Whether claiming the standard mileage deduction OR actual expenses, you need to know what miles you can claim as a delivery driver contracting with gig companies like Doordas, Grubhub, Postmates, Uber Eats and others.
Because here’s the thing: to claim either one, you have to know how many miles you have driven for business. If you do not have a proper record, you may have your deduction disallowed under either method. Track. Your. Miles.
We’ll talk more about how in another article.
What Miles Should You Track?
Very simply, any miles driven specifically and necessarily for your business. If you drove for business purposes, you can claim those miles. If they were for personal use, you cannot.
I heard someone say they only use their one car for delivery and other cars for business, so what they do is just write down the odometer reading at the start of the year and at the end of the year. If that person gets audited, that’s not going to stand up. And if they are saying 100% of miles are for business, that’s the kind of thing that is more likely to trigger an audit. So on both counts, that’s not a good idea.
Track. Your. Miles.
The difference between personal and business miles
Any time you are using your vehicle for delivery, those are business miles. Miles related to business (such as driving to the company office and driving to get supplies are also considered business miles. When you rely on your car for your business, miles related to the maintenance of your car (to get gas for delivery, to the garage for maintenance or repair, to the store for car related items) can be counted.
Any miles you drive for personal reasons can not be counted. Trips the grocery store, trips to go out with your partner, None of these count. Any kind of errands that you run or trips for personal purposes can not be claimed.
Commuting miles cannot be counted. Even though you don’t drive to an office or place of work, delivery and rideshare drivers can have commuting miles.
When can you start tracking your miles as a delivery driver for Grubhub, Postmates, Doordash, Uber Eats or other contractor delivery gigs?
Let’s start with the absolutes: The moment you accept an order, the miles you drive both TO THE RESTAURANT and then to the customer all count as business miles. Any miles driven in between restaurant and customer count. Any miles driven from the point you drop off to a customer back to a busier area where you can get orders count.
You do not need to keep a separate log of every trip. Geek confession time? I do it. It’s not for tax purposes but it makes a heck of a backup if I ever get audited. I personally track every delivery, because it gives me data on how much I earned for that delivery and helps me track which platforms and which times are most profitable for me.
But it’s not necessary. As long as you are moving from one delivery to another, you can track it all as one trip. If at some point you have to do personal driving, that’s the point where you stop. I get this sometimes if one of the kids needs a ride, or maybe when I want to take a break and meet my wife for coffee. You start at the very latest when you accept your first offer, and you stop tracking the moment you head off for a personal errand or when you drop off your last delivery.
Let’s get specific about commuting miles and delivery.
Even as an independent contractor, miles driven to where you intend to work are considered commuting miles. I know there’s a lot of discussion over this question about if you can track the miles from when you leave the house or when you are returning home.
Let’s call it the rule of intent. If you are logged in with the actual intent and ability to deliver, those are business miles. If there is no intent to deliver, such as travelling to a an area before you go available, or heading home after a delivery, you are commuting. I thik this article by Stride puts it pretty well.
I know, how can anyone know your intent? That’s what makes it tricky. Understand that in an audit, the burden of proof is going to fall on you.
Some Scenarios and whether it’s commuting or not.
- You get in your car and go available immediately. You live close enough to some restaurants that if a good offer comes across your phone, you’re ready to take it. At that moment, you are available and have the intent to deliver. You can start counting miles immediately
- You are scheduled for a time block (especially with Grubhub or Doordash). Say you decide to leave early and drive to a spot where you think there will be good offers. If you are unable to take orders or unwilling to take orders prior to arrival or prior to the start of your block, that would be considered commuting.
- You do not live in the region in which you deliver and have no opportunities to accept any offers where you live. You have to drive to that region before you can receive any offers. The drive to that region would be considered a commute.
- You drop off an order and it’s about time to call it a day. You start heading home but keep the app turned on. You’re willing to accept a reasonable offer but none come in by the time you get home. You turn the app off when you get home. This could reasonably considered business miles.
- You’re done. It’s been a long day and you just want to go home. You drop off that last order and head home. There is no intent to accept any other offers, so whether you are logged in or not, this is considered a commute.
Some last thoughts on commuting vs business miles
I think you can make a stronger case for miles that you drive from the moment you leave the house than you can the miles returning home. Maybe it’s just me. When I’m done, I’m usually done. Sometimes when driving home I’ll leave the app on looking for something that will take me the general direction and I’ll usually count that.
Here’s something to think about when it comes to miles. I’ve mentioned this elsewhere in this guide, and that’s how the IRS looks for patterns. Their computers look for deductions that are out of the ordinary for a type of business. Really high miles are one of those triggers. Now if you’re doing delivery or rideshare, those high miles are more normal. But if you list 100% of your miles as business, that’s the kind of thing their computers can say looks a little out of place.
If your miles are 100% business and it’s legitimate, claim them. Just make sure you can back it up.
How the differences between delivery companies can impact commuting miles
Claiming miles with Doordash. The way Doordash is structured might make you have to claim commuting miles more often than the others. In many markets you have to rely on scheduling and with their smaller sub-regions it is not as easy to just go available from your driveway. If you are scheduled in a region outside your own the miles you drive to get to that region are technically commuting miles.
Claiming miles with Grubhub. Because Grubhub gives you the ability to go available even when you are not scheduled, you have a little more flexibility here. However, if you live outside the delivery region, you still have some commuting that you have to claim. If you only deliver while on a scheduled block and drive to get in position before your block begins, those miles are technically a commute.
Claiming miles with Postmates and Uber Eats. These two platforms are usually much more flexible. You can log in on the fly and there’s usually less concern with schedule blocks or regions on these two. That makes it easier to make a case that you are available immediately or that you are available on your way home.
Multi-apping and claiming miles. I highly recommend that you sign on with more than one delivery company, because it gives you more options. There are times that I work more than one app at a time. Being able to log in as available on more than one app gives you more flexibility and more ammo to legitimately claim you are available with intent to deliver while driving to or from your home.
Are there situations where you never have to consider those miles as ‘commuting’ miles?
I’ve heard two scenarios that I want to discuss:
One is that you work from home. Therefore every mile from the point you leave to when you return is valid, from driveway to driveway. This is kind of a grey area. I see a lot of people I respect take this line. My biggest question about something like this is WWAAD? What Would An Auditor Do? If you had to explain your miles, would they allow the driveway to driveway approach? The answer may lay in the fact that we don’t typically do a substantial part of our work from home. With the small exception of a little book keeping most of our work is on the road. That’s going to make it harder to justify that this works as a home office.
The other is what I’ve heard some say, that their accountant told them as long as they have a sign on the car, every mile is for business. They say that the sign is advertising and it’s a business purpose. Any accountant telling you that can get in trouble very quickly. This is directly from the horse’s (IRS) mouth: ” Putting display material that advertises your business on your car doesn’t change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still can’t deduct your expenses for those uses.” That’s looking like a solid no to me.
Reasonable and Necessary
Remember this rule about deductions. They must be reasonable and necessary. That can be a good guide when thinking about what miles to track.
When you get an order, it’s absolutely reasonable AND necessary that you drive to the restaurant. When you drop off the order with the customer, getting to a place where there are restaurants fits that definition. For that reason, you can claim any of the miles where you are active.
Claim every single mile that is legitimate. Track every one. Be careful about going overboard. Don’t make up miles. Don’t claim miles that are not legitimate. If in doubt, ask yourself, is it reasonable and necessary? Follow that principle and you should be in good shape.
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?