When you drive for Uber, Lyft, DoorDash or Instacart, you are not an employee: you are running your own small business. That changes how your taxes work — and it gives you deductions employees don’t have.
1. All of your income counts
You must report everything you earned, even if the app didn’t send you a 1099. Start with the annual tax summary each app provides; it shows your gross earnings and the fees the app took.
2. The self-employment tax
Besides income tax, self-employed people pay 15.3% for Social Security and Medicare on their net profit — the part an employer would normally split with you. That is why keeping good records matters: real, documented business expenses are part of calculating your profit correctly.
3. Your car is your biggest deduction
You can deduct your vehicle in one of two ways:
- Standard mileage rate: a fixed amount per business mile set by the IRS each year. Simple and usually the best option for drivers.
- Actual expenses: gas, repairs, insurance, depreciation — multiplied by the share of miles that were for business.
Either way, you need a mileage record. The miles the app tracks while you have a passenger are only part of it — the miles driving to pickups also count.
4. Other expenses people forget
- Phone and phone plan (business share)
- Car washes, tolls and parking
- Water, snacks and chargers for passengers
- Fees and commissions the app keeps
5. Pay during the year, not all in April
Nobody withholds taxes from your app earnings. If you expect to owe $1,000 or more, the IRS expects quarterly payments — usually in April, June, September and January. Missing them adds penalties. We calculate the right amount so April has no surprises.