Do I Need to Pay Self-Employment Tax on My Turo Income?

As a Turo host, you’re earning income by renting out your vehicle to others—but does this income subject you to self-employment tax? The short answer is yes. Turo hosts are generally considered to be operating a business by the IRS, and this means you’re likely required to pay self-employment tax on your earnings. Let’s dive into what self-employment tax is, why it applies to Turo income, and how to manage your tax obligations effectively.

What Is Self-Employment Tax?

Self-employment tax covers Social Security and Medicare taxes for individuals who work for themselves. The self-employment tax rate is 15.3%, which consists of:

12.4% for Social Security.
2.9% for Medicare.

Unlike employees, who split these taxes with their employer, self-employed individuals are responsible for the entire amount.

Why Turo Income Is Subject to Self-Employment Tax

Turo hosting is generally not considered passive income. Here’s why:

Active Participation
When you list your vehicle on Turo, you’re actively involved in managing your business. Activities like setting prices, managing bookings, communicating with renters, and coordinating vehicle pick-ups and drop-offs all point to active participation.
Services Provided
Many Turo hosts offer additional services, such as delivering the vehicle, cleaning it between rentals, or ensuring it’s in good condition for renters. These activities further classify your Turo income as active business income, not passive rental income.
Business-Like Operation
Whether you’re renting out one vehicle or managing a fleet, your Turo activity operates much like a business. The IRS typically classifies business income as self-employment income, which makes it subject to self-employment tax.

How to Report Turo Income

As a Turo host, you’ll report your income on Schedule C (Profit or Loss from Business) when filing your tax return. This is where you’ll also deduct business-related expenses to reduce your taxable income.

Key Reporting Steps:

Total Your Turo Earnings: Use the earnings summary provided by Turo to calculate your total income for the year.
Deduct Eligible Expenses: Reduce your taxable income by deducting business expenses (see below).
Calculate Self-Employment Tax: Use Schedule SE to determine how much self-employment tax you owe.

What Deductions Can Turo Hosts Claim?

One of the benefits of being classified as self-employed is the ability to deduct expenses directly related to your Turo activity. Here are some common deductions:

Vehicle Depreciation
A significant portion of your vehicle’s value can be deducted as depreciation over time. If you use the vehicle exclusively for Turo, you may deduct 100% of its depreciation.
Insurance Costs
Turo insurance fees or any additional business-related insurance you purchase are fully deductible.
Repairs and Maintenance
Expenses for oil changes, tire replacements, brake repairs, and other vehicle upkeep are deductible.
Cleaning Costs
Car washes and professional detailing fees are common and fully deductible expenses.
Tools and Supplies
Any tools or supplies you use to maintain the vehicle, such as vacuums or cleaning materials, can be deducted.
Advertising and Marketing
If you invest in promoting your Turo listing, such as running ads or creating a website, those costs are deductible.

Quarterly Tax Payments for Turo Hosts

Since Turo income is subject to self-employment tax, you may also need to make quarterly estimated tax payments throughout the year. These payments cover your self-employment tax and income tax obligations to avoid penalties for underpayment.

Quarterly Tax Deadlines:

April 15: For income earned January 1–March 31.
June 15: For income earned April 1–May 31.
September 15: For income earned June 1–August 31.
January 15 (of the following year): For income earned September 1–December 31.

If your Turo income fluctuates, consider working with a CPA to calculate your estimated payments accurately.

Stay Compliant and Maximize Your Earnings

Turo hosting is a great way to earn extra income, but it comes with tax responsibilities. Since Turo income is considered active business income, it’s subject to self-employment tax. Understanding your obligations and taking advantage of available deductions can help you minimize your tax liability and maximize your earnings.

At Wong CPA Advisory, we specialize in helping Turo hosts navigate their unique tax situations. Whether you’re managing one vehicle or an entire fleet, we’ll ensure your taxes are filed accurately and strategically.