Lyft and Uber Driver Salary and Tax Rates
Originally posted on ridesharedashboard.com
This post summarizes potential income from Lyft salary and Uber salary based on my experience in Boston. It also has a quick formula for tax calculations.
Salary for Lyft Drivers
According to other Lyft drivers, their Lyft salary range between 15–35 an hour.
Normal weekday and weekday nights average Lyft salary of $15–20 an hour without Lyft Prime Time.
Lyft drivers are averaging a Lyft salary of $25–30 during Friday and Saturday nights when Prime Time is on.
Lyft Prime Time must be on during most of the time to exceed a Lyft salary of $25/hr. My Lyft salary was as high as $50 an hour for a few hours on Lyft but a Lyft salary above $40 an hour is not uncommon when Prime Time is on during a busy night on Lyft.
Salary for UberX Drivers
- Uber salary is based on fares from Uberx trips, minus 20% fee from Uber and $10 weekly Uber phone fee.
- Normal hourly Uber salary are about $15–25 dollars an hour without the Uber surge pricing. Airport runs can boost my hourly Uber salary to $30/hr as UberX drivers get an extra $8.50 to drop off or pickup at the airport to cover tolls.
- In the mornings with 1.5–2x Uber surge pricing, my Uber salary was $30–40 an hour on UberX.
- Uber surge pricing of 2–3x during Friday or Saturday nights (1–2am in Boston as bar last call is 1am), my Uber salary was $50–60 an hour.
If you are an opportunist, you can make a few hundred a week on Uber by working very key hours on UberX.
Note that surge pricing comes in when there is more demand than available drivers and also sufficient demand for the service in general. If there are very few cars and few passengers, there is no surge pricing, even though the ratio between demand and supply could be high. Lately, there have been more cars than supply, which has been reducing surge pricing.
Taxes for Lyft Drivers
You will need to file for taxes (1040SE) regardless of your Lyft salary. This will go under self employment income, subject to self employment taxes (social security and medicare)
Lyft says there are two different situations they will be sending you a 1099:
- Received more than $600 directly from Lyft (1099-MISC)
- Lyft salary exceeding $20,000 and more than 200 Lyfts in one year (1099-K)
You will get a 1099-MISC if you earn $600 or more from the Lyft New City Bonus, which is the hourly minimum Lyft salary provided to Lyft drivers in new cities. [Lyft no longer has minimum Lyft salary anymore.] You will see this broken out on your daily and weekly statements.
A 1099 would make your life easier as you just use this form to fill out your taxes. If you do not receive one, you will need to calculate your Lyft salary. Use your Lyft salary to fill out an 1040SE.
Taxes for Uber Drivers
You will need to file for taxes (1040SE) regardless of your Uber salary. This will go under self employment income, subject to self employment taxes (social security and medicare)
You will get a 1099-K if you received over $20k in Uber fares (your Uber salary) and given over 200 rides.
A 1099 would make your life easier as you just use this form to fill out your taxes. If you do not receive one, you will need to calculate your Uber salary. Use your Uber salary to fill out 1040SE.
Generally, it is easiest to deduct these items:
- Mileage on your car (read below on instructions). (This is in place of actual car expeditures, such as car maintenance, repairs, and gas. This means you cannot deduct miles and car related expenses.)
- Mobile Phone fees (note: it is recommended you get another mobile phone with data just for Lyft, Uber and Sidecar so you can deduct the entire phone bill, or you will need to itemize how much for personal use or business purposes)
- Cost of things you give to your passengers (for example: water, gum, coffee, cookies (or supplies to make them))
Just as a disclaimer, I am not a tax professional and any numbers and calculations below are just for reference only and cannot be directly applied to all situations.
So the first step is to look at your marginal tax rate. Here are the rules for singles for year 2013. Look at this website for other filing situations (http://taxes.about.com/od/Federal-Income-Taxes/qt/Tax-Rates-For-The-2013-Tax-Year.htm):
- 10% on taxable income from $0 to $8,925, plus
- 15% on taxable income over $8,925 to $36,250, plus
- 25% on taxable income over $36,250 to $87,850, plus
- 28% on taxable income over $87,850 to $183,250, plus
- 33% on taxable income over $183,250 to $398,350
So for example, I am in the 25% range including the fares I receive from Lyft salary and Uber salary as taxable income. Here is the calculation:
First you need to take care of the self employment tax, which is at 15.2%. However, half of that is tax deductible, which means you can deduct this amount from your gross Lyft salary and Uber salary to get your taxable income. You can also claim a deduction on the mileage of your car. I choose to take the mileage calculation as its much easier to track, compared to taking the normal expense deduction on the car, which can be hard to calculate.
Half of the self employment tax applies to your gross income (Lyft salary and Uber salary). Below is the formula I used to calculate my tax rate:
- G1 is my total Lyft salary and Uber salary for the year.
- M1 is my mileage for the year
- T1 is my marginal tax rate (taking into account all your total income for the year, including Uber/Lyft/Sidecar)
- 0.56 is the federal mileage rate
- 0.0765 is 1/2 of the self employment tax for 2013
I drove about 840 miles on both Lyft and Uber and made about $1k in a month. Based on my calculations in the equation above, I would be able to deduct $470 from my income based on the tax deductions. That leaves $530 for taxes. Using the formula above, my average tax rate for my Lyft salary and Uber salary is hovering around 25%. With more Uber surge pricing or Lyft Prime Time Tips, that number goes up as my Lyft salary and Uber salary to mileage ratio is much higher. This tax rate was based on 25% marginal tax rate. You could estimate your own tax rate by adjusting your tax rate accordingly based on your marginal tax rate.
In order to have $1000 deposited into my account, my Lyft and Uber fares would have to total $1250 because of Uber and Lyft’s 20% fee. After taxes, my take home income is $750.
Your take home Lyft salary and Uber salary after taxes and Uber/Lyft 20% fee from your hourly wage is about 60% of any fares you take in on any given day. This can go up or down depending on the Uber surge pricing or Lyft Prime Time Tips and your own tax rate.
General Tax Tips
A note about self employment income:
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
So make sure to keep track of your Uber salary and Lyft salary. You will need to report your Lyft salary and Uber salary if you don’t get a 1099.
Make sure to have good notes before attempting to claim a deduction on the mileage for your Uber salary or Lyft salary. If you are looking to earn a sizable Uber salary and Lyft salary (>$20k), I would highly recommend you claim a deduction. This year, I have been taking more careful notes whenever I drive on Lyft and Uber so I can claim mileage as the tax deduction. Take note that self employment deductions are the most audited part of any tax return so make sure you have the records to back up your deductions.
Disclaimer: I am not a certified tax consultant so any information above is purely for reference only. Please speak to a certified tax professional about your specific tax situation.
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