What's the best way of tracking miles for Uber Eats deliveries? Is such tracking really necessary?
Here's the deal. As an independent contractor, your taxes are based on your profit, not on your earnings. That means you are taxed on what's left over after your expenses. So yes, yes, yes, keep a record of every mile you drive.
And the record has to be kept well. It has to meet requirements. And it has to be kept regularly. Not doing so can be incredibly costly.
Before I go any further: I am not a tax pro and this is not tax advice. This is information I am sharing from my own understanding. If you need advice related to your own situation, you should seek a tax professional.
Do NOT rely on mileage reports from Uber Eats
There are some major problems with doing this. One is that their report does not record all your miles. Typically it's just the miles involved in the delivery. It's also an issue if you deliver for other platforms. Finally, reporting just the number from Uber Eats does not satisfy the recording requirement of the IRS and would not be allowed in an audit.
What miles can you track for your delivery for Uber Eats and others?
In a nutshell, if it's for your delivery work, you can track it. If it's for personal use, you cannot. It's as simple as that.
Okay, we both know there are nuances. Here it is in a nutshell – Any miles you drive on the way to pick up food, on the way to deliver, in between deliveries, or even while driving while looking for an order are claimable. That's pretty much every mile from the time you get started to the time you finish. Stride Health has a great article that lays out what miles you can claim and which ones you can't. We'll talk about some specifics here:
Can you claim your miles from when you leave your home and your first delivery?
If you are logged into the app with the intention of accepting delivery offers, you can claim the miles from the moment you log in. One thing to note though is that if you live outside your delivery area, and thus are not able to accept deliveries while enroute to that area, that is considered a commute and not business miles. The key here is if you can accept offers during that drive or intend to accept offers.
Can you claim miles from your last delivery until you get home?
Once again, the key is whether you intend to accept orders during that time. But, as the Stride article states, “if you stay online but deny all jobs, then your mileage would not be deductible since you don't intend to make money.” The same rule about if you live outside your delivery zone applies to your trips home. If you cannot accept orders during that travel, it is not a deductible expense.
There is an exception when tracking miles for Uber Eats (and others) to and from home.
If your home is your primary place of business, your miles are more likely to be claimable from the point you leave your home to the point you return. (Obviously with the caveat that there's not a personal use in between those points). It's not as easy as just saying you have a home office. Your home has to have a business purpose and there has to be regular and consistent business activity.
Maybe the best rule of thumb is if you can claim a home office. There are two requirements. That the office has regular and exclusive business use. What that means is that your office space has to be for business only. If it's shared between business and personal, it does not count. The second requirement is that it is your principlal place of business. This might make it a challenge if all you are doing on a self employed basis is delivery. You would really want to get a qualified opinion from a tax pro. Because of other self employed work I do, and because I do have a dedicated office, I am able to claim the home office.
How should I be Tracking Miles for Uber Eats?
You cannot simply state a number of miles. The IRS requires a regular and detailed account of your miles. If they can determine that your mileage recording was just put together at the last minute, they can and will disallow ALL miles AND hit you with a pretty stiff penalty to boot. If you drive very much, that can cost you thousands of dollars. You want to make sure your records are good.
Here's what the IRS requires on your mileage record:
- The number of miles of your business trip
- The date of the business trip
- Where you went for the business trip
- The business purpose of your trip
Contrary to a lot of opinions, an odometer reading is NOT required for each business trip. It does however provide some authenticity especially for written records in the event of an audit. You DO however need to have an odometer reading for the start of the year (or for when you first put your car into service) and the end of the year. The IRS requires you have this so that you can report the total miles driven.
You need a record that meets those requirements for every day you drive.
Here's a good article that goes into detail of the kind of records you have to keep when tracking miles for Uber Eats and others. It also points out specific instances of people who had their mileage deduction disallowed because their records weren't good.
Keep a record. Every. Day. You cannot just estimate, that can get thrown out. You cannot just say I drive nothing but business so all the miles on my car will count. As a gig worker, claiming 100% of your miles can often trigger an audit. You need a written record for every day of your mileage.
Is it better to have a handwritten record or use GPS?
I hear experts on both sides of this issue.
The GPS provides a level of documentation that a handwritten record cannot provide, and that's good. There can be major accuracy issues though on a GPS record. Personally, I do both. Okay, confession time here: I actually keep a delivery by delivery record, which goes way overboard. I actually keep that for other purposes, for tracking profitability, but it certainly serves as an iron clad backup.
Problems with GPS Records
It's very possible for someone to get in a lot of trouble relying on their GPS. Even with GPS the records may not meet requirements and mileage can be disallowed. The tracking program has to be able to give you a printed option of the record, as the IRS still relies on printed/written over digital records in audits.
I have heard claims that a lot of auditors are old school and tend to trust written records more than GPS. There are some major accuracy issues that can happen with GPS based tracking. If your phone shuts off or sometimes loses service it may not record. I have one app that has often duplicated trips, thus recording more miles than it should. This is great for your taxes but can be a killer if it comes to an audit.
GPS can be too easy. What I mean is, you can forget to go in and record the business purpose of your trip. You can also neglect whether something hasn't been working, especially if you have one that starts tracking automatically. And don't just count every mile as business, very few of us use our cars 100% for business, and the IRS knows that. In our line of work, when they see 100% of miles claimed, they are more likely to want to see documentation.
Problems with Hand Written Records
The biggest issue with a handwritten record is that it requires a disciplined approach. You have to record the full information on your log including where you went and the business purpose. It can be easy to forget for a day, or a few days, and this can create a real problem. One example in the article that I linked to right above this was that someone kept inconsistent records, there were enough errors in enough places that the entire mileage deduction of over $30,000 was disallowed.
The other issue is that if it's a notebook, it can be easy to lose. You're not allowed to go back and estimate if that happens.
Find the best method for you but keep on top of it.
If you go back later and try to estimate miles, the IRS has gotten pretty good at figuring out that that's happening. Keep your records and do it consistently. Do it each day. Even if you are using a GPS, double check that it recorded, double check that you are recording your business purpose. Do not set it and forget it, it can cost you a ton.
Seriously: Get with a tax pro on this. Get their recommendations. But whatever you do, keep good mileage records. Failure to do so can cost you several thousand dollars in taxes and penalties. Most of us don't have several thousand dollars laying around, do we?
You need to understand how taxes work especially when it comes to tracking your miles. Not tracking your miles can cost you 16 cents or more per mile in extra taxes. We drive a highly disproportionate amount of miles in what we do, and high mileage claims are often one of the biggest triggers for an audit. If you did not keep good records, you WILL end up paying hundreds or thousands extra in back taxes.