.(Schedule C/PartV)

Food and Drink

✅   DEDUCTIBLE

If you need of a snack break because you are working more than a normal workday, you can deduct 50% of that meal. A meal with a potential referral, client, or business associate to discuss work is deductible at 50% (Schedule C/PartII/Line 24b).

Dry Cleaning

❌   NOT DEDUCTIBLE

Dry cleaning is considered a personal hygiene expense and is explicitly deemed a non-deductible expense for rideshare drivers.


Car Loan Interest

✅   DEDUCTIBLE

You can deduct interest relating to the purchase of the automobile and state and local personal property taxes as separate items. The total amount allowed is based on the percentage of business to total miles placed on the vehicle in a year. To find this amount, take a look at your monthly bill to find the itemized interest portion. (Schedule C/PartII/Line 16b)

Health Insurance

✅   DEDUCTIBLE

Health insurance is a valuable business deduction limited to business income after deducting business expenses. If you are eligible for health insurance from an employer or spouse, this deduction cannot be taken. (Form 1040/Line 29)


Actual Car Expense Method Deductions

Below are expenses that are deductible only if you choose not to take the standard deductible mileage rate of 54 cents per mile. (The standard mileage rate already includes all the costs to operate your vehicle: gas, depreciation, oil changes, maintenance, repairs, etc., thus why you can't claim them + mileage). 

At Stride, we've seen that the vast majority of rideshare drivers get more deductions by choosing the mileage method rather than the actual car expense method. Learn more about the complexities and tradeoffs here. 


Oil Change

DEDUCTIBLE AS ACTUAL CAR EXPENSE

An oil change is a deductible expense only if you choose not to take the standard mileage rate.

Gas

DEDUCTIBLE AS ACTUAL CAR EXPENSE

Gas is a deductible expense only if you choose not to take the standard mileage rate.

Car Insurance

DEDUCTIBLE AS ACTUAL CAR EXPENSE

Car insurance payments are deductible only if you choose not to take the standard mileage rate.


Car Repairs

DEDUCTIBLE AS ACTUAL CAR EXPENSE

Car repairs are a deductible expense only if you choose not to take the standard mileage rate.

Car Lease Payments

DEDUCTIBLE AS ACTUAL CAR EXPENSE

Car lease payments are only deductible only if you choose not to take the standard mileage rate.

Car Depreciation

DEDUCTIBLE AS ACTUAL CAR EXPENSE

Car depreciation is a deductible expense only if you choose not to take the standard mileage rate. Total allowed may be reduced if business use falls under 50%.


If you find this content helpful, you may also like our FREE app, Stride Drive, which makes it easy to record tax deductible mileage and expenses year round.

 

Disclaimer: The information contained in this Guide is not offered as legal or tax advice.  The U.S. federal income tax discussion included in this Guide is for general information purposes only and is not a complete analysis or discussion of all potential tax consequences that may be relevant to a particular individual. In light of the foregoing, each individual should consult with and seek advice from such individual’s own tax advisor with respect to the tax consequences discussed herein.  Any information contained in this Guide is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the U.S. Internal Revenue Code of 1986, as amended. 

Stride Stories: Life on the edge with Emily

Stride Stories: Life on the edge with Emily

I Don't Care that UnitedHealth is Ditching Obamacare 

I Don't Care that UnitedHealth is Ditching Obamacare