As an independent contractor delivering for gig apps like Grubhub, Doordash, Postmates, Uber Eats and others, you need to understand what business expenses you can claim and how the process works to claim them.
Here’s the general rule – if the expense is reasonable and necessary for the operation of your business, you can probably claim it as an expense. And you SHOULD claim allowable expenses. Remember that your tax for your business is based on your PROFIT (the money left over for expenses).
I will warn you: Do not go overboard on your expenses. Be careful about claiming expenses out of the ordinary for your business. The IRS watches for patterns and anomalies in tax returns. If something is unusual for the type of business you operate, then your risk of audit goes up dramatically. Don’t neglect to record it if it’s legitimate, as long as you have documentation and it’s legitimate, claim it. But beware of going overboard.
How Claiming Expenses Works for Independent Contractors for Gig Delivery Apps
As an independent contractor you report your earnings and expenses on a Schedule C. I like to say this is the closest thing you have to a W-2. This is because the final amount (the profit or loss from your business) is what gets moved over to your tax return. I see four main parts in that Schedule C.
- Information about your business
- Money brought in by that business
- Expenses for that business
- The bottom line (what’s left over after expenses)
- I know, I said four, didn’t I? And here I have a fifth bullet point. There are some sections beyond these four where you may have to go into more detail about things you listed in the sections above.
You certainly want to get familiar with the expense section of the Schedule C. There are several expense categories, such as office expenses, vehicle expenses, etc. You will list the total amounts you spent for each category and add those up.
You can download a copy of the Schedule C from the IRS, however below there is a picture of that section.
What are the expenses I can claim for my business delivering for Grubhub, Doordash, Postmates, Uber Eats etc?
First off, I’m going to say that I had a heck of a time figuring out how to list these.
Wherever you find a list like this, please understand that this is not exhaustive. Nor is it authoritative. In other words, this is not tax advice (please see the disclaimer above). I am not a tax pro nor am I a CPA. This is all based on my research and seeking out competent information and trying to compile it as a reference for you. You absolutely want to make sure you’ve got professional guidance to verify these items.
In the end, I figured it made sense to just go through the categories in the Schedule C and talk about the kinds of expenses you can list in each. We have other articles in this series that go into depth on car expenses, so we won’t touch much on those here.
Expense Categories for Self Employed Contractors with Doordash, Uber Eats, Grubhub, Postmates, and others
Below is a list of the 20 different expense categories that the IRS lists on Schedule C. Some expenses, such as mortgage, don’t typically apply to what we do. Therefore I’ll give an explanation of each category and talk about examples that would fit for delivery contractors.
Line 8: Advertising
Because of the nature of our contract work, we rarely will have much in the way of advertising cost. If you post ads looking for clients, this is where you would record that cost. There are some small items that may apply
- Business Cards. If you printed business cards to advertise your availability for courier work, you could include that cost under advertising. For example, if you did some freelance delivery work outside of the gig apps.
- Printed materials reminding customers to tip or rate you. Back when it was hard for people to figure out how to tip on Uber Eats, I would hand out thank you cards that would ask them to rate my service. It was probably a passive aggressive way to ask for a tip without asking for a tip, since you had to rate the driver before being prompted by Uber Eats to leave a tip. On some platforms, customer ratings have a direct impact on your ability to earn, so the stickers that some use to ask for a rating would qualify as advertising expense.
Line 9: Car and Truck Expenses
This is the big one for most of us. You cannot use this line item if you use a motorcycle, scooter, bicycle or if you walk for your deliveries. But for the rest of us (MOST of us) this line item dwarfs all of the other expenses. On this line, you will enter EITHER the business percentage of your actual vehicle expenses OR your per mile amount. If you have parking and tolls related to your deliveries, you can add them here as well even if taking the mileage deduction. We cover the car costs in more detail in other articles.
Line 10: Commissions and Fees
If someone sold something for you and you paid a finder’s fee, this would go here. You probably aren’t going to have this kind of expense doing delivery.
The one area where you might claim something here in delivery is if the platform reports a higher income than they pay you, and then deduct a commission. Uber Eats is the biggest example of this in delivery, where they will report your earnings as $10 for a delivery, but then deduct $3.50 as a commission. It’s all on paper, but if you want to make your earnings line up with what Uber reports, you’ll want to report the total earnings they report, and then deduct the commission charge here on line 10.
