How Much Does It Cost to Drive for Uber? It Will Cost You
Everything in life comes with a cost. And unfortunately the freedom of being your own boss and working whenever you want when you drive with Uber is going to cost you. Nothing in life comes free. There is a downside to everything and the cost associated with being an Uber driver is one of these downsides.
What cost am I talking about? There are 2 specific expenses that I am talking about and I will be going over what both of them are as well as about how much they will cost you.
The 2 Expenses of Driving with Uber
Expense #1 – Vehicle Upkeep
Yes if you didn’t know already, you are going to have to cover the costs associated with keeping your vehicle up and running so that you can drive for Uber. This is because Uber considers its drivers “independent contractors”. Basically what this means is that you have your own business and are partnering with Uber. So Uber isn’t responsible for keeping your business (your vehicle) up and running.
Vehicle upkeep includes every and anything that could possible be needed to keep your vehicle drive-able. This could be paying for an oil change, tires, windshield wipers, a break light, a new engine, and most common of all….GAS.
Expense #2 – Taxes!
Taxes… the only way you can legally be stolen from. You work long and hard for that money, but no matter what type of job you have in the US (just about every job), you have to pay taxes.
Uber is no different. Just because you are an independent contractor doesn’t mean you don’t pay taxes. You sure as heck do! Its a bummer, but its just something that you have to live with.
How Much Money Are These Going To Cost You?
The Cost of Vehicle Upkeep
A general rule of thumb that many drivers go by as well as myself is that 10% of your pay is going to be used for vehicle expenses. But this is just a very general number.
Of course it is going to vary greatly depending on the vehicle that you are driving. Gas is going to be your #1 expense as long as nothing drastic or unusual happens. And if you are driving a hybrid Prius your cost for gas is obviously going to be much less than if you are driving around a 2001 Chevy Suburban SUV.
To find out about how much you will spend on gas driving around your vehicle, you can calculate it yourself of you can do a quick Google search to find out.
After paying for gas, the following common expenses will include new tires, oil changes, new brakes, etc.
The Cost of Taxes
Because you are considered an independent contractor as an Uber driver, you will have to pay both a self-employment tax as well as a federal income tax.
Uber will mail all drivers a 1099k at the end of each year which will show the total earnings.
As another rule of thumb, I expect another 10% of my pay to go to taxes, but again this is just a general estimate. This will also depend greatly on the vehicle that you are driving as you will see below…
Getting Money Back
Luckily for you there are a lot of tax deductions that you can get because you drive for Uber and this is because your car is your business.
Just like the biggest expense that you have when driving for Uber is the gas, the biggest deduction you will have is also gas.
The IRS will allow you to deduct $0.535 for every mile you drive for Uber (The IRS could change this). And this will really add up fast.
Just as a quick example… If you drove 10,000 miles you will get a $5,350 deduction because 10,000 x 0.535 = $5,350.
It doesn’t matter what car you are driving, $0.535 is the estimated cost that the IRS came up with. With many fuel efficient vehicles it isn’t going to cost that much per mile so you will benefit from this deduction more than you actually should.
Track You Mileage
It is important that you keep accurate accounts of the mileage you drive with Uber.
To make it easy I suggest downloading an app like MileIQ or TripLog. The basic mileage tracking features of these apps are free to use.
When you drive for Uber you won’t make quite as much as you expect due to the expenses. Depending on the area you are driving and the Uber service that you are driving for you will average different numbers.
Personally, I drive for UberX in Pittsburgh part-time and make around $15/hour after expenses, which you can learn more about here.
Uber may not be quite as good as one expects, but its still a nice flexible job with lots of benefits that I enjoy doing.