Why Pay and Prepare Your Taxes

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What Is Tax Planning for Uber Drivers?

So I asked Google what is tax planning? I got this from financebuzz.com

Tax planning is the analysis and organization of a person’s financial situation with the goal of ensuring the most “tax-efficient” outcome. In other words, the goal of tax planning is to make sure you are legally paying as little in taxes as possible.

For UberPeople, tax planning require keeping good record of your expenses. Try to separate your personal expense from your business expense. This is hardest this for most gig workers to do. Why? Because UberPeople use their personal bank accounts as their business account. That’s ok. But you will eventually have to separate your business expenses from your personal expenses.

In the tax preparation world, tax planning for UberPeople means good record keeping. So then, how do you do this? We recommend you do the following

  1. Use a debit card or credit card to make purchases and record your transactions.
  2. Get an accounting software (Quickbooks Self-EmployedPatriot Software, Waveapps or some free expense ledger
  3. Diligently categorize your monthly expenses. Which ones are business or personal. I mean monthly do this.
  4. Print out a Profit and Loss Statement Monthly and review the statement for accuracy.

By doing these four items above, you will cut half the fee to prepare your taxes by about $300. You have don’t the leg work. Without doing this, you end up paying a higher tax prep fees. It’s all about keeping good records.

Hope this helps……

Tax Tips for Gig Workers – Uber | Lyft | DoorDash |InstraCart | Airbnb

Prior to covid-19, the gig economy seems to be on steriods. The emergence of Amazon, Uber and Lyft, Airbnb, InstraCart, Grubhub, DoorDash were all new entries into the way we now live. More and more people tend to use gig work to supplement their income.

If you take up gig work on a part-time or full-time basis, often through a digital platform like an app or website. Gig work, such driving a car for booked rides, selling goods online, renting out property, or providing other on-demand work, is taxable and must be reported as income on the worker’s tax return.

Here are some things gig workers should know to stay on top of their tax responsibilities:

Gig work is taxable:

  • Earnings from gig economy work is taxable, regardless of whether an individual receives information returns. The reporting requirement for issuance of Form 1099-K changed for payments received in 2022 to totals exceeding $600, regardless of the total number of transactions. This means some gig workers will now receive an information return. This is true even if the work is full-time or part-time.
  • Gig workers may be required to make quarterly estimated tax payments.
  • If they are self-employed, gig workers must pay all their Social Security and Medicare taxes on their income from the gig activity

Proper worker classification:

While providing gig economy services, it is important that the taxpayer is correctly classified.

  • This means the business, or the platform, must determine whether the individual providing the services is an employee or independent contractor.
  • Taxpayers can use the worker classification page on IRS.gov to see how they should be classified.
  • Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.

Paying the right amount of taxes throughout the year:

  • An employer typically withholds income taxes from their employees’ pay to help cover income taxes their employees owe.
  • Gig economy workers who aren’t considered employees have two ways to cover their income taxes:
    • Submit a new Form W-4 to their employer to have more income taxes withheld from their paycheck if they have another job as an employee.
    • Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.

The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.


More information:
Publication 5369, Gig Economy and your taxes: things to know
Publication 1779, Independent Contractor or Employee
Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?

Share this tip on social media — #IRSTaxTip: Here are some things gig economy workers should know about their tax responsibilities. http://go.usa.gov/xJ7KX

Friendly Tax Services

LA PREMIER Tax dba Friendly Tax Services is the premier income tax preparation firm for individuals, families, small business owners and the self-employed; Uber, Lyft, Taxi, and Limousine drivers; Actors, Independent Contractors and Entrepreneurs. We have empathy and understand the toll driving takes on Uber, Lyft, Taxi, and Truck drivers. That driving is time consuming. Uber drivers just don’t have the time it takes time to keep track of those business-related expenses.


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