I am curious how I would go about contesting how I was compensated as an independent contractor to the IRS for tax purposes. Is there an official channel for this or do I have to go some sort of court, small claims court.

This question is specific to CA, USA.

Long story short, I am doing my taxes for lyft and how the payments work as I understand it is: Either the rider pays me 'the driver or independent contractor' the ride total and I pay lyft their 25% the for using their services OR the rider pays lyft and they pay me AFTER they have taken out the fee/expense per ride.

Now, I am curious because they list my AGI (adjusted gross income) as 25% more. As in I am payed by the rider and give them their cut, yet the amount I am payed does not include that when I am payed at the end of the week. So it seems they take the money from the passenger, deduct their cut and pay me.

So why am I paying income tax on money I didn't receive?

up vote 3 down vote accepted

You don't pay income tax on the part that is paid to Lyft. They are correctly listing the entire amount you earned for driving through their service - that is how much is supposed to be used as your income in the eyes of the law.

You then deduct the amount you paid to Lyft in fees etc as a business expense in your tax forms, under the appropriate section. That will alter your adjusted gross income when determining how much taxes you actually owe. If you're confused on how to enter that deduction properly, consult a tax agent or other support mechanism for the service you are using to file your taxes.

  • Where'd the bit about Lyft come from? An earlier revision? – Stackstuck Apr 1 at 1:40
  • @Stackstuck For some reason it was removed from the question. Added back in. – animuson Apr 1 at 1:44

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