How to Do Taxes for a Taxi Driver

The IRS classifies taxi drivers as self-employed taxpayers.

When you prepare your tax return as a taxi driver, the Internal Revenue Service (IRS) considers you a self-employed taxpayer. The IRS classifies you as the owner of a sole proprietorship, even if you lease your cab from a fleet owner. Your completed tax return must include a 1040 listing your total income, a Schedule C listing your net business income and a Schedule SE for your self-employment tax. If you own your own cab, you must also file Form 4562 to claim the depreciation deduction on your cab.

Things You'll Need

• Customer receipts
• Bills for gasoline and service repairs
• Bill for taxi rental (if leasing from a fleet company)

Instructions

1. Download and print a copy of IRS Form 1040, Schedule C and Schedule SE off the IRS website. Download Form 4562 if you own your own taxi. The IRS provides instructions for each form online as well. Print these instructions if you want additional help with your taxes.

2. Complete Schedule C to calculate your net business income from driving your taxi. Your total business income includes all cab fares. If you own your cab and rent it to other drivers, include your rental income on your Schedule C. Your total business expenses include the cost of fuel, cab repairs and leasing costs if you do not own your own cab. Subtract your business expenses from you income to calculate your net business income.

3. Complete Form 4562 if you own your own taxi. This form calculates your total depreciation deduction from owning a cab. The IRS lets you deduct the cost of business assets used in a business. Do not fill out this form if you do not own the cab.

4. Complete Schedule SE to calculate your total self-employment tax liability. As a sole proprietorship, you must pay your own taxes into the Medicare and Social Security program. Your self-employment taxes are based on your net business income, as calculated on Schedule C.

5. Complete Form 1040 to calculate your total income tax liability. Add any other forms of income over the past year to your business income to calculate your gross income on the top of your 1040. This concludes the adjustment for your taxi income. Complete your 1040 as normal to finish your tax return. Be sure to mail all completed forms to the IRS as part of your return.

References

• IRS.gov: 2010 Instructions for Schedule C
• IRS.gov: 2010 Instructions for Schedule SE (Form 1040)
• IRS.gov: 1040 Instructions
• IRS.gov: Instructions for Form 4562