It's 1099 time. All the delivery apps are sending out their 1099's.
But you got nothing from Uber Eats. Or maybe it was a lot smaller than you expected it to be.
Why is Uber Eats not sending out 1099's like everyone else? And why are the ones they do send out for so little? It's because Uber Eats is using a different kind of 1099 for their rideshare and delivery drivers.
Uber long ago made the decision to use 1099-K forms to report income for their contractors. The requirements and minimum pay levels are different.
The longer answer is it's their attempt to make it look like they really aren't a delivery company. We'll get more into that in a bit.
What is a 1099-K?
The 1099's we receive from everyone else are designed to report what's called non employee compensation. In fact, this year gig companies had to change from 1099-MISC forms to 1099-NEC (Non Employee Compensation).
Uber Eats is going a different route.
If you've ever operated a store, or sold things online, you might be familiar with the 1099-K. It's not designed for independent contractors. The 1099-K is a form meant for payment processors (think Stripe or Paypal) to report money that you earned for your sales.
Here's why the 1099-K was created. People began figuring out they could make a lot of money under the table selling stuff. You could go buy stuff and re-sell it on eBay or Etsy. You could create a little store and sell all sorts of stuff.
And the IRS never knew you were making any money.
As part of the Housing and Economic Recover Act of 2008, banks were required to start reporting merchant and credit card payments. Thus the 1099-K was born in 2012.
Now the IRS has more opportunities to identify any possible unreported income.
How is the 1099-K different from 1099-Misc (or now the 1099-NEC)?
It has to do with two different kinds of business, especially for people who are self employed.
One is where you do something and get paid. That's the typical independent contractor model. Do a task, get compensation. The 1099-Misc and 1099-NEC are meant to report that income.
But then there's the model where you sell stuff. You buy things and sell them. There's no task involved, usually no contract. You just sell. But you sell enough stuff that eventually you make enough money that the IRS wants to know when that happens.
it's a different dynamic. Like I said, you're not contracting. Instead of getting income from one person or business, you're getting it from dozens, hundreds, thousands or more.
And who knows about it that could report it? The credit card processor that you use.
The other big difference is the amount. It's a huge difference, actually. Companies you contract with have to send out a 1099-MISC or 1099-NEC if you get $600 or more from them.
Credit card and processing companies don't have to send anything until you make at least $20,000 and have at least 200 transactions. And when they send it, it's a 1099-K.
Why is that such a big difference?
I'm not sure why it's THAT big, to be honest.
Bottom line is, money received in return for a service is more often than not profit. Money received for a sale is a different story.
Usually there's a cost of goods sold. Whatever you had to pay to buy the item in the first place. Often there's shipping and costs related to warehousing or facilities.
I'm sure it was a statistical decision. That maybe they figured that not enough people at $10,000 in sales or $15,000 in sales had much in the way of actual taxable income. Somewhere they settled on $20,000 as a good means.
I'm pretty sure the government didn't anticipate independent contractor earnings being reported on this form.
Why is Uber Eats using the 1099-K instead of 1099-MISC or 1099-NEC?
It's all about trying to paint a picture that Uber is not using employees.
If a company were to line you up with opportunities, but it's actually the CUSTOMER paying you, that company is only serving as the middle man.
Since they're not the ones paying you directly, they wouldn't be required to send you a 1099-NEC because they weren't the ones actually paying you. Instead, since all they're doing is processing the payment from your customer, they'll send you a 1099-K.
If that's what they're actually doing, it's a legitimate use of the 1099-K.
That's the picture Uber Eats is trying to paint. They want the government to believe that they aren't the ones paying you, that it's really the customer.
I'm not in a position to determine if it's fraudulent use of the 1099-K. All I can do is point out that what the customer pays doesn't line up with what we are paid. So while I won't actually accuse Uber Eats of fraud here, I have to wonder how it's not.
Why would they do this? Two words: “Independent Contractor.”
One of the primary factors the government has used to determine if you can use contractors or if you have to hire employees is that the work being performed can't be part of the same line of work you're in.
Have you ever heard these delivery companies claim they're not delivery companies? Doordash has it written into their contract that you're agreeing Doordash is not a “food delivery service.”
It's the same narrative. They're not actually delivery companies but they're technology companies that connect us with the restaurants and customers.
One problem with this is, they're the ones paying us. Uber Eats uses the 1099-K as a way to claim that it's the customers paying us.
But then why is Uber Eats sending out 1099-NEC's for smaller amounts?
Remember the story Uber Eats is trying to tell here:
They're saying by using the 1099-K that you're being paid by the customer, not by them.
