TNC (Uber, Lyft) Expenses

Jan 05, 2017 3 Replies

Hoping the group can clarify some things for Uber/Lyft drivers (of which I am one), and I'll communicate the information in the taxes section of the Uber drivers forum.


1) If you have a vehicle used exclusively for TNC (Transportation Network Company) use, can you still use the standard mileage deduction?

If you want to use the actual expenses rule, what is the maximum cost basis for depreciation and is the depreciation straight-line over the depreciation period? Is it 3 years? If you use the vehicle partly for business and partly personal, do you pro-rate the depreciation? Only a small number of Uber drivers would probably want to do this, because it's way more record-keeping. However, some who have expensive vehicles and are driving "Uber Select" might.


2) What expenses can you deduct other than the mileage?

I assume you could deduct:



Non-vehicle equipment necessary, such as a bluetooth headset, perhaps your smartphone if you could show the phone was not also for personal use (unlikely), business cards, water, candy etc. given to passengers.



Can you deduct cleaning? Obviously only money paid to third parties, not the "value" of your time for cleaning the car. I'm thinking most specifically like if someone pukes in your car and you get it professionally cleaned. (This is one of the occupational hazards.)



What about insurance? And what if your personal policy cost, say, $500 a year but it went up to $1000 a year when you changed the coverage to include ridesharing?


3) I assume that the mileage deduction is based on miles driven between 12:0AM January 1 and 11:59PM on December 31, but the income is based on what Uber pays you during the calendar year. In other words, you have the minor but common mismatch of miles driven the last few days of the year for which you're not paid until early the next year.

If you use the phone for both personal and Uber, it would seem to me that the portion of the day where the Uber App is on (ready to receive a rider request) until the Uber App is off (no longer receiving rider requests) would be deductible. So if the Uber App is on eg. 10 hours per day, then wouldn't 10/24 41.7% of the phone charge be deductible?

I don't know about all cell providers, but Verizon will provide a detail listing of all phone calls to/from your number with the number of minutes for each call. You could use the ratio of business/personal minutes. (That's not to say that you can't find another reasonable method for allocating business/personal use.)

As to your other questions, they should be answered in IRS Pub. 463. I would include the insurance upcharge plus a portion of the "regular" insurance if you are deducting actual expenses. If using the standard mileage rate, insurance is already included. Again, if using actual expenses, any ordinary business related out-of-pocket expense can be deducted. With the standard rate, just about everything is baked into the rate except tolls, parking, and personal property taxes.

Ira Smilovitz, EA

Allocating minutes would not be appropriate, as the cell phone use is mostly data-related. However, I suppose you could use the ratio of data used for TNC vs. all other apps combined.

In my personal case, my profit is so low it doesn't matter. I often drive from my home to a large city about 60 miles away to work, because it's much busier there. I usually have the app on driving each way, but even if I didn't I'd still consider it business use rather than "commuting."

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