We live in a sharing economy, an economic model that allows individuals to acquire goods and services and provide them to one another. This includes everything from access to capital, data, fashion, employment, and even transportation. The latter is commonly referred to as ride-sharing, but you probably know it better by one of the major players in that industry: Uber Technologies.
According to Uber, some 3.9 million people work as drivers in 63 different countries, completing roughly 14 million trips every day. Those figures date from 2018, though; by some estimates, the number of drivers hit 5 million in 2020, with 18.7 million trips completed each day.
Many people become drivers to make a few extra dollars, while others drive on a full-time basis. Perhaps you have thought of signing up. Here’s what you need to know about what is required to become a successful driver.
To start with, you’ll need a car and access to a smartphone, which allows you to connect with paying passengers. But that’s not all. Keep reading to find out what it takes to become an Uber driver and to learn other important details, such as your earning potential and the tax treatment for your income as a driver.
- All Uber drivers must meet requirements regarding age, driver’s license status, and driving experience.
- You’ll need to pass a driver screening, which includes a review of your driving history and criminal record, and provide proof of residency, along with proof of auto insurance and car registration.
- Your car will need to meet certain requirements relating to age, size, and condition.
- The type of car insurance coverage that you’ll need varies by state. Uber does offer coverage, but it’s limited to only when the driver is logged in to the app and driving customers.
- Uber drivers are considered independent contractors, which means that you’ll have to set aside money for income taxes, Social Security, and Medicare.
Minimum Requirements to Become an Uber Driver
Before you get too invested in the Uber process, start by filling out the application on Uber’s website. The requirements for drivers in the United States are listed below. Be aware that different countries and some cities and states within the U.S. may have different qualifications or regulations.
These are the minimum requirements that you must meet before you can drive with Uber:
- You must meet the minimum age to drive in your city
- You must have at least one year of licensed driving experience in the U.S.—or three years if you are under the age of 23
- You must have a valid U.S. driver’s license
- You must use an eligible four-door vehicle
Vehicle requirements vary by region. Uber will tell you what is required in your region when you apply.
Documents You Will Need
You will need to share the following documents with Uber:
Many localities, such as New York City, also require you to have commercial auto insurance to work for a car hire service.
Information for Driver Screening
Uber will require you to complete an online screening to review your driving record and criminal history. Uber will need your Social Security number (SSN) to perform the screening, as well as for tax purposes.
If you recently moved to a new state, you might be required to submit extra information to verify your driving history. Be sure to have your old state’s driver’s license and insurance on hand.
Steps to Become an Uber Driver
- Fill out the driver application form at Uber.com or on the Uber app, uploading all the requested documents when prompted. If you’re having trouble completing this process, call Uber or visit a local Uber office.
- Give your consent for background screening and then wait for a response, which can take up to 10 days.
- If your application is successful and your driver status is activated, enable driver mode in the Uber app. Now you can accept rider requests and start making money.
What Kind of Insurance Do I Need for Uber?
The type of car insurance coverage that you need depends on your state. Uber offers coverage, but only when you are logged in to its app and driving customers. When you’re offline or the driver app is off, your personal car insurance company and coverages apply.
When you are logged in and waiting for a driver request, Uber’s insurance for a covered accident covers “third-party liability if your personal auto insurance doesn’t apply.”
The coverage includes:
- $50,000 in bodily injury per person
- $100,000 in bodily injury per accident
- $25,000 in property damage per accident
When you are driving a passenger or en route, Uber’s insurance covers more in the case of a covered accident, including:
What Kind of Car Do I Need to Join Uber?
Each city has its own regulations for vehicles, and Uber will let you know what they are after you sign up to drive. Depending on the city where you live, your vehicle must be 15 years old or newer. Some cities, such as busier ones, may require you to drive a more recent model.
Also, the vehicle must be a four-door vehicle that seats four or more passengers, not including the driver; feature no commercial branding; not have a salvaged, reconstructed, or rebuilt title; and be in good condition. Normally, you’ll have to get your vehicle inspected for potential faults before driving paying customers around town. This inspection is repeated once a year or after 50,000 miles and is free if done at an Uber center.
There are other tiers of Uber, including UberXL and Uber Black, that have additional vehicle requirements. For example, an UberXL driver must have a vehicle that seats six or more, and an Uber Black driver must have a luxury class vehicle within a certain age range.
You can visit this page to determine which vehicles are eligible in your city.
If you do not have a car that meets Uber’s requirements, you can consider buying a used vehicle that qualifies. If you buy a new car for your Uber position, be aware of the potential wear and tear on the car. Depending on your budget and how much Uber driving you plan on doing, a used car might be a better option.
You can also research leasing a car, but know the mileage limitations before signing a lease. Uber has also partnered with car rental and leasing companies that offer discounts and deals to Uber drivers.
How Much Money Will You Make?
Depending on where in the country they drive, most drivers can make anywhere from about $5 to $26 per hour before accounting for expenses such as gas, tax, and car maintenance. Uber sometimes offers cash bonuses for new drivers, too. For example, the company has been known to offer up to $500 to Lyft drivers to join.
There are other ways to maximize your earnings while driving for Uber, including:
- Driving a hybrid vehicle, which should save you money on gas
- Driving during a surge, which is when Uber charges riders peak pricing due to the lack of available drivers in a certain area at a certain time or for rides in a populated city
- Making food deliveries with the Uber Eats app
“There’s plenty of earning opportunity as an Uber driver, but you can’t just flip on the app and expect to make a ton of money,” notes Harry Campbell, owner and founder of TheRideShareGuy.com. “You have to be willing to try new places, new times, and basically, go above and beyond what other drivers are doing.”
