Denver, CO asked in Tax Law, Civil Rights and Constitutional Law for Colorado

Q: Lyft claims that drivers are to pay income tax on the amount the passenger pays, not the amount the driver receives.

How is this legal, given the fact that Lyft does not disclose the full fare amount to the driver? Drivers are "agreeing by contract" to pay taxes on an unknown amount? How is this even close to legal? If state tax is included, a driver can pay more than 50% of their actual income to taxes, in some cases. Again, how is this even close to legal? Where can I find an attorney who may be willing to argue this point?

2 Lawyer Answers
David Ostrove
David Ostrove
  • Tax Law Lawyer
  • Los Angeles, CA

A: It all depends on what is being deducted from the Lyft driver's gross income. If it is something that the employer is required by law to deduct, then most likely the Lyft driver will need to report the gross amount, not just the net amount received by the driver. That of course is true of all employees.

D. Mathew Blackburn
D. Mathew Blackburn
  • Licensed in Colorado

A: You report gross and deduct the fees Lyft takes.

That's the IRS rules not Lyft.

You pay the same tax either way, it's just an accounting issue.

If this is confusing you should hire a professional to do your return.

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