Average Salary: $22,820
Expected Lifetime Earnings: $953,000
Driving a taxi is not the most lucrative job out there. You're only going to make between $15k-$30k a year, depending on your shifts, tips, and the amount it costs to lease your cab. Also, those living in urban environments can pick up more passengers but the high cost of living in the city may offset their earnings. It's probably still preferable, however, to living in the boonies and only getting a call once every other week to drive Old Miss Hoover down to the dairy.
A number of taxi drivers own their own car, which means they are self-employed. Even though they can set their own hours and avoid lease fees, they are still responsible for obtaining a business permit and getting the right insurance. Furthermore, certain cities like New York City, Boston, Chicago, and San Francisco require taxi drivers to purchase what is called a "medallion." This may sound exciting, but it isn’t made of gold and it doesn't hang around your neck to alert all others of your glorious achievements in battle. Medallions allow taxi drivers to pick up passengers on the street. Otherwise, taxi drivers are limited to only picking up passengers who call their dispatch. These medallions limit the amount of taxis in cities. Because they cost around $150k—yes, you read that correctly—most people lease taxis from cab companies that have already invested in purchasing one. This would be a real good time for that old, rich, mean grandmother of yours to kick it and leave you a fortune.
She might want to look into Botox.
Taxi drivers are considered "independent contractors," which means they must purchase their own health insurance and take taxes out of their own pay. Getting health insurance is a good idea, considering all that maniacal driving you're going to be doing out there on busy streets. Taxi companies carry the minimum amount of insurance. If you get hurt, the insurance may only cover $15,000 of your medical bills. While $15,000 seems like a lot, it really isn't when it comes to serious injuries. One bad car crash can leave you paying medical bills for years to come. Not to mention the fact that it's tough to drive a cab wearing a full-body cast.
When filing your taxes, you will have to report your income as the total amount of fares you have collected in the preceding calendar year, plus rental income if you have rented your vehicle out to another driver at any time. You will be able to deduct such expenses as lease fees, gas, maintenance, and cleaning. You can also increase the amount of your return by making note of how much your vehicle has depreciated. It's nice to be depreciated.