In part one of our two-part blog series, we discussed several important deductions that Lyft, Uber and other ride-sharing drivers can use when undergoing tax preparation for independent contractors. Many people who draw income from these sources aren’t even aware they’re independent contractors in the first place, but there might be several benefits available to them.
At Equinox Business Solutions, we’re here to help. In part two of our series, we’ll go over some basics on how to understand your 1099 tax forms from your ride-share operator.
As an independent contractor in this position, you will not get a typical W-2 form that you often do for many standard jobs. Instead, you’ll likely receive at least one 1099 form, which are distributed by companies like Lyft and Uber using basic criteria:
- 1099-K: This is a form for any processing of customer payments. The amount shown in Box 1a of this form represents the full total of all money the ride-share operator received from customers during the rides you were the driver for. Know that this amount will be more than the number you actually received in payment – it also includes commissions and other expenses that the ride-share company takes. The company will provide you with a basic summary, which allows you to translate this information into income and expenses for reporting on Schedule C.
- 1099-MISC: This is a form for payments for all other activities. These include referrals, non-driving-related bonuses, and others. This is money to report on Schedule C.
When You’ll Get Different Types of 1099
If the ride-share operator processed over 200 transactions and over $20,000 in total payments for your rides, you’ll get a 1099-K. If the non-driving income was under $600, on the other hand, you will not get a 1099-MISC. Know that even if you don’t receive any 1099s at all, you have to report and pay the taxes for the income you’ve received.
For help here, or for any of our services in accounting or bookkeeping for independent contractors, speak to the pros at Equinox Business Solutions today.