Uber Eats is by far the most confusing of the delivery apps when it comes to understanding your 1099 forms and what you actually earned with them.
They might send two 1099 forms. You could make thousands of dollars and not receive any 1099s. And then to top it off, they lie to the government about how much you earned in the previous year.
How do you make heads or tails out of what they claim you earned? How do you avoid paying too much of a tax bill because they inflated the amount that you were paid? Why do they use more than one 1099 form and which one is correct?
Most of the other delivery companies are straight forward. Make $600 or more, get a 1099-NEC. They've been making things confusing for Uber rideshare and delivery drivers for years. How do you figure out the Uber Eats 1099 mess?
We'll walk through this and try to make some sense of it. At least as much sense as you can make of a system that doesn't really make sense.
We'll talk about:
- An overview of how Uber Eats reports their income
- Understanding the 1099-K on Uber Eats
- Understanding the 1099-NEC on Uber Eats
- Uber Eats and the Annual Tax Summary
- Why Uber Eats inflates your earnings
- How to use the Uber Eats tax forms.
But first, some Important things to understand about this article
This is the second article in our series on Uber Eats taxes. Also in this series is our Uber Eats Tax Calculator, which helps you look at your Uber Eats income and get a feeling for how it impacts your total tax picture.
This series focuses on independent contractor taxes in the United States. Many countries do things similarly with how they do taxes, but there are differences. Uber Eats does just enough differently (especially when it comes to 1099 forms) than other companies that we thought it was a good idea to focus on the nuances with Uber Eats.
This is not tax advice. Do not take this as tax advice. I am not a tax professional or tax expert. The purpose here is to provide information that helps you understand how things work with Uber Eats, and in this article, their tax reporting.
For personal tax advice that relates to your own situation, you should seek out a tax expert who can explain things specifically for you.
An overview of how Uber Eats reports their income
If you earned a certain amount of money last year as an independent contractor, the company you contracted with is obligated to report that income to the IRS. They also have to let you know what they reported. All of that is done with 1099 forms.
This is one where Uber does things very differently from other food delivery companies in the gig economy. Most companies use form 1099-NEC to report income for everything earned.
Uber Eats does use that form, but it's only for a small portion of your earnings. Most of your income is reported on form 1099-K.
Here's the big difference between the two forms. Form 1099-NEC stands for Non-Employee Compensation. It's what you file to report payments to a contractor that did work for you.
1099-K is not for reporting independent contractor earnings. It's for third party payment companies (like Paypal or Square) to report payments that were sent to vendors and stores. We'll get into why Uber is using this form in a moment.
The other big difference is the reporting threshhold. Independent contractor earnings have to be reported using 1099-NEC if you make $600 or more. Third party network transactions to vendors have to be reported once they have made $20,000.
That's a pretty huge gap between $600 and $20,000.
However, for the 2022 tax year (what you'll file in 2023) they are levelling the playing field, requiring 1099k forms to be filed at the same $600 threshold, thanks to a little bit of language snuck into the American Rescue Plan.
In the end, Uber does their tax forms the same whether you're a delivery contractor, rideshare driver, or do a combination of the two.
Remember, Uber uses both 1099-K AND 1099-NEC. Those are the official tax documents for reporting your earnings. Then there's the unofficial tax summary. We'll talk about each form in the next points.
Understanding the 1099-K on Uber Eats
Form 1099-K reports the delivery fees and tips that you receive from customers. For most of us, it's the vast majority of what we receive.
What this means is, you could earn several thousand dollars in delivery fees and tips on Uber Eats and not get a 1099-K. (I should say, there's a difference between what Uber Eats says you earned and what you got paid. More about that in a bit)
Base pay, surges, and customer tips are all part of your 1099-K income.
It's confusing because no one else does it this way. Not that many anyway. Lyft drivers have very similar situations, as Lyft also uses 1099-K to report income.
Why is Uber Eats using 1099-K instead of 1099-NEC?
As I said earlier, 1099-K is not for independent contractor reporting. It's for third party payment processors to report customer payments to vendors.
How does that make sense? We're independent contractors, Uber paid us, we should get a 1099-NEC instead.
