Taxi drivers are regarded as self-employed people and as such, must pay taxes on their income. In actuality, taxi drivers are liable for both self-employment tax and income tax. Self-employed people are subject to self-employment tax, which is a social security and Medicare levy.
Taxi drivers are often independent contractors who lease a vehicle from the company and pay a fee for the right to use it instead of being employees of a taxi company. This entails that they are in charge of paying their own taxes and are not eligible for benefits like retirement plans or health insurance.
One must first fulfill the prerequisites in order to work as a self-employed cab driver. These can entail earning a commercial driver’s license, clearing a background investigation, and fulfilling their state’s age and driving experience criteria. Taxi drivers furthermore need to have a spotless driving record and may need to finish a training course.
Once a person starts working as a self-employed cab driver, they are in charge of maintaining complete records of their earnings and outgoings. This include recording their mileage, gasoline expenditures, and any other costs associated with driving their car. They must also submit an annual tax return as well as quarterly estimated tax payments.
In conclusion, taxi drivers must pay taxes on their income just like any other independent contractor. After establishing themselves as independent contractors, cab drivers must maintain complete records of their earnings and outgoings in order to properly file their taxes.