How Do I Claim Mileage On My Taxes – Affiliate Statement: As an Amazon Associate and Partner for other programs, I earn from qualifying purchases. I may receive commissions for products or services at no additional cost to you.
The IRS allows you to claim your car expenses if you drive for your deliveries as an independent contractor (or for ridesharing trips). Whether you claim the standard mileage rate or use the actual expense method, you must have written proof of your business miles.
How Do I Claim Mileage On My Taxes
Another article discussed how to track miles for an economical gig job. However, it’s also essential to understand which miles you can track as a legitimate business deduction.
Maximize Your Business Deductions: The Power Of Accurate Mileage Tracking
A common question for delivery drivers is, how many miles can I claim on my taxes? When can you start tracking and when should you stop? We’ll look at the answers to that, including:
This article is about how to track mileage in the US. Other countries have their own tax laws which may or may not be similar. Because there are so many state and local governments, we don’t dive into local or state taxes. You should seek out a tax professional who can assist you with your location and related taxes.
Is mostly about the business side of shipping in the gig economy. Therefore, many examples will be related to food delivery companies like Grubhub, Shipt, Amazon Flex, DeliverThat and many larger companies.
There are many aspects to a delivery driver’s taxes. It is impossible to cover it all and do it well in one article. For that reason, this is part of a more comprehensive series on gig worker taxes. We’ll link to other articles where appropriate, and finally, we have a list of all the articles in the series.
Mileage Reimbursement: Definition, Examples And Tracking Tips
Finally, this is not tax advice. The goal is to inform and educate about how taxes work. For advice regarding your personal tax situation, you should seek guidance from a tax professional who is familiar with independent contractor taxes in your area.
All miles driven expressly and necessarily for your business are deductible. As an independent contractor, you file your taxes as a small business.
The IRS states that in order to claim a business expense, it must be necessary and ordinary for your type of business. In other words, it must be a regular part of a shipping business like yours and it must have a business benefit.
If you have to do mental gymnastics to describe it as business travel, it probably doesn’t meet the IRS definition.
Irs Standard Mileage Rates For 2023
There is an obvious business benefit if you make money delivering for companies like Doordash, Uber Eats, Instacart, DeliverThat, Roadie, Grubhub or others. You are driving for business when you are logged into one of the delivery or ridesharing applications with the intention of accepting reasonable offers for delivery or rides.
Delivery and ride-sharing trips aren’t the only legitimate business trips for workers. Trips to pick up supplies, to a company’s office for a gig, or to prepare your car for delivery all have a business purpose.
The first thing you should ask yourself is, what is the point of this trip? Is there a business benefit?
The moment you log into any of the gig economy apps with the intention of accepting a reasonable offer, you can start tracking. I call this the rule of intent: as long as you intend to work, you are driving for business.
Best App To Log Mileage
You don’t have to wait until you accept a delivery offer, nor do you have to wait until you arrive at a restaurant. The act of driving for the purpose of seeking business opportunities is a business activity.
The rule of intent comes into play here. The moment you’ve decided you no longer intend to accept opportunities is the moment you no longer drive for business. Whenever your ride becomes personal or a trip, you are no longer going for business.
Let’s look at the example of driving home at the end of a series of trips. If you keep the apps on and are interested in travel or delivery on your way home, it means there is still business intent.
However, if you’ve decided you’re done and going home regardless of the offers, it’s now become a journey. Your tracking ends with the decision that you are done.
Irs Now Has A Higher Standard Mileage Rate Because Of Rising Gas Prices
No. Business activity is not limited to the time you have passengers or food in your car. Looking for the next opportunity is a business activity. So is positioning for better offers.
The IRS does not require you to record individual trips. When it comes to delivery and ridesharing, when you’re moving from one stop to another, the entire time you’re driving is a business trip.
You can account for several uses of your car that may be considered part of a single use, such as round trip or uninterrupted business use, with a single entry. Minimal personal use, such as a lunch stop en route between two business stops, is not an interruption of business use. IRS Publication 463 for Combining Auto Expense Records
Based on the language from the IRS here, you don’t have to stop recording your miles for smaller trips, like a lunch break or personal errands, that don’t take you off the road. However, a personal trip that adds a few miles to your commute would not be “minimum personal use,” meaning you have to pause the recording for such.
How To Claim Mileage From The Irs Step By Step
This is not always how miles traveled look. Even if you drive to a place before starting our deliveries for Grubhub, Doordash, Instacart, Uber Eats or Postmates, those are miles for the trip.
One notable exception to the ability to claim miles is travel. The IRS does not allow you to deduct miles between your home and your workplace.
Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally unrecognized travel expenses. IRS Publication 463 under Transportation
While you use your car for business, it is not your place of work. Place of business is the geographic area where you provide delivery or ridesharing services.
Florida Mileage Rate For 2022 And What It Means For You
A good definition of commuting for gig workers is the miles traveled from home to wherever you start your business miles.
This brings us back to the intention rule. Your place of business is the location where you first log into a gig application with the intention of accepting reasonable offers.
If you immediately log in when you leave your home with the intention of accepting offers, you are driving for business. Those are not travel miles. However, if you travel to another part of the city before checking in, the journey between home and the point you check in is a trip. You can’t claim those miles.
The other part of the trip is your return home after the trips are over. At what point do business miles end and travel miles begin?
Printable Mileage Log Templates (free) ᐅ Templatelab
The answer once again lies with intention. Your commute home becomes a commute as soon as you no longer intend to accept deliveries or rides.
If you finish your last task and decide you’re done for the day and it’s time to go home, that trip home is a trip to work. However, if you stay logged in on the way home, deciding you’ll take a reasonable offer if it comes your way, they’re still business miles.
Does the home office deduction change things with travel miles? If you have an office in your home that qualifies as your principal place of business, you can deduct daily transportation expenses between your home and another work location in the same trade or business. IRS Publication 463 “Home Office”
The IRS states that if you can claim your home office as your principal place of business, that travel from your home to other places of business is deductible. That would negate everything we said about commuting, wouldn’t it?
What You Should Know About Reimbursing Your Employee’s Mileage
It doesn’t do that. That’s because the key word is “if.” We need to look into this from the IRS as well.
Example 3. You do not have a regular office and you do not have an office in your home. In this case, the location of your first business contact in the metropolitan area is considered your office. Transport costs between your home and this first contact are unrecognized travel costs. Transportation costs between your last business contact and your home are also unrecognized travel expenses. IRS Publication 463 Example 3 under Home Office.
In short, commuting to wherever you start working isn’t commuting if you have a qualified home office. If not, you cannot claim that trip.
The question is, do you have a qualified home office as a shipping or ridesharing contractor? For most drivers, the answer to that is probably no. That’s because of the two requirements you must meet to claim a home office as your primary place of business.
The 2022 Mileage Rate
The regular use clause is what creates the problem for most of us. The nature of gig economy work means there is little need for administrative work. Most of what we do
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