Uber/Lyft drivers are considered self-employed individuals. This is another way of saying as an Uber/Lyft driver, you are operating a small business of your own – providing a ridesharing service for a fee. Most Uber/Lyft drivers operate as sole proprietors. This is the simplest form of a business structure. A sole proprietor is an unincorporated business that is owned by one person.
As a self-employed individual or sole proprietor, you have to report the income you earn from your business on your personal T1 income tax and benefit return each year. The personal T1 income tax and benefit return includes form T2125 – Statement of Business or Professional Activities where you report all income earned by the business and are able to deduct expenses you incurred to generate this income.
Here are just a few expenses that you may be able to deduct if incurred to earn income from driving for Uber/Lyft:
- Vehicle Registration costs
- Insurance
- Vehicle repairs and maintenance
- Car cleaning costs
- Parking costs
- Fuel expenses
- Cell phone data costs
The net income or loss (income less deductible expenses) calculated on the Form T2125 is added to your other sources of income to calculate your overall income taxes on the T1 personal tax return.