We live in a sharing economy. This is an economic model that uses peer-to-peer activity, allowing individuals to acquire and provide goods and services 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 (UBER).
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, completing 18.7 million trips a day. Many people become drivers to make a few extra dollars while others drive completely on a full-time basis.
Perhaps you're one of those individuals who's thought of signing up. Want to know more about what you need to become a successful driver? You'll certainly 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 what it takes to become an Uber driver, including what you'll need, your earning potential, the tax treatment for your income as a driver, along with some tips from the company.
- 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 regarding the age of the car, the size of the car, and the condition.
- The type of car insurance coverage you'll need varies by state. Uber does offer coverage, which is limited to only when the driver is logged into the app and driving customers.
- While you can earn $10 to $20 per hour, you are considered an independent contractor, which means you'll have to set aside money for income taxes, Social Security, and Medicare.
Becoming an Uber Driver: Where to Start
Before you get too invested in the Uber process, start by filling out the application on Uber's website (access it here). 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 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:
- A valid U.S. driver’s license
- Proof of residency in your city, state, or province
- Proof of auto insurance and car registration
- Driver profile photo (cannot be driver's license photo)
Many localities, such as New York City, also require you to have a commercial driver's license and 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 and for tax purposes as well.
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.
What Kind of Insurance Do I Need for Uber?
The type of car insurance coverage you need depends on your state. Uber does offer coverage, but only when you are logged into their 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 on 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 are en route, Uber's insurance covers more in the case of a covered accident, including:
- Third-party liability insurance with a $1 million limit
- Uninsured/underinsured motorist bodily injury (limits vary by state)
- Contingent comprehensive and collision coverage with $1,000 deductible (only for drivers with personal comprehensive and collision coverage)
What Kind of Car Do I Need to Join Uber?
Each city has its own regulations for vehicles. Uber will let you know what your city's regulations are after you sign up to drive. Depending on the city you live in, your vehicle must be 15 model years old or newer. Typically, nicer or busier cities require you to drive a more recent model. It must be a four-door sedan that seats four or more passengers, not including the driver. The vehicle must not have a salvaged, reconstructed, or rebuilt title and cannot be a painted taxi.
There are other tiers of Uber, including UberXL and Uber Black, which 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.
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?
Most drivers make about $10 to $20 per hour after accounting for expenses such as gas and car maintenance. Uber sometimes offers cash bonuses for new drivers. The company has also been known to offer up to $500 to Lyft drivers to join.
There are other ways you can maximize your earnings while driving for Uber, including:
- driving a hybrid vehicle, which can save you up to $200 a month 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," according to Harry Campbell from 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 you'll have to set aside a percentage of earnings to cover taxes. The company sends you a 1099 form at the end of the year to include with your annual tax return.
The self-employment tax you're responsible to pay as an independent contractor, which 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. Be sure to keep a detailed log of your miles and expenses. 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. For example, in 2019. 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 also adopts certain labor and wage policies.
On Aug. 20, 2021, Alameda County 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 Judge 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 repairs and maintenance costs, and any other car-related expenses. But 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 that's to the interior or exterior. This includes any time 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. This fee is then passed on to the driver.
Uber also reimburses drivers for any tolls incurred while they are on any driving trips. Toll charges are added to the rider's fare when they pass through a toll bridge. Both riders and drivers can see the breakdown in their receipts and statements.
Advice for Uber Drivers
Becoming a driver for a ride-sharing company like Uber can give you a steady income if you're out of work. Or your earnings can supplement what you make from your full-time job. Whatever your reason for signing up, it's a good idea to consider a few of the 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 brand new city or are driving in an area that you're unsure of, which can help make your driving experience smooth. It will also keep you in good graces with riders, too.
- 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.
- 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.
And don't forget: Safety first. Make sure your vehicle is in tip-top shape. And it's always a good idea to invest in a dashboard camera. This not only protects you against abusive riders and incidents, but you'll also have proof in case you need to make a claim or file an incident report.
The Bottom Line
Is driving for Uber right for you? In certain states and cities, Uber offers a flexible way to earn money. You can also use the service as a way to make some extra money to supplement your primary income. As the driver, you decide how much and which hours you drive. 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.
How Do You Qualify to Be an Uber Driver?
There are a few basic requirements 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. You must also have a valid driver's license and an eligible vehicle with four doors. 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 Give to Uber?
Uber charges drivers a service fee. This charge depends on the trip and is calculated by taking the difference between a rider's payment and the driver's earnings. This doesn't include any additional charges, taxes, and surcharges. According to the company, this service charge to Uber is lower if a driver is on a longer trip.
What Year Car Do You Need for Uber in 2021?
If you want to drive for Uber in 2021, your vehicle cannot be older than 15 years. This means your vehicle must be a 2006 model or newer. So someone who drives a 2004 Honda Civic can't sign up to use the app as a driver.
Can You Make $500 a Day With Uber?
You can certainly make as much as $500 a day as an Uber driver under certain circumstances. For instance, you can increase your earning potential if you drive in a major metropolitan area such as New York City or Los Angeles. You can boost your earnings by making sure you're available during surge pricing—that is, during peak times. You may also 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 of course, you also receive 100% of your tips.
Which Cars Qualify for Uber Luxury?
Uber Lux is considered the "most stylish trip option" offered by the company. This option offers riders a roster of luxury vehicles driven by professional drivers with high ratings. Vehicles are generally high-end, ranging from Bentleys to Rolls Royces, Teslas, Porsches, BMW Series 7 vehicles, and Mercedes Benz-Class S and G cars.