Most Grubhub delivery contractors use their personal vehicles to make their deliveries. If you do, you can get a significant tax write-off from tracking and deducting car expenses on your tax return.
Don't make the mistake of ignoring this tax deduction. It's a mistake that can cause you to pay hundreds, or possibly thousands, more on your tax bill than you need to. It's a legitimate and legal tax deduction, even if you take the standard personal tax deduction.
I've been delivering for Grubhub and other gig economy companies for several years. The standard mileage deduction alone has reduced my tax bill by nearly $20,000 in that time. It makes that much difference.
We'll talk about writing off car expenses for Grubhub and other platforms. We'll discuss:
- Why every Grubhub driver who uses their car for deliveries can write off car expenses (even if they take the standard tax deduction)
- The choice the IRS gives you about HOW to claim car expenses.
- Why you absolutely MUST track your business miles for Grubhub
- Special car expenses you can write off even if you take the standard mileage allowance.
- How do you claim expenses for bikes, motorcycles, scooters, etc.?
- How to claim Grubhub car expenses on your tax forms.
- Frequently Asked Questions about the Grubhub mileage deduction and car expenses.
About this article
This article aims to explain how Grubhub delivery drivers can write off their car expenses. It's one of several articles in our series about Grubhub delivery driver taxes in the United States. We'll link to other articles where appropriate, and you can view the entire list of our Grubhub tax series posts here.
This is not tax advice, and you should not take it as such. We intend to educate and explain how taxes work for Grubhub contractors and other gig workers. We only discuss U.S. taxes in this article. You should seek a tax professional who can guide you in your specific situation and understands your local and national tax rules.
Why you can write off car expenses for your Grubhub delivery work (even if you take the standard tax deduction).
The most expensive tax mistake you can make when delivering for Grubhub is to think you can't write off your cost of driving. It's a mistake that often happens if you confuse business expenses with tax deductions.
Here's what's behind that mistake: The IRS lets taxpayers choose between a standard tax deduction and itemizing personal deductions. In 2022, a single filer can write off $12,950 (or $25,900 on a joint return). You can do that with no questions, documentation, receipts, or anything.
When you take the standard deduction, you can't claim personal deductions like Mortgage interest, healthcare costs, etc. All of that is rolled up in the standard tax deduction. Too many Grubhub drivers think that means you can't write off your business expenses.
However, your mileage and other expenses for Grubhub are different. They are not personal tax deductions but business expenses.
As an independent contractor, you provide delivery services as a business, not as an employee. You are self-employed as a Grubhub courier, technically running a business. This makes you a small business owner, with your Grubhub taxes being business taxes.
This is important to understand because of what your Grubhub taxes are based on. Self-employed individuals do not pay taxes on how much money is received for services. Your Grubhub tax bill is based on your profits or what's left over after expenses.
You write off your expenses to determine taxable income as a Grubhub delivery contractor. As a result, you take those deductions in a completely different part of your tax return.
The choice the IRS gives you about HOW to claim car expenses.
We just discussed how the IRS lets you choose between itemizing or using the personal tax deduction. They do something similar with your Grubhub car expenses. You can track and claim the business portion of all the costs related to your car, or you can write off a flat rate per business mile.
You must choose between the two options. In other words, you can not claim miles and additionally write off car-related expenses. It's one or the other, not both.
With the Standard Mileage Rate method, you total the business miles you drove while delivering in the calendar year. Next, multiply those business miles by the mileage rate for that year. For the 2022 tax year, you can write off 58.5 cents per mile driven from January through June and 62.5 cents for each mile driven from July through December.
You may choose the actual expense method of claiming car expenses. Many newer and more valuable cars cost more to operate than the standard mileage rate, so it may make sense to claim actual costs.
To use the actual expense method, first determine the percentage of total miles driven for business purposes. Then, multiply that by the total cost of operating your car to calculate your vehicle write-off.
Is it better to write off your Grubhub mileage or actual expenses?
That depends on your individual situation and vehicle. It's wise to track both, so you can make a good decision about which is best.
Most gig workers are better off deducting miles because the mileage deduction is pretty generous. The true per-mile cost of driving typically goes down for older and less valuable cars.
