This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
Two words: Tax. Season. These words are typically met with a sigh and a grimace, and, we get it. We do. Whether you're fresh to the gig work world or have been working independently for years—doing your taxes can be complicated and expensive. Plus, filing as an independent contractor adds an additional layer of nuance. According to a 2021 Pew Research Center survey, 16% of Americans have earned money through an online gig platform. Though 16% of workers might not sound like much, that’s over 53 million workers!
Even if you are a part-time Dasher or only drive Lyft on the weekend and your net income is modest, you may owe a surprisingly large amount. This is because, as a self-employed individual, you’re responsible for paying both the employer’s and the employee’s share of Social Security and Medicare taxes—which comes to 15.3% of your net income. Which poses the question: how can independent contractors save this tax season?
The answer is simple: write off business expenses!
Though there are a plethora of expenses that you can deduct when it comes to gig work, one of the most important things you should be tracking are your deductible miles. This encompasses more than just actual hours on the job, this also includes time spent commuting, re-positioning yourself for fresh pickups, and more. Our full-time rideshare-driving Solopreneurs are driving 641 miles a week on average which equates to driving 33,332 miles a year. With the 2022 standard IRS mileage deduction rate now at 62.5 cents/mile of business, our users are logging a whopping $20,665 per year in deductions.
The Solo app allows you to track your income, mileage, and taxes automatically in one dashboard so you can stay ahead of Tax Day and plan your finances accordingly. In the “Taxes” section of the Solo app, Solo automatically estimates your State and Federal taxes for you using the information based on income from your connected work accounts and the Solo mileage tracking feature. Please keep in mind that while the projections are accurate for the information we have available, you may be responsible for more or less tax depending on your filing status (i.e. filing jointly with a partner) or other income and expenses not tracked through Solo.
In the “Expenses” tab of the “Your Business” page in the app, you can turn mileage tracking on. We recommend opening the Solo App and leaving it on in the background as you work so it can do the work of automatically tracking your miles and matching it up with your work time. When you’re done with work for the day you can simply exit the app and repeat the process next time you start working. If you forget to track your miles, no sweat—you can pop back in and edit your miles after 24 hours has passed and the app has time to categorize and sync your miles properly.
In addition to mileage, you can also deduct other gig-work-related expenses tied to your business, which could include:
You can use the Solo app to track any other expenses and income that isn’t already being automatically pulled into the Solo App. You can add your expenses in the ‘Expenses Tab’ under ‘Manual Expenses’ and add any deductible business expense like car cleaning supplies or delivery hot bags!
Be sure to keep track of all your business-related expenses and you’ll be breathing a sigh of relief when you go to file in 2023! Download the Solo App to start tracking your miles and gear up for your 2022 taxes if you haven’t already. Also, our friends at Ride Share Guy also have an awesome “Ultimate Tax Guide for Uber & Lyft Drivers” resource which outlines a ton of useful tax information for gig workers. We hope this helps you lower any taxes you might owe this year and serves as something to chew on as your plan for your 2022 taxes!