Line 11: Contract Labor
If you paid a subcontractor to do deliveries for you, you can enter that amount here. If you did use a subcontractor, understand that you may have to file a 1099 reporting that income. Be very sure you have documentation if you claim this expense, as it’s not a typical expense for a gig worker.
Line 12: Depletion
This is related to mining and stuff where I can’t begin to imagine where you would enter an expense here as a delivery contractor.
Line 13: Depreciation
When you purchase significant items for your business that have a useful life of more than a year, you cannot take those as expenses. The reason for that is that you are exchanging one asset (money) for another (the item). As far as the IRS is concerned, you still have the same amount of assets when the transaction is done.
However, when the item loses value, now you have less overall value, and that is then considered an expense. That loss of value is called depreciation. You can claim the depreciation over the useful life of the item. For example, you can write off a car value over five years (IF you are claiming actual expense for your car). The IRS also has set up a Section 179 deduction that allows you to take the full value of the deduction immediately. You must understand, however, if an item is not used exclusively for business, you can only claim the business use percent of the item.
The rules and how you figure it out are kind of complicated so we won’t dive into the weeds here. There is some language out there suggesting you only need to bother with depreciation on items valued at $2500 or more, and you could expense anything less than that in other places. But then I see a former IRS tax analyst writing that you should use depreciation on a lot of these things. I don’t know for sure which is best. This is one area where it’s especially useful to get a tax pro.
Here are some typical items a delivery person might use Depreciation.
- Your Car. You can only claim your car depreciation IF you are using the actual expense method. The rules are complicated here and we won’t dive into much detail here.
- Your Smartphone. This is only true if you PURCHASED your smartphone. If you have a lease plan for your phone, you would claim that elsewhere.
- Software. If you have to purchase software as a one time item and the software is intended to last longer than a year, it would be handled here. The best example that might impact us is if you bought the desktop version of an accounting software like Quickbooks. You do not include software here if it is based on a subscription or is only good for a year or less.
- Dashcams. More and more delivery drivers are installing dashcams for protection and documentation. With increased instances of customers not receiving food and increased risk of accident on the road, a dashcam makes sense. My understanding is you can claim this even when taking the mileage deduction because it’s not part of the normal use of a car and has a business purpose. You should probably claim based on your business miles percentage.
Line 14. Employee Benefit Programs
I haven’t heard of anyone that actually has employees here, so I’m skipping this one.
Line 15. Insurance (other than Health)
If you get your own health insurance as a self employed person, there is a different place in your taxes that you can claim that. It’s not considered a business expense. Your car insurance is considered part of your car costs. Personal accident insurance to my understanding does NOT go here.
- Business Liability Insurance. If you purchase general business insurance or business liability insurance, that would go in this category.
- Workers Compensation for Self Employed Persons. Some states or municipalities may require a self employed person to purchase workers compensation insurance. In that event, the cost would be entered here.
Line 16. Interest Expense
You can claim interest on expenses related to your business. Make sure you are able to document that what you purchased is business related.
- Car Loan Interest. You can claim the business percentage of your interest on your car loan. If 60% of your miles were business miles, you can claim 60% of your car loan interest. You can read more here about claiming the car loan interest if you take the mileage deduction.
- Business Loan or Credit Card Interest. If you have a business credit card that you use exclusively for your business, you can claim the interest off that card. For example, you might get a credit card for your gas and car expenses. Any interest for this kind of card is deductible, provided it is for business expenses. You cannot claim interest for personal purchases. I would suggest you want to avoid claiming interest off a mixed use card (business and personal) as the math can get really complicated.
Line 17. Legal and Professional Services.
Quickbooks defines this as “fees for short term professional advice (including lawyers and accountants) regarding specific deals, sales transactions, or yearly taxes”. The most common of these would be tax and accounting, but also could include consulting fees.
- Accountant fees (ask your accountant to break out how much is related to business and how much is related to personal).
- Legal fees. If you set up a corporation or had fees related to consultation over business related issues.
- Business Coaching. If you hired a business coach or paid for consultation on how to improve your delivery business, this is where you would apply it.
- Other Business Consulting. Fees paid for consulting on how to set up a business, or consulting about a particular aspect.
