Columnist
Share this content
court mallet and money
tzahiV_istock_taxcourt

Uber Driver Takes a Wrong Tax Turn

by

Whether clients run a business formally or informally, the IRS requires they keep adequate records for income and expenses, otherwise a visit to the Tax Court may be in their future to sort things out.

Oct 15th 2021
Columnist
Share this content

In a new case, Nurumbi, 2021-79, TC Memo 2021-79. 6/30/21, an Uber driver ran afoul of the rules, but at least was able to salvage some deductions in Tax Court.

Participants in the so-called “gig economy” ranging from drivers to temporary landlords to delivery services people are generally treated as self-employed individuals. In this capacity, the income they receive is fully taxable, but they may be entitled to deduct qualified business expenses to offset part of the tax. In addition, the participant is liable for self-employment tax, but can write off half of the tax on their personal return.

Facts of the new case: The taxpayer, a resident of Arizona, used his Uber account and mobile application to provide transportation to passengers in exchange for fares.  But he wasn’t the only driver using the account during the tax year at issue.

Notably, the taxpayer recruited friends and family to sign up for Uber under his account. They rented his vehicles, which he had purchased using car title loans or at auctions.

The drivers could access the Uber app to see their trips driven and fares collected, but all fare proceeds (net of Uber’s fee) were paid directly to the taxpayer’s Uber account. There were no written contracts between the taxpayer and the other drivers.

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:


Content lock down, tick icon

View all AccountingWEB content


Content lock down, tick icon

Comment on articles

Access content now

Already have an account?

Replies (1)

Please login or register to join the discussion.

avatar
By SkinnVinny
Oct 20th 2021 13:34 EDT

This guy was an idiot. Allowing other drivers to piggyback/freeload off your Uber account is a terrible idea.

Thanks (0)