Money Doesn’t Come Without Guidance ...
As a taxi driver, if you set your own hours and no one supervises how you do your job, then you will be considered as self-employed. Even if you rent your cab from a rental company and use a dispatcher, you will be considered as an independent contractor. You will need to take every possible deduction on your taxes to lower your tax bill. Common work-related expenses for taxi drivers that can typically be deducted are as follows:
Lease Payments or Depreciation Value If You Own the Vehicle
The money you pay as a taxi driver to rent your taxi from a rental company is tax deductible. If you own a car, then the depreciation value will be tax deductible. You need to keep track of what the rental company charges for your taxi each day or yearly depreciation amount if you own that car. At the end of the year, sum up your expenditures for renting or leasing your cab.
Licence and Registration Fees
Any fees you pay to drive a taxi are deductible. This may include not only your taxi license but also any extra charges you pay to have a special driver's license. Your taxi registration fees are also tax deductible.
Car Maintenance Expense
You may claim your taxi’s maintenance expenses like oil changes, inspections, tire rotation expense etc. for deduction. You need to keep proper receipts to back up your claim.
Gasoline and Fuel Costs
You can claim your day-to-day gasoline and fuel expense for running the taxi. Keep track of your daily fuel expense and at the year-end total up your gasoline and fuel expenditures for claiming. You may need to provide proper logbook or receipts to claim this expense.
Equipment Expense used in Tax
You can deduct the cost of any equipment you use in your taxi service. If you have special equipment you use in your cab, these are business expenses. You can claim deduction for these expenses.
You can also claim deduction for insurance expense of your taxi, any parking fees related to work, business card printing expense, any membership fees related to driving a taxi etc.
While calculating deduction one thing you need to remember is that, you can only claim work or business related proportion of the expense. Personal expense cannot be claimable. If you incurred an expense for personal as well as work related, then you can claim only the proportion of the expense related to your work or business.