This is for drivers on Uber, Lyft, DoorDash, Instacart, Amazon Flex and everything adjacent to them. You are self-employed for tax purposes, which means nothing was withheld, the car is both your business and its biggest cost, and Proposition 22 gave you some benefits but not a retirement plan. The good news is the one nobody mentions: net self-employment income makes you eligible for a retirement plan of your own.
What is actually different about your money
The first year is where people get hurt, and it is always the same mechanism. Money arrived weekly and looked like wages, but nothing was withheld from it, so it was never actually all yours. Net earnings from self-employment carry self-employment tax at 15.3% — 12.4% for Social Security up to the wage base, 2.9% for Medicare with no ceiling — on top of whatever income tax you owe. Half of the self-employment tax is deductible in figuring your adjusted gross income, which softens it, but does not make it disappear. And it is not paid once a year: if you expect to owe $1,000 or more when you file, you are generally required to make quarterly estimated payments, and the penalty is for missing the schedule, not just the amount. Income from driving is taxable and reportable whether or not any platform sends you a form.
Second, the car. It is simultaneously your business, your commute and your largest expense, and there are two ways to deduct it: the standard mileage rate, which is 72.5 cents a business mile for 2026, or actual expenses — petrol, insurance, repairs, depreciation, the lot. You have to choose, the choice has consequences that reach into later years, and which one produces the better result depends on the car you drive and how you drive it. What we will say flatly is that the choice exists, that a great many drivers have never been told it exists, and that it is worth a single conversation with a CPA rather than whatever the software defaults to. What you must do either way is keep a contemporaneous mileage log, because a deduction you cannot substantiate is not a deduction.
Third, Proposition 22, described exactly as it is. For app-based drivers who meet the engaged-time thresholds, a network company must provide a healthcare subsidy — the full amount at an average of 25 or more engaged hours a week, half of it between 15 and 25, calculated from the average Covered California premium. It must carry occupational accident insurance covering medical expenses up to at least $1,000,000 and disability payments of 66% of average weekly earnings for up to 104 weeks. It must meet an earnings floor of 120% of the applicable minimum wage for engaged time plus a per-engaged-mile amount. Those are real protections and we are not going to be cute about them. What Proposition 22 does not do is create any retirement benefit: there is no employer contribution, no plan, no vesting and nothing that follows you when you stop driving. That is not a criticism of the law. It is the gap you have to fill yourself.
What you are usually sold
Two things get sold into this market. The first is tax preparation bundled with a refund product — fast, storefront, priced in a way that is hard to compare, and structured around getting a return filed rather than around what you should have been doing in March. The second is an IRA at a large brokerage, opened online, funded once, and then left in cash because nobody chose an investment. Neither is a scam. Neither is a plan either, and the more useful product for a self-employed driver — a solo 401(k) or a SEP-IRA — is rarely mentioned because it takes a conversation to set up and produces no commission.
None of that is illegal and not all of it is wrong. But you are entitled to know how the person recommending it is paid, and to compare. Our standard · our fees, published · the difference between an RIA and a brokerage.
What we do instead
We start with the tax money, because nothing else works until that is solved. A separate account, a percentage moved into it the moment a deposit lands, and four dates in the calendar. The percentage depends on your situation and your CPA sets it; the discipline of moving it at deposit rather than at quarter-end is what makes it survive. The safe-harbour rules give you a target that does not require predicting the year accurately — generally, paying 90% of the current year's tax or 100% of what last year's return showed, whichever is smaller, avoids the underpayment penalty, and higher earners have a different threshold to check.
Then we build the plan. Anyone with net self-employment income can open a solo 401(k) or a SEP-IRA, and the difference matters at driver-level incomes. A SEP-IRA is employer-side only: the lesser of 25% of compensation or $72,000 for 2026, which on modest net earnings is a modest number. A solo 401(k) lets you wear both hats — an employee deferral of up to $24,500 for 2026 plus an employer contribution — which frequently allows a driver to put away far more of a moderate income than a SEP would. It also has a Roth side, which for someone in a low bracket now is often the better choice. Once assets pass $250,000 there is an annual Form 5500-EZ, which is a real obligation and not a reason to avoid the plan. Which plan fits you · the honest comparison.
What we do not do is compute your deduction or tell you how to classify your work. The self-employed contribution calculation runs off net earnings after the deductible half of self-employment tax, and whether you are properly a contractor or an employee is a question for employment counsel and depends on facts we do not have. We open the account, choose what it holds, keep it funded, and publish what we charge. Evenings and video, because your working hours are not ours.