Line 18: Office expense
This is basically about day to day operational cost. Since our business is out and about driving, this is usually a small amount. Be careful because a large office expense cost as a gig delivery person can look very out of place to the IRS. Some experts stick to simple office supplies here and will record everything else in line 27 (Other Expenses). Check with your tax professional to see which location they think works best.
- Software subscriptions. If software is a one time purchase meant to last multiple years, you claim it in depreciation. For monthly subscriptions or short term use software, claim those costs here. Example: Quickbooks Self Employed.
- Paid apps related to your business. This works the same as subscription software. Examples: A paid GPS tracker program or paid version of Dash Utility.
- Business Books. Books or audio books that help you with your particular business go here. It HAS to apply to this particular business to be claimed. Example: books on gig taxes (affiliate link)
- related to helping you understand or devel
- Bank Charges. Monthly fees, transaction fees, check printing related to a business bank account.
- Instant Pay Transaction Fees. Delivery apps often charge $0.50 to $2 per transaction. These fees act the same as a bank charge and are claimable.
- Cell Service. You would claim cell SERVICE here (not the phone) and only in the percentage of business use. I suggest avoiding claiming 100% unless you have a business specific phone separate from your personal. I can’t find a definitive explanation how to figure the percent. Some use business miles percent, some track what calls are business or personal, others go by hours (e.g. 20 hours delivery = 50%). Pick a standard, be reasonable, document it.
Line 19: Pension and profit-sharing plans
If you don’t have employees, this won’t apply. Personal retirement savings do not go here.
Line 20: Rent or lease
- Vehicle Rent or Lease. You cannot claim the lease or rent payments if you claim the mileage deduction. However, if you LEASE or RENT your vehicle and claim the actual costs, you can claim the business percentage of your lease payment (including taxes).
- Cell Phone Lease. A lot of cell phone companies now provide leases, such as what some call the iPhone for life. You have to turn the phone back in when upgrading. Check with your cell company, if you are on a lease (and not a purchase payment plan) you can claim the business percentage of your lease. See the note on cell plans under Office Expenses.
- Bicycle, scooter, or motorcycle lease or rental. If you are taking advantage of an eBike rental program for delivery, or leasing a bike or scooter or motorcycle for business purposes, you can claim the business percentage of the rental of that item.
Line 21: Repairs and Maintenance
If claiming actual expense for your vehicles, those repair and maintenance costs go under the category for vehicles.
Bicycle, motorcycle, or scooter repairs and maintenance. Two wheel vehicles cannot be claimed under line 9 for vehicle expenses. These items are treated more like business equipment. If you use a bicycle or motorcycle or similar vehicle for business, you can claim the repair and maintenance costs for the business percentage of the use of the item. If your motorcycle
Line 22: Supplies
This is where you would list the supplies and things you need on an ordinary basis for your business. For most of us, this is a pretty small amount. Some items that might fit into this category include:
- Delivery bags and cup holders. If you purchase delivery bags to help you run your business, that would fit here.
- Cell phone holder. Because of the use of navigation and constant use of the phone apps, a cell phone holder to make that easier is a reasonable business expense
- Emergency toolkit. If there are certain tools you need for safety while out on the road, you might enter that under supplies.
- Work Specific Clothing. Be careful with this one. As independent contractors, there generally is not a uniform requirement. Essentially the IRS definition is that the clothing has to be “exclusively for work” and “unsuitable for street wear.” If you purchase a Grubhub or Doordash branded apparel for your deliveries, that might qualify. I think there’s some grey area about if it is unsuitable for street wear. I’ve been tempted to claim my fedora and bowtie because it’s a branding thing. It’s just not enough deduction to take the chance.
Line 23: Taxes and Licenses
Any particular taxes and fees related to running your business would apply here. DO NOT CLAIM SALES TAXES PAID here. The IRS considers sales tax a part of the cost of the item.
- Business licenses. Some states or communities might require you to obtain a business license.
- Incorporation Fees. If you determine it makes sense to incorporate, the fees that you pay for incorporation go here. Assistance in preparing or applying for those fees would go under legal and professional.
- Property Tax on your vehicle. This is an item you can claim whether you take the standard mileage or the actual expense. You can claim the percentage of your property tax that corresponds to your business use of the vehicle.
