As a rideshare driver, you are typically considered an independent contractor. You may be able to claim a number of ordinary and necessary work-related expenses since the IRS considers you self-employed.
You can include your expenses when completing the Business Income(Schedule C) section of Credit Karma Tax.
Go to this section in Credit Karma Tax: Business Income
Ordinary expenses are those that are common and accepted in your trade or business, and necessary expenses are those that are helpful and appropriate for your business.
Check out our article on Tax deduction tips for rideshare drivers for more useful tips for tax season.
There are two different ways you can calculate your vehicle expenses. You can either deduct the actual expenses of operating your car or you can use the standard mileage rate deduction.
Parking fees and tolls that you paid while working as a rideshare driver are deductible whether you use the standard mileage rate or actual expenses.
Standard Mileage Rate Deduction
The standard mileage rate may be a good option If you find it easier to track the number of miles you drove for work, rather than recording each expense.
In order to use the standard mileage rate, you’ll have to start using it the first year you use the car in your work as a rideshare driver.
- If you own the vehicle, you can switch to actual expenses later, but if you start out using the actual expense method, you can’t switch to standard mileage in subsequent years.
- If you lease the vehicle and choose to use the standard mileage rate, you must use the standard mileage rate for the entire lease period (including any renewals).
The IRS calculates the standard mileage rate based on all estimated costs of operating your vehicle, including things like fuel, tires, and maintenance. You won’t be able to deduct most of your actual expenses if you use the standard mileage rate deduction.
If you prefer to deduct your actual expenses, you can use the total of what you spent on qualified vehicle expenses during the tax year. When deducting actual expenses, you should keep receipts or other accurate records of these expenses. Keep in mind these expenses may only be deductible, if at all, to the extent that you incurred them while working as a rideshare driver.
Actual expenses you may be able to deduct using this method include the following:
- Lease payments
- Registration fees
- Garage rent