We’ve all fudged numbers here and there on our tax returns, it’s a part of the system. Right?
Well, that could be coming to an end for rideshare drivers. The IPO’s of Uber and Lyft are raising eyebrows left and right. Recent news has reported that both Uber and Lyft are coming under fire from the IRS. One of the growing concerns within the gig economy is that corners are being cut. This was bound to happen. The entire system of traditional employment is being undercut by the gig economy and some think by its somewhat underhanded practices.
So what does it mean for drivers?
So what, Uber is getting audited for the past two years? Good! Well, unfortunately, that means that the current threshold for reporting could come under fire. For full-time drivers, this might not be a big concern, but part-time drivers could find that they need to start reporting even $1,000 dollars earned. You might think it’s not a huge deal, but one thing is certain if Congress is concerned it means the prying eyes of the IRS are behind it.
Uber and Lyft Driver Tax Returns Under Scrutiny
If Uber and Lyft are under fire, it’s only a matter of time before the “poop” rolls downhill. They won’t stop at lowering the threshold, they’ll target the deductions next and all of the things drivers have been “fudging” for years could start to disappear. This is bad news, because one of the ways that drivers have been able to stay afloat is by taking advantage of the system in place. Write-offs have been a saving grace for many in the gig economy and rideshare is no different. But what would happen if they went away?
The answer is simple, we wouldn’t be able to operate! In turn, Uber and Lyft would not have access to the pool of cheap labor they have now. It may be that they win the fight with the IRS and Congress and it will all go away. But I wouldn’t hold my breath.
Hang on to those receipts!
This particular bit of news most likely won’t begin to take effect for several years yet, but what should you do to protect yourself? Keep hold of all of those receipts and file them away. One of the truths that are evident about the IRS and Congress is that it often takes a long time to get things done. If Uber and Lyft are the big fish and they are frying right now, it could be a couple of years before audits come your way. But that doesn’t mean you want to be caught with your pants down. Remember to treat your rideshare driving like a business and continue to save your pennies and pay your proper taxes.
Go Download Self-Employed by Quickbooks
You’ll want to stay ahead of the problem. One of the ways to do that is to implement a rigorous record keeping system. I recommend signing up for the monthly plan by Quickbooks. All of my expenses and costs are tracked and it makes tax time much easier. I wouldn’t call it a breeze, but it is easier. If you’ve kept good records when the tax man cometh, then you’ll be far better prepared than the rest.