Can I avoid taxes on Uber income by using an LLC and company car deduction?

This is a good question about business structure and tax deductions. You can absolutely form an LLC for your rideshare business, and yes, you can deduct legitimate business expenses including vehicle costs - but it's not quite the "tax avoidance" you might be thinking of. Here's what you should understand: Whether you operate as a sole proprietor or an LLC, you can already deduct your actual car expenses (or use the standard mileage rate). An LLC by itself doesn't change your tax situation - a single-member LLC is treated as a "disregarded entity" for tax purposes, meaning it's taxed exactly like a sole proprietorship on your personal return via Schedule C. The vehicle purchase can be depreciated over time or potentially qualify for Section 179 expensing, but you can't simply "offset all income" with the car purchase in one year. There are specific rules about how vehicle expenses are deducted, particularly for passenger vehicles.

After getting hit with a massive tax bill from my rideshare income last year, I was in the same boat trying to figure out ways to reduce my tax burden. I tried several approaches before discovering https://taxr.ai which completely changed how I handle my business expenses and deductions. What I found most helpful was their ability to automatically identify all possible deductions for my rideshare business and organize them properly. They analyzed my driving patterns and expenses and found several deductions I was missing - like certain maintenance costs and even a portion of my cell phone bill that I didn't realize was deductible. The system also helped me understand the difference between mileage deduction vs. actual expenses deduction, which was huge since I was choosing the wrong method for my situation.

Just wanted to follow up about my experience with https://taxr.ai after being skeptical initially. I decided to give it a try with my Uber and Lyft driving income. The service identified several deductions I had been missing completely - particularly around partial deductions for things like car washes, cell phone mounts, and even snacks I provide to passengers. What really surprised me was their analysis showing I should switch from taking the standard mileage deduction to actual expenses in my situation. With my high-maintenance vehicle, I'm actually saving about $1,400 in taxes this year by tracking actual expenses instead. They also confirmed what was mentioned earlier - forming an LLC doesn't provide tax benefits by itself, but helped me understand exactly when it might make sense in the future as my business grows.

For anyone dealing with tax questions about their rideshare business, I want to share something that saved me tons of headache. Last year I had a similar question about business structure but couldn't get a straight answer from the IRS website. After spending HOURS trying to call the IRS (constant busy signals and disconnections), I found https://claimyr.com which got me connected to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with explained exactly how the LLC vs. sole proprietor situation works for rideshare drivers and confirmed that either way, I'd file a Schedule C and could deduct the same business expenses. They also clarified the rules about business vs. personal use of vehicles which was super helpful.

Ok I have to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway since I was desperate to talk to someone at the IRS about my rideshare deductions. I was shocked when I actually got through to an agent in about 15 minutes. The agent confirmed everything that's been discussed here - an LLC doesn't change tax treatment unless you elect S-Corp status, and you can deduct vehicle expenses either way. But they also explained some nuances about mixing personal and business use that were really important. Apparently even a small amount of personal use can drastically reduce the deduction, so the "100% business use" part the original poster mentioned is actually critical. They also warned me about some common audit triggers for rideshare drivers, which was super valuable information I hadn't seen before.

I'm a full-time Uber driver (3 years now) and I can add some practical advice. Whether you go LLC or sole proprietor, what REALLY matters is documentation. The IRS loves to scrutinize rideshare drivers because so many of us mess up the record-keeping. Keep meticulous mileage logs (I use Stride), save EVERY receipt related to your car, and take photos of maintenance records. Document when you start and stop driving for the day. If you claim your car is 100% business use, be prepared to prove you have another vehicle for personal use. From experience, the standard mileage deduction (65.5 cents per mile for 2025) is usually better than actual expenses unless you drive a gas-guzzler or luxury vehicle with high maintenance costs.

Quick question for those with more experience - does anyone know if you can switch between standard mileage deduction and actual expenses year to year? I'm getting a newer car soon specifically for Uber and wondering what's best.

Great discussion everyone! As someone who's been doing rideshare driving for 2 years, I wanted to add a few practical points that might help the original poster. First, regarding the LLC question - you're right that it doesn't change your tax situation for deductions, but one thing to consider is that some insurance companies offer better commercial auto rates to LLCs versus individual drivers. It's worth shopping around. Second, about the "100% business use" claim - be really careful here. The IRS scrutinizes this heavily. Even driving to get gas, going to the car wash, or driving to your first pickup of the day can count as personal use in their eyes. Most tax professionals recommend being conservative and claiming something like 90-95% business use to avoid audit triggers. Finally, don't forget about other deductions beyond the vehicle! Phone bills (business portion), toll fees, parking costs, and even roadside assistance memberships are all deductible. These can add up to significant savings even if you're taking the standard mileage deduction.