Here's what Uber is doing: They are claiming that the customer paid us directly. In other words, we were paid by the customer, not Uber Eats. Since Uber Eats feels they passed that payment on to us, rather than paying us directly, then decided they should use the 1099K.
It's a lie. There's a long story behind why they do it that way, that is all about independent contractors vs employee status. But ultimately, that's what's going on.
But that's not the point of this article. In the end, any money that “came from the customer” is reported on 1099-K.
You can read more about Uber's use of 1099-K forms here if you want to go down that rabbit hole.
Understanding the 1099-NEC on Uber Eats
Not all of your income is reported on the 1099-K form.
If you delivered quite a bit for Uber, you may have received a 1099 that says you made quite a bit less than you actually received. If so, you'll probably find that was a 1099-NEC.
As I mentioned above, Uber Eats reports money that came “from the customer” on 1099-K. However, there are two things that don't fit into that category: Incentives and Referral Fees.
Incentives include Trip Supplements, Boosts, and Quests. For some reason surges are part of what supposedly comes from the customer.
If you used your referral code and a friend joined up, the referral fee you received from Uber is included in the 1099-NEC report.
We go into more detail about how there are actually two 1099 forms in the Uber-verse here.
Uber Eats and the Annual Tax Summary
In my opinion, the annual summary is the most important of the three documents you can download from the Tax Information tab in your Uber account dashboard.
Uber provides an annual tax summary of all of your earnings. If you did not receive either of the 1099 forms, or only got one of them, you can pull up the annual summary to see what you earned.
I will warn you now: It's inflated. Uber is telling the IRS you made more than what you received. We'll talk about THAT more in a moment.
In the example above, $13,275.80 is what Uber reports was earned. The $11,140.76 was what was actually paid to this particular driver.
The Gross Trip Earnings is what determines whether you get a 1099-K. In 2021, this person would not get the 1099-K because the gross income is less than $20,000. If they make this much in 2022, they will get that form because of the new lower reporting threshold.
The “Total Additional Earnings” is the basis for the 1099-NEC. This person made more than $600 and thus would get a 1099-NEC form. However, the 1099-NEC would only report the $2,791.24, NOT the $11,140.76 that was actually paid nor the $13,275.80 that Uber claims.
This form is critically important when you do your tax return. One, it tells you what Uber Eats is reporting for your income. Two, it gives you numbers to use even if you don't get a 1099 form. Three, it gives you information that will keep you from paying more than you have to due to Uber inflating your earnings.
We'll explain the Expenses, Fees and Tax coming up.
Why Uber Eats inflates your earnings
Remember, the whole purpose Uber Eats uses the 1099-K is to claim you're getting paid directly by the customer.
If you ever sold something on eBay where the buyer paid through Paypal, you get an idea how some of this works. Say you sell an item for $10. eBay takes out $1 as a commission, then Paypal takes out 79¢ in processing fees. By the time you get your money, only $8.21 was deposited into your bank account.
In that instance, you technically earned $10. However, you technically paid $1.79 in fees, even though you never actually touched that $1.79.
This is a lot like what Uber is doing here. They say we were paid the higher amount, but then they took out their fees.
When I first started delivering for Uber Eats, the “Uber service fees” were 35% of the total pay. If I received $6.50, Uber said I made $10 and they got the $3.50 as a service fee. However, more recently I notice that the fee percentages are all over the place (sometimes even negative amounts).
If you pull up a trip record, you can find out what those “fees” are for each trip. At the bottom of the pay breakdown, you can tap on “More Details” and it will reveal what the customer paid, and what part was paid to Uber.
The “Paid to Uber” part is part of where they get the so-called “Service Fees.” The good news is, that service fee is a business expense. Let's talk about how to claim that expense.
How to use the Uber Eats tax forms.
If you received both 1099 forms, you would add up the total from both forms and add those to the income line of your form Schedule C.
However, you don't need to have the 1099 forms to do that. You can get your total off the Total Gross Payments on your tax summary document.
But here's where the tax summary is very important. Just because Uber says you made more than you actually did, you do not have to pay taxes on more than you made.
