Moonlighting in the Gig Economy and Taxes

Are you one of the thousands of people who are working gig-type jobs for Uber, Lyft, DoorDash, Grubhub, or companies like them? Whether you’re full time or just moonlighting a few hours a week, the paperwork for this part of your taxes will be a little different. Here’s what to expect. 

What Documents Will You Receive?

Both Uber and Lyft provide two different tax forms:

  • 1099-K, which reports the grand total of fares for rides that you provided
  • 1099-MISC, which lists the amount you’ve earned from incentives and referrals.  If you’ve earned less than $600 in incentives and referrals, a 1099-MISC will not be issued.  Check your tax summary to see whether you have income to report in addition to the income listed on the 1099-K

To calculate the gross income amount, add the amount listed in box 1a on the 1099-K form and the amount listed in box 7 of the 1099-MISC form.

What Expenses Should You Keep Track Of?

You can deduct certain items you spend on your job as long as you keep good records and receipts. Here are a few items you might have been charged for:

  • Commissions and fees taken by the ridesharing service
  • Tolls and parking fees
  • Convenience items for passengers, such as water or gum
  • Bookkeeping fees and bank charges
  • Vehicle costs (lease payments, gas, maintenance and repairs, car registration, insurance)
  • Mileage (listed in your driver summary as “on trip mileage”)
  • Cell phone expenses (business use percentage)

How Your Income Is Calculated

We will use the information you provide to calculate your net profit—that’s why it’s crucial that you keep detailed records and accurately capture your expenses.  We’ll enter your gross income and subtract expenses, leaving you with net profit.  You pay two types of taxes on your net profit:

  1. Your regular tax rate (based on your income level) and
  2. Self-employment taxes.  Since you are self-employed, you are responsible for paying the employer’s share of taxes, which is currently 15.3 percent of your income.  This is over and above the amount of tax you pay based on your tax bracket.

Be prepared this tax season by keeping your expense receipts and records and being ready for your tax bill.