Did you start driving for Uber (or Lyft) in Toronto last year? If yes, your tax return may look a lot different when you file later this year than what you’re used to. Here are important tax deductions for Uber drivers to remember.
The upcoming tax season is quickly approaching, and those receiving any kind of income, including Uber drivers, need to file their taxes. Whether you are driving for Uber full-time or part-time, you qualify for filing Uber-related expenses as business expenses. This means you are able to qualify for tax relief on these business-related expenses.
Tax deduction on Uber business expenses can be acquired by recording these business-related expenses on your income tax return. A CBC News article reminds Uber drivers to document everything (e.g. mileage driving Uber passengers, mileage when you are not driving Uber passengers, driving destination, any kind of financial transactions) in order to keep track of your earnings and what may or may not qualify for tax deductions. According to TurboTax, Uber business expenses include: service fees, toll charges, business-related supplies (or supplies provided to customers), and even cell phone expenses.
TurboTax advises you to list your service fees (e.g. oil changes, gas receipts, insurance payments, tire rotations) paid to Uber to be listed on your T2125 Statement of Business Activities form (which is to filed with your personal tax returns), as they fall under the category of Management/Administration Fees. However, TurboTax also mentions that these service fees can only be tax deductible if you know your total mileage for the year (in which you deduct your Uber mileage from). This is especially important because automobile-related expenses tend to be susceptible to auditing.
As an Uber driver, there is a good chance you are able to file your toll charges as a business expense when you offer rides to passengers that require you to pay a toll. Additionally, toll charges included in the overall fee that is charged to your passengers is considered income.
If you offer items to your passengers (i.e. food/snacks/water), these too can qualify as tax-deductible goods by filing them under the Supplies category in your T2125 form.
You can receive a tax deduction for your cell phone expenses due to the necessity of having a working cell phone in order to work for Uber. TurboTax states that rather than just a portion of the bill, it can be the whole monthly bill and even the cost of your phone if it is determined it is used for business purposes.
*For more information on filing your taxes as an Uber driver, especially if you made $30,000 or more in your cumulative income for the year, visit this CBC News article on the topic here. For more information on what may qualify as tax deductible Uber expenses visit this TurboTax article.
For more financial tips and advice to help you save money visit the Pay2Day blog.
If your tax return not what you expected and now your plans to fix your long-awaited car problems are ruined, we can help. Find a Pay2Day store near you for a timely, manageable solution to your temporary financial crisis.
[cta id=’15317′]