This guest post comes from our friends at TurboTax Self-Employed.
The deadline to file your 2016 taxes is next week, on Tuesday, April 18. If you haven’t filed yet, you still have options. Here are few last-minute suggestions.
1. Use TurboTax Self-Employed to meet the deadline
You can use TurboTax Self-Employed to easily file electronically by the deadline. TurboTax Self-Employed asks you simple questions and fills out all the right tax forms for you to maximize your tax deductions. It also offers priority access to credentialed experts so you can get live one-on-one answers.
To get started and save $20, head to the Driver Dashboard for a summary of your last year’s income, along with links to any 1099 forms that you qualified for. Remember, you’ll only get a 1099 if you met the minimum reporting thresholds ($600 in earnings and 200 rides for a 1099-K, and $600 in bonuses for the 1099-MISC). Even if you don’t receive a form, you’re still required to report your income to the IRS.
2. Be careful, and proofread
The biggest problem with filing at the last minute is the possibility of making an error that delays the processing of your return and refund, if one is due. The three most common mistakes made by last-minute filers are:
- Math errors (easily prevented with a calculator or tax software)
- Incorrect Social Security numbers (be sure to proofread)
- Failure to sign or date the tax return
Keep in mind that if you used TurboTax last year, all of your personal data was stored and will automatically be imported if you use TurboTax again this year, reducing the chance for errors. If you use TurboTax for the first time this year, next year’s return will have all of the personal information available — you'll just need to double-check it and update it with any changes.
3. Avoid a tax audit
To claim an expense, the deduction needs to be considered ordinary and necessary for your business. This is what the IRS looks for in an audit:
- The amount
- Business justification
- Date incurred
- Category of spending
- Proof of payment
For a list of the top tax deductions for Lyft drivers, see Tax Tips for Lyft Drivers. You can also use this free Self Employed Expense Estimator to see how much you can increase your tax savings by applying your estimated self-employed business expenses.
4. File an extension and gain additional time
If you haven’t already organized all of your tax materials, you might consider filing a tax extension. You will avoid a late filing penalty and get up to six months to prepare your taxes accurately in October.
The IRS usually grants extensions automatically, and you do not have to provide a reason why you are requesting the extension. There are some requirements:
- You must file the extension request by the tax deadline (midnight on April 18 for 2016 taxes filed in 2017). Don’t worry, you can file a tax extension for free using TurboTax Easy Extension.
- You must still pay any taxes you owe on time. The extension is for filing your taxes, not for paying them. If you haven’t completed your tax return, you will have to estimate the payment amount.
- You can use the Driver Dashboard to compute your income, and then add anything you else you earned in 2016. You can use free tax estimators to estimate your taxes.
- You can also find your tax rate on the IRS tax tables and then deduct your personal exemption for a rough estimate of how much you owe.
- If you owe more than you can afford to pay, the IRS recommends filing your extension request and then calling or setting up a payment plan online.
5. Stay organized
Whether you’re filing your return or requesting an extension, keep yourself organized year-round with important documents—including receipts—by putting everything in one place. Whether it’s tracking with QuickBooks Self-Employed*, a folder system or a shoebox, having a single place to search will make the preparation of your income tax return easier. Some of the documents to include are:
- Form W-2 (if you have a full-time employer in addition to your Lyft gig). Your employer must mail the form, which shows your earnings and taxes withheld, by January 31.
- Form 1099-INT, for interest earned, such as from a savings account.
- Form 1098, Mortgage Interest Statement, which shows mortgage interest paid on a loan for your own home.
- Receipts for all purchases and payments, including those for business, healthcare, and education.
- Social Security numbers: yours, your spouses (if you are filing jointly) and all listed dependents for whom you are claiming a dependency exemption.
Remember, TurboTax Self-Employed makes it easy to prepare and file your taxes online, which is the fastest way to get your money if you’re expecting a tax refund.
*File your 2016 TurboTax Self-Employed return by 4/18/17 and receive your complimentary subscription to QuickBooks Self-Employed until 4/30/18. Activation required; e-mail address used for activation and sign in*
As a reminder, Lyft does not provide tax advice.