Uber Partner | Lease vs. Own | Taxes

Uber Partner

Uber Partner: Lease vs. Own

We thought it would be helpful to dive into the tax differences between buying or leasing the vehicle you use to drive for Uber or Lyft.  There are many things for an Uber partner to consider when making a financial decision like this, such as ownership or the difference in monthly payments to name a few.

If you are an uber partner or lyft driver deciding whether to buy or lease a car, understand that taxes can play a key roll when your vehicle will be used for business.  The differences between the two will arise when you use the actual expense rule (see first post on taxes for an introduction).

Rideshare Lease vs. Own Tax Advantages

Let’s start with some similarities.  If you’re an Uber partner or Lyft driver and decide to lease or own your vehicle, you can deduct your business percentage of your insurance, repairs, tires, garage rent, lease expense, oil, gasoline, registration fees, etc.

If you decide to purchase your car, you are allowed to depreciate (tax deduction) the value of the car (subject to business use percentage) typically over a 5 year period.  There are special rules for certain types of vehicles, but we will just cover passenger automobiles as that will be applicable to most rideshare drivers.

Uber Partner

BUY

A passenger automobile as defined by the IRS (Publication 946) is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans).

It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile.

The following vehicles are not considered passenger automobiles for these purposes.

  • An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business.
  • A vehicle used directly in the trade or business of transporting persons or property for pay or hire.
  • A truck or van that is a qualified nonpersonal use vehicle.

The maximum depreciation limits are $11,160 in year 1, $5,100 in year 2, $3,050 in year 3, and $1,875 for the remaining years up to the value of the car (subject to business use of the car).

Uber Partner

LEASE

If you are leasing the car, you are allowed to deduct the business percentage of the lease payments against your income from driving.  When the value of the leased car is above a certain amount ($18,500 in 2015), there is a lease inclusion amount that must be subtracted from your lease payments in order to arrive at your tax deduction.

We have covered some items for uber partners and lyft drivers to think about when deciding to buy or lease your vehicle when driving for a rideshare service.  Tax laws change frequently so we would advise consulting your tax adviser when factoring this into your decision.

Want to Become an Uber Partner?

Uber is disrupting the taxi cab industry before our eyes. If you are looking to get out of the 9 – 5 grind or are looking to make a substantial income on the side, you’ve come to the right place.

We are here to help you! We have provided some rideshare tax tips above to think about when leasing or buying a car. Most important part about making a substantial income on the side is not tax savings but taking action!

Sign up today to become an Uber Driver and you will soon see the financial rewards. Depending on your city, you can earn up to $750 sign-up bonus! They key to receiving this bonus is by using an Uber Driver referral code (this is very important!).

Uber Partner

Click Become an Uber Driver and you will be on your way to earning your first paycheck just by signing up. Do not miss this limited time Driver Sign-up Bonus opportunity! Or visit our page on how to become an uber driver to learn more!

Feel free to drop us a comment for any other tips or questions!

Related Post