Tax deduction is an important term used to refer to the amount of money that is reduced from the annual income of a taxpayer. There are certain conditions that must be met to ensure this process is carried out smoothly and that the required goal is achieved.
Nowadays, with the ever-growing popularity of Uber as a mode of transportation, the demand of Uber drivers has increased giving rise to the employment rate, which means more opportunities for the layman. All Uber drivers must be aware of the ways through which they can deduce their taxes which helps immensely in reducing the tax burden in the long run. A few of the methods are listed below:
- Maintain a Record
First things first, if you want to claim a deduction you must give a legal proof to the authorities of your allowance and activities. Keep all the related documents together which includes receipts etc., in a file so that you do not have to worry during the tax collection season. In case you do not want to maintain a hard copy, there are several software that do your task efficiently and accurately so opt for computerized methods.
It is essential for every Uber driver to remember that the fuel costs are most certainly claimable for a deduction as long as it is business related. When an Uber driver goes to pick a client or drop them off to their destination, the fuel cost implied during this during is claimable.
Since the mobile phone is the central hub for the business as the driver has to contact the client using the mobile phone, you can certainly claim a tax deduction on the amount of money invested on the phone, may that be the data or the minutes used when driving. It is to be kept in mind that a deduction is only possible if the mobile phone was only used for work purposes and not personal.
- Food and Services
It is a good practice to keep water bottles and mints for the passengers as it helps in building an employee client bond. The money that is spent on the purchase of such food items for the passengers can also be included in the list upon which you can reduce the tax. An Uber driver can only deduct 50% of the amount, which was once invested.
- Car Washes
An integral duty of every Uber driver is to keep his car neat and clean at all times for the customer satisfaction. Since cleaning is a necessity for the business, this too is claimable in the tax returns.
- Parking Fees
In certain localities a certain parking fees is applied which the driver has to pay. This parking fee is also claimable at the end of the day.
- Maintenance Cost
The Uber system works on the mechanism of providing transportation facility in time of need. Therefore, when a vehicle is used for this purpose, it is very important to maintain it frequently to avoid bigger maintenance bills in the long run. A significant portion of this maintenance cost is deductible at the time of the tax collection. This includes oil changes, tire changes and so on.