How Do Uber Drivers Pay Taxes?
As an Uber driver, you are considered an independent contractor, which means that you’ll have to set aside a percentage of earnings to cover taxes. The company sends every driver a tax summary and, if you’ve earned enough, a 1099 form at the end of the year to include with your annual tax return.
The self-employment tax that you’re responsible to pay as an independent contractor, consists of 12.4% for Social Security and 2.9% for Medicare.
You may be able to write off job-related expenses, such as miles, gas, and more, so be sure to keep a detailed log of them. Talk with a certified public accountant (CPA) to get a better idea of what can be written off when you file.
Some states are considering legislation that mandates minimum wages for independent contractors, along with access to benefits such as workers’ compensation, unemployment, and health insurance. Such laws might impact how taxes are paid, depending on how workers are classified.
In 2019, for example, California enacted Assembly Bill 5 (AB5), which requires many independent contractors, including rideshare drivers, to be classified as employees; it was overridden in 2020 by Proposition 22, which defines app-based transportation and delivery drivers as independent contractors and adopts certain labor and wage policies.
On Aug. 20, 2021, Alameda County (Calif.) Superior Court Judge Frank Roesch ruled that two sections of Proposition 22 were unconstitutional and that the measure as a whole was unenforceable; however, it remains in effect while its proponents appeal Roesch’s ruling.
The point is, the rules are constantly changing. Be sure to review your state and local government websites to see which laws apply in your area.
What Costs Does Uber Cover?
As an independent contractor, you are responsible for all of your gas costs, car repair and maintenance costs, and any other car-related expenses; however, there are certain costs that the company does reimburse for its drivers.
For instance, Uber charges riders a fee if there is any damage to the driver’s vehicle, whether interior or exterior. This includes any time that a rider spills something or vomits inside an Uber driver’s car. Uber makes a full assessment of the cost of cleaning and charges the rider. The full collected amount is then given to the driver.
Uber also reimburses drivers for any tolls incurred while they are on driving trips. Toll charges are added to the rider’s fare when they pass through a toll area. Both riders and drivers can see the breakdown in their receipts and statements.
Uber’s Advice for Drivers
Becoming a driver for a ride-sharing company like Uber can give you a steady income if you’re out of work or supplement what you make from other jobs. Whatever your reason for signing up, it’s a good idea to consider a few tips from the company:
- Familiarize yourself with the app. The app allows you to connect with riders and gives you a list of other features to help navigate you through the ride-sharing experience.
- Get to know your area. This is especially helpful if you’re in a new city or are driving in an area with which you’re not familiar.
- Learn to manage your time. Even though you can set your own schedule, you’ll make more money if you’re ready to drive during peak hours. The morning rush hour and evenings are usually the busiest times.
- Go above and beyond. Keep your vehicle clean. Be pleasant and engage with riders who want to chat. A few simple steps can help you get a five-star rating.
- Accessorize. Keep a phone charger handy. And remember that mounting your phone will help you keep your hands on the wheel.
Another useful tip is to invest in a dashboard camera. This device can protect you against abusive riders and incidents and provide proof in case you need to make a claim or file an incident report.
How Do You Qualify to Be an Uber Driver?
There are a few basic requirements that you’ll need if you want to sign up to become an Uber driver. You must meet the minimum age to drive in your city and have at least one year of driving experience (or three years if you’re under age 23). You also must have a valid driver’s license and an eligible vehicle with four doors. Moreover, when you sign up, you’ll have to provide the company with proof of residency, proof of insurance, and registration, as well as a profile photo.
How Much Do Uber Drivers Make?
Hourly rates vary, depending on the city where you are driving and the demand at that given time. Gridwise claims that hourly earnings can range anywhere from $5 to $26, on average, with its report showing New York City drivers making the most and El Paso, Texas, drivers making the least.
Ways to boost earnings include fuel efficiency and making yourself available when there are not enough drivers to meet demand. You also may want to consider short trips, which provide you with minimum pricing; signing up for promotions, such as making a certain number of trips per day or week; and being nice to riders to get tips.
How Much Do Uber Drivers Give to Uber?
Uber charges drivers a service fee, which varies for each trip and is calculated by taking the difference between a rider’s payment and what the driver earns, excluding tips, tolls, surcharges, taxes, and various other fees, including the booking fee. According to Uber, the service fee is variable rather than fixed to make it fairer for drivers and will be lower if the trip takes longer than expected.
What Will Disqualify You From Uber?
Uber runs background checks on all aspiring drivers and won’t accept just anybody. Potential candidates with certain types of criminal convictions will be barred from driving. That can include those awaiting trial for serious offenses. People with restrictions on their driving license or a history of recent driving violations also risk being excluded.
What Taxes Do Uber Drivers Pay?
Unless stated otherwise in your local laws, Uber drivers are treated as independent contractors by the Internal Revenue Service (IRS). This means that taxes won’t automatically be taken out of your income and that it is your responsibility to declare your earnings and settle any tax bills.
Uber usually helps out its self-employed drivers by providing them with a tax summary and, when applicable, a 1099-K tax document to fill out and send to the IRS.
The Bottom Line
Is driving for Uber right for you? In certain states and cities, Uber offers a flexible way to earn money.
As the driver, you decide how much and which hours you drive, meaning that you can easily work for Uber as a part-time or full-time business, or fit it into your school or existing work schedule. You’ll need a vehicle that’s no more than 15 years old and should have a smartphone so you can use the app.
But before you hit the road, make sure you familiarize yourself with the company’s policies and invest in a good dashcam to keep your riders in check.