If you are expected to owe more than $1,000 in 1099 taxes, we've compiled three simple steps below to filling your estimated taxes (which are due four times a year). To file your rideshare estimate taxes in 3 simple steps, please note the following:
1. Export your tax information from your dashboard – This is as simple as logging into your account and accessing all the information related to your account. You will be able to view your trip information including dates & times of trips, duration, mileage and fare amounts and trip maps. You can export this information to a csv file, which is helpful when compiling all of your information to calculate your total income and corresponding mileage.
2. Calculate your income & expenses – You will pay tax on your gross earnings, less your expenses. You will be issued a 1099 at the end of the year showing the gross amount paid to you for your services. Your job is to track all of your expenses. You probably spent a significant amount of money actually running your ride sharing business (on things like car washes, snacks and bottled water), you will want to claim these expenses as deductions on your tax return. You also want to track your mileage. The IRS allows a generous standard mileage deduction, so it is essential that you keep a log of your miles that you have traveled for business.
You may be surprised to learn that, unlike a W-2 form received from your employer, no taxes are withheld from the income you earn on your own business. Because you are self-employed, your income is subject to a 15.3% self-employment tax. This tax covers your required contributions to Social Security and Medicare, and you also have to account for ordinary Federal taxes on the net income you earn. This means, depending on your total tax situation, you’ll be taxed at a rate of 15%-40%, depending on your gross profits. Remember, good record-keeping is key!
3. File the tax form – Once you have calculated your net profit from your business, estimated taxes need to be paid to the IRS on a quarterly basis. These payments are due: April 15, June 15, September 15 and January 15 for the current year. These payments satisfy your liability requirements with the IRS and keep you from paying additional penalties on taxes you already owe. Pay your quarterly liability with Form 1040-es, which looks like this:
Go to: http://www.irs.gov/uac/Where-to-File-Addresses-for-Taxpayers-and-Tax-Professionals-Filing-Form-1040-ES for the proper address to mail your payment to. Keep in mind that depending on where you live, state taxes may also be due as well.
If you need help, please feel free to book us for any and all tax questions you may have.