Letter: Be prepared to pay taxes

By

Published:

 

This is in response to the March 19 story “Delivery on Demand,” about a new approach to delivery of goods by Amazon using independent drivers. Given the proliferation of these Uber and Amazon “jobs,” it might be helpful to follow up with a story about the tax ramifications for performing this type of work. To the IRS or other taxing authorities, an independent contractor is the sole proprietor of a business. Both Washington state and Vancouver require one to purchase a business license if their gross receipts exceed $12,000. Many cities in Oregon also require business licenses.

A driver owes self-employment taxes to IRS on the net income from the work. At the rate of approximately 14 percent, a driver netting $10,000 will owe about $1,400. Drivers with annual self-employment tax over $1,000 are likely obligated to file quarterly tax payments to IRS. If one is delivering packages or passengers in Oregon, the driver is subject to Oregon income taxes as well.

It is difficult to avoid the taxman because Uber or Amazon will send a Form 1099, listing the gross amount paid to the driver, to the IRS and Oregon State Department of Revenue. It’s up to the driver to keep good records to support any business deductions.