In accordance with the rules and regulations outlined by the Canada Revenue Agency (CRA), ride-sharing drivers such as Uber and Lyft Partners are self-employed and are required to file their Canadian income taxes as being self-employed. That means that in addition to the usual income tax forms, the T1 General and the Schedule 1, you will need to report your self-employed income on Form T2125, Statement of Business or Professional Activities.
Our easy to follow step-by-step process with TurboTax Self-Employed helps you file your personal and business taxes together, and also provides extra guidance through self-employment income and deductions. Although this handbook is not intended to take you through every step of the process, it will cover common questions about entering Ride-share related income and expenses for tax preparation using TurboTax Self-Employed.
Let’s take a look at what you should gather before starting your return in TurboTax.
In order to begin the process of completing your tax return, there is some information that you will need to gather related to your income, expenses, mileage and other tax-related expenses, such as;
- Your Annual Tax Summary from your Ride-share partner
- Receipts, bills and statements for all tax deductible expenses
- Your total vehicle mileage driven for the year – Odometer reading from the beginning of the year and at the end of the year
- Kilometers driven for business and personal
- Your Social Insurance Number (SIN)
- Any other tax documents and slips related to other employment (if applicable)
Don’t worry if you don’t have everything in order yet because you can still get started without it all. The TurboTax Self-Employed software will ask you easy-to-answer questions in plain English and take that information and put it in the correct tax forms for you.
Preparing your Tax Return
Step 1: Create your Personal Profile
First, you will need to enter your personal information to create your Personal Profile, which includes;
- Marital Status
- Contact Information
- Dependants (and their SIN’s, if applicable)
- Language Preference with the CRA
Step 2: Create your Tax Profile
Once your personal information has been entered, you can start with your tax profile. This is where you tell TurboTax all about your sources of income, expenses, investments and other items that may be applicable to your unique tax situation. Remember, if you had other employment income or items which may have impacted your taxes beyond Ride-Sharing income, you will need to file all of that together.
2a. Completing your Tax Profile
Continue through the Tax Profile by continuing to answer questions from our easy step interview that are unique to your tax situation. Then click “Continue”.
Step 3: Enter Your Income Information
Follow the on-screen prompts and enter any tax slips that are relevant to your tax situation. For example, if you had a source of employment income you may have a T4, etc.
If you earned other income during the year, or made any contributions to an RRSP, TurboTax can help you can get a jump-start on your taxes by automatically importing your slips directly into your TurboTax return from the CRA using the Auto-Fill my return feature. In order to use that, you will need to be registered for the CRA’s My Account.
Next, it is time to start entering your Uber Partner Income information under the self-employment income section.
3a. Identifying the Type of Self-Employment
Step 4: Completing Form T2125
Next you will need to complete the T2125 Business Identification, Business Statement, and this is all completed within the TurboTax product so you just have to follow the on-screen prompts and complete the information that is applicable to your unique tax situation.
Here are some TurboTax Tips for Ride-Share Drivers:
4a. Business Statement: Basic Information
4b. Business Statement: Business Address
4c. Business Statement: Industry Code
4d. Business Income
4e. Vehicle Expenses: Claiming Vehicle Expenses
4f. Vehicle Expenses: Adding Your Vehicle for Business Use
4g. Vehicle Expenses: Entering your Vehicle Information
There are various ways you can determine the value such as looking up the ‘book value’.
- If you purchased the vehicle in 2018 and its cost was $30,000 or less, then use Class 10.
- If the cost was greater than $30,000, then use class 10.1 and enter a maximum of $30,000 plus applicable sales taxes (using $30,000 as the cost of the vehicle).
- If this is your first year as a ride-share driver, leave the “UCC at the beginning of the year” part blank.
4h. Vehicle Expenses: Summary
4i. Business Expenses: Claiming Business Expenses
4j. Business Expenses: Licenses, Business Taxes or Dues
4k. Business Expenses: Office Expenses and Other Supplies
4l. Business Expenses: Banking Charges, Professional Advice and Service
4m. Business Expenses: Telephone and Utilities
Step 5: Reviewing the Bottom Line
Now you’ll be presented with a statement of your business income. You can review the bottom line, and if you’re satisfied, click “Continue” to move forward to the Business Summary page.
5a. Statement of Business Income
5b. Business Summary
5c. Employment Insurance Contributions
You have successfully completed your self-employment income and expenses related as a Ride-Share Driver!
TurboTax Self-Employed will continue to guide you through the rest of your Canadian income tax return. Simply follow the on-screen prompts and complete the relevant information that is applicable to your unique tax situation.
Keep an eye on the ticker in the top left corner and watch it decrease after entering your income and as you enter your deductions.