Some of you know that I retired in 2020 after 25 years in tech. While I was working at Google, my wife and I were always in the top tax brackets. In 2020, we sold a portion of our stock portfolio to fund our retirement, pushing us into the top tax bracket with a tax bill equal to our mortgage.
The average American pays $525,000 in taxes in a lifetime. My wife and I have well exceeded expectations. We are now on the flip side. For retirement, we have setup tax neutral passive income streams, so now we can focus on enjoying life and only work “jobs” that are tax efficient.
Let me share the numbers from one full year of Lyfting, and what the final numbers are for taxes. With a gross income of about $40K (Lyft + Wingz), my final rideshare net income after expenses and deductions was $9887. Our final tax bill after all income streams was $1593. Not owed after withholdings. Total.
Interested in the details? Read on.
Lyft as a business is pretty simple. You are a contractor, so you get a 1099, not a W2. This means there are no Social Security tax, Medicare tax, or other allowances withheld. Not being an employee, you are also allowed to contribute $6000 to an IRA to further reduce taxes. As an individual business owner, you are able to deduct reasonable business expenses.