I have discussed this part-time passion with a few of my friends, many of whom have decried the idea of ridesharing as far "beneath them". Firstly, if you enjoy driving and are able to fit it into your schedule, I don't see anything wrong with using a little hustle to turn it into money. It is especially attractive as a way to justify owning a vehicle - if you are able to drive enough to pay for the car, you are essentially turning your free-time hours into a nice vehicle you can use for your enjoyment.
One question comes up over and over again, though: how much can you make a year driving?
This is a very difficult question to answer. Earnings are very volatile. Taxes are very different. Set hours and vacations don't exist so it's difficult to compare with an exempt, W-2 employee's salary, but I will attempt to do so below.
Right now, on a cash basis, Uber/Lyft pays me ~$24-$28/hr for driving. Since I mostly drive peak hours, I'd imagine this number is higher than it would be if I were to spread this to a full-time position. For a conservative measure, let's assume that I would earn $22/hour if I worked 45 hours/week.
Thus, my weekly earnings are $22 * 45 = $990
Mileage is the large downside, however, and it often varies. I think it is fairly conservative to assume that you will drive 15 miles/hour. It all depends on your location and the rides you pick up. Often, urban areas will result in more frequent, shorter rides with little downtime in between (great earnings!) where more rural areas will have less frequent, longer rides with lots of downside (more mileage, lesser earnings). This number can vary greatly, but I have done around 15 miles/hour during my time.
45 hours * 15 miles/hour = 675 miles/week. In 2015, mileage was able to be deducted for $0.575/mile.
675 * $0.575 = $388.13 of expenses.
So, driving for 45 hours will yield $601.87 (or $13.37/hour) Not much better than a minimum wage job in California.
~47 working weeks in a W2 job (2-3 weeks of vacation plus holidays) means this is comparable to $28,288/year in salary.
But, this is where the tax implications play a MAJOR role. If your expenses are less than $0.575/mile, you are actually hacking the tax code to your benefit. The farther below this number you are, the more benefit you are receiving (especially if you are in a high tax bracket or a high tax state - this author lives in California)
Let's investigate how:
My actual mileage costs are $0.18/mi. So on a cash basis, the above numbers become $990 - 675 * $0.18 = $868.5
47 x $868.50 = $40,820
This already bumps the annual salary to $40,820. The key difference though is that you are taxed as if you are earning the $28,288/year in salary. It is similar to a 401(k) in that you are sheltering income as tax-free. Everybody's tax situation is different, but if you are in the 25% tax bracket, this means you are "earning" an extra 25% of the cash. Thus, the annual salary is CLOSER to $40,820 + (($40,820 - $28,288)/.75) - ($40,820 - $28,288) = $44,997
This is the number I have been telling people to manage their expectation. I sincerely believe if you did peak hours or were willing to work more on weekends and holidays, you would be able to keep the numbers higher.
As you can see, the calculations are complicated, but the key is simple. Don't expect to get rich quick. Take your time. Keep your costs low. Have fun.
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