This is because of an important point in our Uber Eats tax overview article: You are taxed based on profits. Your business income is actually your net profit, or what's left over after business expenses. It's NOT what you received.
And, you can write off those service fees as an expense. You SHOULD write those off. In the example above, the $13k minus the $2k gave this driver the $11k that they actually received. Writing the Uber service fees off gets your taxable income back down to what you actually received.
In the example above, NOT writing off the $2,135 in fees would result in paying an additional $327 in self-employment taxes come tax time. It also could mean $214 or more in income tax depending on the tax bracket. That's one of the most important tax deductions you can take.
I've heard of some adding the service fees to the Commissions line on their Schedule C. Personally, I list them as a line item in Other Expenses (Line 27). You may want to ask your tax professional for the best way for you to list those expenses.
Do I have to report income if I didn't get a 1099?
It can be really tempting to just not report the income. If you didn't get a 1099, that means the IRS doesn't know you made that money, right?
Or, if you only got the 1099-NEC for a much smaller amount, that means that's all the IRS knows about.
There's a mistaken belief that you don't have to report income that wasn't reported. But here's the thing about being an independent contractor: You're filing as a business, and that's different than W2 wages. As a small business owner and sole proprietor, the IRS actually requires you to report all earnings you received.
Obviously, you have to make your own decisions and I won't tell you what you should do. However, think about this: If all you get is a 1099-NEC from Uber Eats, I know you made more than what was on that 1099, because I know how Uber does things.
The IRS knows too.
The other thing to think about is that next year, with the the IRS dropping the reporting threshhold for 1099K forms to $600, if all of a sudden Uncle Sam is finding out you're making a lot of money with Uber, that's the kind of thing that can get them digging into the past.
And if they want to find out if you made any money, Uber has the information.
I see an “Online Miles” total on the annual summary. Can I use that for my mileage write off?
If you forgot to track your miles, that mileage total COULD be a last resort.
For 2021 you can write off 56 cents per mile driven. In 2022 the standard mileage deduction jumps to 58.5 cents. In the sample Uber tax summary screenshot above, 7,109 mioles is $3,981 you could write off. That mileage total is useful information.
However, I think there's a better way. I wouldn't rely on the mileage total for the following reasons.
- Uber's total is typically a lot less than what you actually drove. Uber doesn't track all of your business driving and relying on their number could cut short the amount you can claim on your tax form.
- A single total like this may not stand up in an audit. The Internal Revenue Service requires a written log that includes daily totals. This number doesn't meet that standard.
If you use tax software to file, consider using TurboTax Self Employed.
I say that because Turbo Tax does the best job of any tax filing software I've seen in how it handles Uber Eats total income.
Turbo Tax will actually log into your Uber account and download the tax information. It automatically finds the right income and then it adds the Uber service fee into your expenses on Schedule C.
For the 2020 tax year, Uber was giving away TurboTax Self-Employed to drivers. They're not doing that this year. However, you can use my affiliate link to TurboTax Self-Employed and get a $20 discount. Full disclosure: I may get a commission for any purchases using this link.
The way Uber does all this is complicated. But don't let it freak you out.
It's real easy to go down a rabbit hole about why Uber does their 1099's the way they do. Trust me, I've done it.
I tried to explain briefly why Uber does some things differently. I hope the explanation helped. But in the end, the why doesn't really matter. Let me boil it down:
- If you made more than $20,000 you will probably get TWO 1099 forms. 1099K gives you the customer fees, 1099-NEC tells you your incentives and referral earnings.
- Add the payment from BOTH 1099 forms to your Schedule C income.
- If you didn't receive one (or both) of the 1099 forms, use the Annual Summary Gross Earnings total (the large number at the bottom of the left column) as your income.
- Make sure to write off the Uber Service Fees (middle column of tax summary) as a business expense.
Keep it as simple as that and I think you'll do fine. If it still scares you, get a tax pro who understands self-employment.
Frankly, I think you should do that anyway. I use a tax pro myself to make sure I haven't missed anything. My experience is, good tax professionals are more than worth it.