Well, whether they are lying or not, there are some things that they still have to pay out of their own pockets. Any promotions they offer are paid by them. And because it comes out of their pockets, they have to use the 1099-NEC to report that money.
Here's what it boils down to:
- The base fare, surges, and tips are reported on the 1099-K.
- Trip supplements, Boosts, Quests and any referral fees will be reported on a 1099-NEC.
If you received more than $600 in promotions or referral fees, you'll get a 1099-NEC that only reports those items.
Personally, about a fourth of what I earned was from promotions, where we had a lot of quests going for awhile. I've seen other folks who only had about 10% of their payment come by way of promotion.
Those ranges mean it could be between $2,000 and $10,000 that you have to earn on Uber Eats before you see a 1099 of any kind.
In fact, Uber Eats may send you TWO 1099 forms.
As if everything else wasn't confusing enough.
If you had significant earnings, it's very possible that you will get two different 1099 forms. Which is the correct 1099?
They both are.
Remember that each 1099 is reporting a different type of earnings.
The 1099-K is reporting the total of base fare or delivery fee, surges, and tips that were received through the app. If your total earnings for those are over $20,000 you will receive a 1099-K. Remember, this is only reporting the delivery related fees.
Several states actually require a 1099-K to be sent out now for lower earnings thresholds. Some require it for as little as $600 in earnings.
The 1099-NEC is reporting promotions and incentives, as well as any referral fees you may have earned. This is sent out if that total exceeds $600. Chances are very high that if you received a 1099K, you will receive a 1099-NEC.
They both are correct and both need to be added to your Schedule C. Beware, the total earnings they report will be higher than you think. Uber Eats actually reports a higher earnings than what they paid, and then claims a service fee or commission is deducted. You need to be aware of that fee and make sure to account for it so you don't pay too much in taxes.
So what do I do if I didn't get a 1099 or if it wasn't enough?
Uber Eats does keep a tax record on file for you. It's not an official document but it can be very helpful.
In fact I'll give Uber Eats a great deal of credit here. I can pull up a breakdown online of every delivery I've ever done for them. I can't say that about anyone else.
More than that, I can log in and pull up a full earnings record for the year. Again, I can't say that about anyone else. (In fact it's impossible to pull up a full year's earnings record with Doordash.)
You can log into your driver portal at Uber.com and log in. Then click on Tax Information.
From there you'll have a list of options. If you did get a 1099, you'll see it listed as an option that you can download. There's a line item where you can choose monthly summaries or you can choose the annual summary.
The annual summary will give you a breakdown of your total income. You can then use that information to compare to your records and see if everything matches up.
That said, the yearly summary is confusing. We'll talk about that in another article.
Frequently asked questions about Uber Eats 1099's.
Uber Eats does not use the 1099-NEC the same way other delivery gig companies like Doordash and Grubhub do. They use a 1099-K to report the bulk of payments to contractors. The minimum earnings before they have to report on a 1099-K is $20,000, much higher than the $600 for 1099-NEC earnings.
Incentives and promotions are recorded differently by Uber Eats. Quests, Boosts, Trip Supplements, and Referral Fees are among items that Uber Eats reports on the 1099-NEC. Only when those items add up to more than $600 will you receive a 1099-NEC.
A 1099-K is a form that payment processors (such as Stripe or Paypal) have to use to report payments made to vendors. The IRS uses it as a way to tell when a store or online seller has sold enough to make a profit. If someone has received more than $20,000 through payment processors and had 200 or more transactions, the payment processor will report that on a 1099-K.
By using the 1099-K, Uber Eats is painting a picture that it is the customers who are paying us for deliveries, not Uber Eats. Using the 1099-K portrays them as a middleman connecting couriers with customers, where Uber is just the processor passing on the payments.
This is part of the narrative of being the so-called middle man. Base fares, surges, and tips from the customer are what Uber Eats represents as being paid by the customer. Thus that is reported on a 1099-K. Incentives and promotions are things that Uber Eats pays out directly to get drivers to take deliveries and because they're paid directly by Uber Eats, those are reported on a 1099-NEC.
You can log into your driver portal at Uber.com. Click Log In, choose driver log in, enter your email and password, then select Tax Documents from the main menu. There you will find any 1099's generated, if any, as well as monthly and yearly summaries.
The first answer is, you need to track your earnings. Use an app like Hurdlr if you don't have a tracking method. Uber Eats does provide the best earnings information of any of the delivery gigs, and they do provide an Annual summary that breaks down earnings and fees.
Uber Eats reports different things on the 1099-K than they do on the 1099-NEC. Fares, delivery fees, tips and surges are reported on the 1099-K. Incentives and referral fees are reported on the 1099-NEC. If your earnings for each met the threshold for reporting, you will receive two different 1099 forms.