- Permits. For example, you purchase a special permit to allow you to park in loading zones while delivering, that permit cost would go here. You could conceivably put it under parking under vehicles as well.
Line 24: Travel and Meals
Your normal driving is part of your vehicle costs. Driving around for normal delivery work is not considered travel for the purposes of this category.
- Business related travel. This is going to be pretty rare here. If someone held a convention for delivery couriers, you could claim travel for that under this category. If you served on a driver panel for one of these companies and had to travel out of town for such meetings would apply here as well.
- Business Meals. Understand this: you can NOT claim meals eaten as part of your delivery work. The IRS will disallow that in a heartbeat. A high number listed here for meals under our business category would be an instant red flag. If you were to get together with other drivers over dinner to discuss driving and concerns, you can claim half of your meal cost for that meeting. If you were to buy dinner for someone you wanted to refer as a driver, you could claim that as a business related meal. You want to make sure you keep the receipt, notate who you had the meeting with and the business purpose of that meeting.
- Dinner mints or candy packets. Some people hand those out with deliveries to help improve tips.
Line 25: Utilities
This line item is rarely going to apply. Home office utilities do not get applied here. This would only work if you had a dedicated office or location for your business.
Line 26: Wages
This is only going to apply if you have actual employees. That doesn’t include you.
Line 27: Other
If you have items that do not comfortably fit into one of the other categories, you would list them under line 27. There is a spot further down on the form where you can list all of the different things that you would fit in the “other” category.
- Professional Memberships. This doesn’t often apply. However, I know of at least one content creator that has created a membership community for drivers to help them grow their business. That membership fee would be listed here.
- AAA or Roadside Assistance. If you are purchasing these for safety purposes, with these being over and above what normal insurance would provide they could be claimed under Other Expenses.
- Professional Development and Training . Training courses on how to do accounting for your business or how to operate as a business would apply here. Be careful – if the training is geared towards learning a different career, it would not be deductible, the training has to apply to your particular business or improve your skills for operating said business.
- Service fees paid to the gig company. If you delivered for Uber Eats in particular, you’ll see that they report higher earnings than what you received. This is because of their whole use of 1099-K’s and treating the transaction as though you were being paid directly by the customer. When this happens you would report the higher income on the income side of your Schedule C, and then you would report that commission as an expense here. Some will report these fees here, others will use the Commissions and Fees (some report these fees in Line 10 – Commissions and Fees).
Additional sections of the Schedule C
There are a few additional items for the schedule C that go beyond the 20 categories mentioned above. I’ll touch briefly on them.
- Line 30: Home Office Expense. The IRS allows you to deduct expenses for the use of a home office IF that space is used regularly and exclusively for business. Your dining room table doesn’t count. I think it’s really hard to make a case for the use of a home office because the vast majority of your work is done in the car. The little bit of time you might spend updating your books and maybe emailing the delivery companies probably doesn’t qualify as regular use of the space for business. I would be hesitant to claim this.
- Cost of Goods Sold (Part III). This is something for when you are buying and reselling or you manufacture items. It will rarely if ever apply for gig delivery.
This is not meant to be an exhaustive list. I’m sure there are plenty of other expenses that are legitimate and can be claimed. Hopefully, seeing how this is laid out, and seeing the why some things qualify and why some others don’t might help you evaluate other things you have questions on.
There are some other deductions for self employed individuals.
There are some deductions you can claim on your taxes that are not listed on the Schedule C when you are self employed. Those are a different part of the tax filing process so we won’t go into detail on this page. Some of those deductions include:
- Deductions for self employed individuals who have to purchase their health insurance
- Deductions as a self employed person for retirement fund contributions
- A deduction for 1/2 of your self employment tax
- An income tax deduction for self employed and business owners.
Here are a few books you can check out that are very helpful when looking at your taxes as a self employed contractor. Ask yourself as you look at different expenses, would the IRS consider the expense reasonable and necessary for the operation of your business? If you know other good resources, then I’d love to hear from you so I can pass them on or add them to the list. Firstly, I’ll list one geared towards Rideshare, but it delves some into delivery. Next, you’ll find a couple that are more general but they maybe do slightly better at explaining taxes in general. Note, these are affiliate links to Amazon, purchases do help me keep this site running. You can learn more here.
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?