Your car's age and value often make a more significant difference in actual expenses than its fuel efficiency. That's because a big part of the actual expense calculation is depreciation, which is calculated as a percentage of the purchase price.
When claiming actual expenses, IRS depreciation methods often let you write off between 15 and 30 percent of the purchase price each year. That means the depreciation is far more for a $30,000 car than on a $1,000 beater.
Some special rules allow you to write off even more in the first year you own a car.
There are several IRS rules about which expense method you use. For example, you can never use the standard mileage method if you used the actual expense method in the first year of business use.
It would be beneficial to visit your tax professional for guidance about which method works best for your situation.
What can you write off with the actual expense method?
The IRS lists several items you would use to calculate the actual cost of operating your car. They include:
- Depreciation if you purchased or financed your car
- Lease payments (if you lease)
- Registration and licensing fees
- Repairs, oil changes, and other maintenance costs
- Tires and other replacement parts
- Day-to-day parking and tolls.
Add up the total spent on each of these items. Multiply that by the business percentage of miles you drove. If 80% of your miles were business-related, you could write off 80% of your vehicle costs.
Why you absolutely MUST track your business miles for Grubhub
When you write off your Grubhub car costs, the IRS will ask you two questions:
- Do you have evidence of your deduction?
- Is the evidence written?
To take the car expense deduction, you must answer “yes” to both questions. Therefore, a log of the miles you drive for Grubhub is necessary.
Even if you choose the actual expense method, you need to know how many miles you drove for business. You also need to know how many total miles were put on your car for the year. Those numbers are necessary for calculating the business percentage.
What miles can you track for Grubhub?
The easiest way to determine when you can track miles is whether you're logged into the Grubhub driver app (or other gig economy apps) with the intent to accept reasonable offers.
You may claim miles driven to the restaurant or miles driven between deliveries. You are not limited to claiming miles when food or merchandise is in your car.
In this part of our tax series, we go into much more detail about which miles you can claim with Grubhub.
How to track Grubhub miles
The IRS requires a written daily log of your miles driven. That mileage log must include the following:
- The date
- Where you went
- The business purpose of your trip
- The number of miles driven.
There are two ways you can do this:
- Write down your starting and ending odometer readings for each trip on a paper log or in a spreadsheet on your phone.
- Use a GPS mileage tracking app like Hurdlr. There are several different apps. Some are free with limited features, and others have a subscription cost.
We go into much more detail about how to track miles for Grubhub, create a written log, and how some of the different GPS apps work.
Special car expenses you can write off even if you take the standard mileage deduction.
There are three expense items related to driving that you can write off as business expenses regardless of your chosen expense method.
- The business percentage of interest on your car loan
- The business percentage of your car's property taxes
- Tolls and parking fees incurred while delivering for Grubhub (and other apps)
We write more about how Grubhub drivers can claim their car interest, property tax, parking, and tolls. There we show what the IRS has to say about these deductions. We also detail why they can be claimed on top of the mileage allowance.
How do you claim expenses for bikes, motorcycles, scooters, etc.?
The standard mileage allowance is only available for cars that meet the IRS definition of a car. Two-wheel vehicles, such as e-bikes, motorcycles, and scooters, do not meet the criteria.
In other words, you cannot claim miles for bikes, motorbikes, or scooters.
The good news is that you can claim the business portion of these expenses. As you do with a car, determine what percent of riding is for business, and claim that percentage of total costs (including depreciation) related to the vehicle.
We write more detail here about how to claim your bike, motorcycle, or scooter for Grubhub.
How to claim Grubhub car expenses on your tax form.
You will fill out IRS form Schedule C for your Grubhub taxes at tax time. It's entitled “Profit and loss from business.” There, you list income from your Grubhub 1099-NEC form. Also, add earnings from other gig economy companies if you contract with several.
The expense section of Schedule C includes several expense categories. Total what you spent in each category and list those totals on the form.
The section where you claim your miles or actual expenses is Line 9: Car and Truck expenses. Calculate your vehicle expense write-off (whether using miles or actual expenses) and enter that total on line 9. If you had parking or tolls during your deliveries, add those payments to your Line 9 total.
