I am an Uber drive on occasion, doing it part time mostly after going to my day job. It’s a great extra source of income. I’m happy to discuss the pros/cons and how to get going, but that’s for a different post.
I’ve discovered something interesting recently, so I’m going to share it! It's not going to make you rich, but for those normal people of the world, it'll be a good/easy investment of time. I met with my accountant for my annual tax return. I claim my Uber income as a good law-abiding citizen, and in return, I can write off everything!! My write offs include a portion (see below) of my car payments, gas, maintenance, cleaning, plate renewal, SiriusXM subscription, insurance and any other expenses that go into my car!
Ya, I know….that’s not new for all of you… so here’s the fun part! The way Canada, and possibly many other countries, allows you to write off the expenses is by calculating a proportion of your driving towards the ride sharing service that you provide. The calculation is simple: Record your vehicles mileage at the start of the tax year (January 1st for most people), and record it at the end (Dec 31st). Each time you drive with you Uber/Lyft meter running, record that too. Then you simply calculate the percentage of ride sharing driving regardless if you have a client or not. That’s the part that makes this fun!
In this little LEGAL scheme, you hope that you don’t have any rides. Here’s my suggestion: find a place in the outskirts of the city you live in, likely where very few people live or would travel around, but also where the ride sharing service is available. The Uber app allows you to set an “end destination” so you simply set it for somewhere roughly 25 kms (12 miles) away from your current location on the edge of the city. Set it, go online, and drive there. When you’re done, do the reverse and go home. The whole thing should take about an hour. Do this 5 times a week, every week (more if you want better results).
In my situation, I live in the suburbs, and I will often turn on my app to make myself available for rides going to work in the morning and home at night. I often do not get ride requests as I’m limiting my potential client base with the end destination. Those are miles that I’m going to put on my car regardless of driving for Uber or not. So that works well for me, but the risk of getting rides exists and is about 50/50 for me.
What does this do you ask?? Here’s the calculation based on estimates, and you can adjust to your personal situation.
**all prices are CAD and based on normal rates here in Canada
• Monthly Expenses:
o Car Payment $500
o Insurance $100
o Cell Phone $50
o Gas/Maintenance $300
o Other $100
• Total Expenses = $1050/month for your car
• Average annual mileage for a Canadian driver in my area is 20,000kms/year
• Extra mileage for the Uber driving is 13,000 (50kms/day x 5 days/week x 52 weeks/year)
• Total Mileage for the year = 33,000 (normal driving plus extra Uber mileage)
• This means that 39.39% of your mileage goes to driving for a ride share program.
• 39.39% of your total monthly driving expenses = $413.60/month
• Which comes to $4,963.20 per year (413.60 x 12 months)
So what does this mean? It means, you’re not going to get rich doing this. BUT, you are going to artificially, but legally, create $5000 worth of expenses to lower your tax rate and payment. This works when you file your income tax and depending on your tax rate and other personal financial factors, you’ll see a large portion of this back in your pocket. All for 5 hours/week. This comes out to $19/hour and like I said, will vary depending on your personal situation. There are ways to improve this for sure!!
So….if you want to give this a try and have questions, let me know!! Also, I’m happy to help set up your account for you too. Cheers!