Gig economy
If the job treats you as an employee, issuing you a Form W-2, then your taxes are easy. Simply report the wages and withholding tax.
But many of these gigs treat their workers as independent contractors and a Form 1099 is issued (usually Forms 1099-K, 1099-MISC or 1099-NEC)
Transporting people (ride-sharing)
Independent drivers for Uber, Lyft and other alternatives to taxi cabs.
When using your own car the IRS allows a deduction of 57.5¢/mile. You need to keep a logbook, ideally showing the odometer reading at the start of your shift, and again at the end of the shift. Subtract any personal miles driven before you total the business miles driven.
If you start the day from an office in your home, then the odometer reading might start and end from your own driveway.
- Trips to a repair shop, fueling station and the car wash, if done primarily for the ride-sharing business, are also deductible.
- Tolls and parking are deductible.
- Parking tickets, speeding tickets and fines for other infractions are not deductible.
- Buy a shirt or jacket with an embroidered business logo and that could turn this article of clothing into a business uniform, which makes its purchase and cleaning deductible.
- Costs for car registration, car insurance and property taxes are already included in the cents-per-mile.
- But the percentage of property taxes allocated to the non-business miles are deducible as an itemized deduction on Schedule A (subject to the usual limitation there).
- The cost for additional insurance, specifically for this gig, such as E&O insurance or umbrella insurance may be deductible.
Transporting prepared food
Independent drivers for Grubhub, Uber Eats, Doordash and other services that deliver freshly prepared hamburgers & fries.
When using your own car, all the same deductions for ride-sharing are available to you.
Transporting other items
Independent flex drivers for Amazon, Uber Freight and other freight delivery operators.
If using your own vehicle, then all the same deductions for ride-sharing are available to you. Or if purchasing your own delivery van, you might find that the direct cost method (which includes depreciation expense) results in a bigger deduction than the mileage method.