The IRS wants more detail about your driving and your car. They will ask when you first used your car for business and the total miles you drove for business, commuting, and other purposes.
Finally, they ask if you have evidence of your deduction and if that evidence is written. You don't have to submit that evidence when you file, but you should have it available in case you are audited.
You'll subtract your expenses from your business income to determine your profit. You then add the profit to your 1040 tax return as personal income.
Finally, your Grubhub profit determines your Self-Employment taxes, which is your version of Social Security and Medicare taxes.
A Grubhub driver who drives a mile for each dollar earned can write off nearly 60% of their Grubhub income. You can see why paying attention to your mileage deduction or car expense write-offs is essential.
Frequently Asked Questions (FAQs) about car write-offs and mileage for Grubhub drivers
Grubhub does not report miles to the IRS for you. It is your responsibility to record and document your own mileage and expenses.
Yes. You may choose which expense method to use on a vehicle-by-vehicle basis. You should track your expenses and mileage separately for each vehicle if you use more than one for Grubhub deliveries.
No, you cannot claim both. By claiming the standard mileage deduction, you are already claiming gas costs. The mileage rate is an alternative or substitute for actual costs, meaning you can only claim one method.
You can not write off the purchase of your new car regardless of which expense method you use. The IRS calls a car purchase a “capital expense.” A car is an asset, treated like money, meaning buying a vehicle technically trades one asset for another. However, if you use the actual expense method, you can claim your car's loss in value(depreciation).
aimed as an expense. Second, a payment only pays down a loan and isn't considered an expense. You can, however, write off the business portion of the interest. You can read more about writing off car payments for Grubhub.
A lease payment differs from a car payment and can be written off if you use the actual expense method. You never technically own the car when you lease it. It's really more like renting the asset. As a result, a lease payment differs from one's loan principle as it is considered an expense. However, depreciation can not be claimed on a leased vehicle.
You can only write off car washes if using the actual expense method. The IRS sent a notice to tax volunteers stating, “There is no authority that would allow a taxpayer claiming the standard mileage rate to also deduct the expense of car washes as they would tolls and parking.”
Part of writing off mileage or vehicle expenses includes telling the IRS that you have written evidence to support your deduction. An auditor may disallow the entire vehicle deduction if you lack such documentation.
The IRS doesn't specifically require that odometer readings be on a mileage log. They only require total miles for the trip. For example, logs generated by GPS apps don't typically have odometer readings. However, odometer readings are a good way of adding legitimacy to your mileage log if tracked manually.
No. You must own the vehicle or have a lease agreement to claim the standard mileage allowance. The mileage allowance is intended to cover the total cost of ownership, and you do not pay for those costs when using someone else's vehicle. You can write off the business portion of out-of-pocket expenses related to using someone else's car. Those costs can include any reimbursement you provide for the use of the vehicle.
Grubhub does not track miles for you. They do keep track of estimated miles for each delivery you complete. They will email you a yearly total of your estimated miles after the year's end. There are two reasons you should not rely on Grubhub's estimate. First, it is only an estimate and does not capture all your business miles. Second, their estimate does not include a daily total and thus is not IRS-compliant.
Grubhub sends an email with your total estimated miles for the previous year. That estimate is typically sent around the end of February. You can not obtain that report other than in that email. Remember that it is only an estimate and not in an IRS-compliant format.
You may be able to retroactively create a written log if you have evidence to support your record. You must provide a written statement explaining how you determined the mileage. We discuss more here about what to do if you forget to track miles for Grubhub.
No. The IRS requires that you have written evidence to support your deduction. There may be situations where you can estimate miles based on other available evidence, but a guess will never be accepted.
The IRS does not cap the number of miles you can claim. That's good because full-time gig workers can put tens of thousands of miles on their cars. Keep in mind that extremely high mileage write-offs can trigger an audit. If the mileage claim is legitimate, you should still write it off. Just be sure your documentation is solid.
Your mileage is reported on line 9 of Schedule C. We wrote about this in more detail earlier in this article.