The retirement structures that actually apply to you: Solo 401(k), SEP-IRA, Roth IRA, quarterly estimated tax, Prop 22 healthcare stipend. Which of those fits depends on how you are paid and whether anyone else is on your payroll — the plan chooser walks through it, and this guide compares them honestly.
A first conversation, at no cost
Fifteen minutes on the phone. If your question has a short answer you get it on the call, and if we are not the right firm for you we will say so.
Where rideshare and delivery drivers are in Los Angeles and Orange County
We work across both counties from a principal office in Norwalk. These are the county guides, each naming the cities where this audience actually concentrates:
Our fees, published
No competing advisor page in this area publishes its fees. Here are ours.
| What | Fee |
|---|---|
| Investment management | 1.5% to 2.0% of assets per year; Advisers may set a rate below the standard schedule, as low as 0%, at their discretion — and whatever rate applies to you is disclosed in writing before you engage. Our Form ADV Part 2A, Item 5, states the fee as up to 2.00% of assets per year, subject to negotiation; the firm may waive all or part of it. Generally billed quarterly in arrears |
| Account minimum | No minimum account balance |
| Commissions and product fees | None — we are fee-only |
| Solicitor compensation | May be received or paid under disclosed arrangements |
| Initial conversation | Free, 15 minutes, no obligation |
Complete fee details in our Form ADV Part 2A, Item 5.
Questions
I drove all last year and never paid quarterly taxes. What do I do first?
Get the return filed and the liability quantified before you do anything else, with a CPA rather than a guess — the IRS has instalment arrangements, and the worst version of this is the one where nothing gets filed. Then set up the mechanism so it cannot recur: a second account, a percentage moved at deposit, and the four estimated-payment dates in your phone. The penalty for underpaying estimates is calculated on the schedule, so starting in the middle of a year still reduces it.
Standard mileage or actual expenses — which one should I use?
That is a tax question and we are not licensed to answer it for you, which is exactly why we will not pretend otherwise. What we will tell you is the shape of it: the standard mileage rate is 72.5 cents a business mile for 2026 and is simple to substantiate if you keep a log; actual expenses can be larger for an expensive or heavily used vehicle but requires you to track and keep everything, and the method you pick in the first year of using a car can limit your options later. One appointment with a CPA settles it for the life of the vehicle. Keep the mileage log regardless — you need it under either method.
Prop 22 gives me a healthcare stipend. Doesn't that count as benefits?
It counts as a healthcare subsidy and as occupational accident coverage, which are genuinely worth having and which many independent contractors in other fields do not get. It is calculated from engaged time — the full amount at an average of 25 or more engaged hours a week, half between 15 and 25 — and it is paid toward health coverage. It is not a retirement benefit. There is no employer contribution to any retirement account and nothing accrues to you over years of driving. If nobody is putting money away for your retirement, and under Proposition 22 nobody is, then the only person who can is you.
Can I really open a solo 401(k) if all I do is drive?
Yes, if you have net self-employment income and no employees other than a spouse. It is a real qualified plan with your name on it, and driving income counts the same as any other self-employment income. The practical limits are administrative rather than philosophical: it has to be established by a deadline, it needs a plan document, and past $250,000 in assets it files a Form 5500-EZ each year. For someone earning moderately it usually allows a much larger contribution than a SEP-IRA, because the employee deferral is not tied to a percentage of earnings. The mechanics.
Am I actually an independent contractor, or should I be an employee?
That is a legal classification question, it has been litigated in California for years, and it is not ours to answer — it turns on the specific facts of how you work and on which statutory test applies to your situation. Take it to employment counsel. What we can do is work with the income as it is currently reported to you, which is what your retirement planning has to be built on today regardless of how the law develops.
What does this cost, and is there a minimum?
There is no minimum to open an account. We ask for $50 a month of continuing deposits, because a plan you do not fund is not a plan. Investment management is 1.5% to 2.0% of assets per year, billed quarterly, and it is published on the site — which is more than most firms in this market will tell you before a meeting.
Do I have to have a lot saved already?
No, and that is deliberate. Most firms set a minimum precisely to avoid people at the start of this. We built the opposite: $0 to open, and the same fiduciary standard whether the account is four figures or seven.
¿Atienden en español?
Sí. Atendemos en español, y buena parte de nuestro material existe en español, escrito originalmente, no traducido por máquina.