Your miles are a big part of your expenses when you deliver for Doordash, Uber Eats, Grubhub, Postmates and other gig companies, which means you need to track them.
If you don’t track them, you cannot claim them.
If you don’t track them AND you claim them and the IRS checks into it, it can cost you big. Really big.
You need to understand what’s required for tracking and you need to make sure you have the right documentation.
Do I need to track miles if I don’t drive enough to itemize my deductions?
You don’t have to. Not if you like paying more taxes than you should.
But you should. Because you are self employed, you deduct your miles somewhere else. You can take the standard deduction AND still claim your miles.
Don’t listen to anyone who says otherwise. Unfortunately, there are too many out there who do. Way too many.
By the way: Don’t ask for advice on Facebook or Reddit. Just don’t do it.
Now that we have that out of the way, let’s talk about tracking miles.
What kind of tracking does the IRS require of delivery drivers?
The IRS requires a written record four specific things of your record.
- The date. This means you need a record for each day you claim trips.
- A description of where you went. It does not need to be detailed.
- How many miles you went.
- The business purpose of your trip.
They also require evidence of how many total miles you have. The best way to handle that is having an Odometer reading from the start of the day on January 1 and one at the end of the day December 31.
This means a couple of things:
First off, this means you have to have a record. You can not estimate. You cannot say that I drive 100% for business so every mile counts. It is NECESSARY that you have a record.
This also means you cannot rely on any mileage report that you get from Uber Eats or Doordash or anyone else who might have an estimate for you. That’s especially true if the mileage amount you are relying on does not break your miles down daily. That report doesn’t meet the IRS requirements.
What is the best way to track miles as a delivery driver for Grubhub Doordash Uber Eats, Postmates or other gig apps?
Is it better to use a GPS app or keep a written record.
I think either one can be good. There are benefits to both and I personally do both. The written record is my go to, and I run the app just to have documentation of WHERE I was. I do that more as a backup in case anyone claims they didn’t get their food, but it also serves as a good backup for my written record.
Advantage of a written record.
I have heard rumors that IRS auditors tend to be old school and trust the written record more than GPS records. I have no idea if that’s true, and there are aspects of the GPS record that seem more reliable. If they do prefer the written record, I think it’s that the written record of your odometer reading adds some credibility. You can tell what your mileage was at the start and end of the year. You can compare your odometer reading to your maintenance records to add credibility to the record. I think too that the regular task of recording the odometer reading at the start and end of your drives shows an attention to detail, which I think that adds some psychological credibility.
Disadvantage of a written record.
Maybe the biggest potential problem with a written record is what happens if the record gets lost? Now personally, I use Google Sheets, and that way the record is stored in the cloud. The one drawback for a lot of people is, it just takes a little more time to record that information. It’s easy to forget. Then what do you do?
Advantage of a GPS app.
The biggest advantage with a GPS app is that it provides more detail. You can look at the record and see exactly where you were. That goes above and beyond on the IRS requirement of identifying where you went. With some apps they will automatically record when you start driving, which is huge if you are prone to forget.
Disadvantages of the GPS app.
My biggest complaint on the use of an app is accuracy. I know, sounds weird to say that, how can you get more accurate than an actual recording of where you went. I have had times the GPS has glitched and actually duplicated trips. There are times when the GPS just doesn’t record. If my phone gets locked up by the Doordash app and I have to reboot, I may forget to make sure GPS is still recording.
What would a good written record look like?
You can make it as simple or as complicated as you like. You can do a notepad and draw six or maybe seven columns. Use these headings: Date, Start, End, Total, Destination, Purpose and, if you do a 7th, Note. The note column is just to explain anything that might look a little odd.
Here’s a screenshot of a spreadsheet that goes a little further.
This particular one goes a bit beyond what is required – the commute stuff is probably overkill. That said, it provides an extra layer of credibility and documentation. You could go with a very simple start miles and end miles and be just fine. Some would argue that not claiming those commuting miles is leaving money on the table. We talk more about that in the previous article in this series.
What is the best type of GPS app?
I have tried three: Stride, Everlance, and the app that goes with Quickbooks.
With Stride you have to manually start and stop the app to record your miles, and then you can classify. I’ve stuck with Stride, probably more than anything because it’s free. It has been the one most likely to glitch on me, sometimes duplicating records, sometimes failing to start even after I hit this Start a Drive. That’s an accuracy issue more than anything. One other small drawback to Stride is that it doesn’t differentiate between driving and walking. I’ll walk a block or two sometimes downtown for a delivery because it’s quicker than finding parking, and Stride counts that as miles.
Everlance and Quickbooks both have an automatic mode. They can detect when you are moving and start tracking at that time. On paper that’s a good feature. It keeps you from missing miles, and since I can sometimes forget to record, that can save money. The problem is with all the starts and stops when doing deliveries, I can end up with 60 different recordings in a day, and that’s cumbersome. The other issues related to this include that it’s a little harder to define a break between types of miles (such as personal or business or commuting) and there can be issues that the GPS did not actually start up automatically as expected.
Here’s something that I’ve not been able to find yet on a mileage app that I do find on exercise trackers like Strava. I can pull up a record of my bike rides on Strava and tap on a location and have it show exactly what time I was at that location. That would be a fantastic feature for a business tracker for documentation purposes.
The Triple Whammy
I mentioned that I have Strive recordings on top of my written (or Google Sheets) record. The reality is that I have three different documentations. I didn’t plan it this way for tax purposes but it does make it all pretty iron clad.
Some time back, I started tracking every single delivery. I did it more for business purposes. I record the start and end time, the miles driven, and the amount I earned. That allows me to see my hourly profit for any given delivery. It also allows me to create reports on which hours of the day make the most money and how much I profit hourly for each of the providers. It’s a great tool for helping me learn where I can earn the most money and for seeing my progress through the day.
I keep this on Google Sheets, and it gives me a great view of how my day is going. If it ever comes down to an audit, I have even further backup of my miles.
Track your miles.
You have to do it. If you do not have a good record of your miles and the IRS audits you, they will disallow any of your deductions. I drove about 20,000 miles last year, and not tracking miles would have added about $3,000 to my taxes.
Even if you are using the actual expense method, you have to track your miles. Why? Because you have to claim the percentage of miles that you drove for business. You still have to report how many business miles you drove for the year. If you do not have a record proving the business use of your car, you really can’t claim ANY of the actual cost of your car.
As a delivery driver who is an independent contractor, whether for Grubhub or Doordash, or any others like Uber Eats or Postmates, you have to keep a record of your miles. You don’t have to go triple overboard like I do (though it doesn’t hurt). If a GPS app like Stride is easier, go with that. But if you do that, pay close attention so you’re not missing trips and making sure everything is classified properly. Personally I think the written method works the best because it forces a discipline.
Whatever works best for you: Track. Your. Miles!!!
The Delivery Driver’s Tax Information Series
- Introduction to the Delivery Driver’s Tax Information Series
- Your Taxes are Based on your Profits, not Revenue
- Understanding your Revenue: Money In
- Understanding your Expenses: Money Out
- Filling Out Your Taxes
- Preparing for next year: How much should I save?