I tried finding the best delivery tax book for contractors who deliver Grubhub, Doordash, Uber Eats, etc. Not finding anything really written specifically from a delivery perspective, I wondered if maybe I should put something together.
I am planning on putting together an online guide that I hope can help delivery drivers with tax questions. However, for more in depth information I do think I'd be reinventing the wheel by trying to create another book. If you want to find the best tax book for delivery drivers and you are an independent contractor with Doordash, Grubhub, Uber Eats, Postmates or any others, it may already exist. It just happens to have been written for rideshare.
My review of “Income Tax Guide for Rideshare and Contract Delivery Drivers” by John C. White.
“Income Tax Guide for Rideshare and Contract Delivery Drivers” by John C. White does mention delivery in the title, though in reading it it's definitely geared heavily towards rideshare. I'm not sure the distinction matters. The industries have enough overlap that much if not most of the information provided is applicable. The bottom line is, you are using your car as an independent contractor. That means the tax situation is pretty much the same on either side.
If you search for Rideshare Tax Guide on Amazon you find two books that specifically relate to taxes for rideshare. The two run opposite ends of the spectrum. I wouldn't bother with the other one. But the Income Tax Guide for Rideshare and Contract Delivery Drivers is thorough and well written. What I think really sets it apart is that the author does a good job of translating the concepts. He uses plain language and doesn't assume you understand certain terms, while at the same time he doesn't talk down to you. I appreciate the clarity in most of his explanations.
By the way – any time I use Amazon links, they are affiliate links. What that means is that if anyone buys off of the link, I do receive a small (very small) commission. That helps offset the cost of running this site and the podcast.
Background on the book
Just a note: From here on, I'm abbreviating the title to “Income Tax Guide” for the sake of brevity.
John C White published “Income Tax Guide” in 2017 under the name 3rd Millennium Tax LLC. Unfortunately the website domain is no longer active. According to his bio in the book, he was an attorney registered in Texas, and was employed by the IRS for more than twenty years as a tax examiner, revenue officer and tax analyst.
One thing I should point out is that this book was written prior to recent tax reform. I'm not sure that reform would have changed much in this book, however. There are a couple of benefits for self employed individuals that were added. It would be good to get up to date on some of those changes.
I really appreciated White's understanding of how the IRS works. I see a lot of disagreement over what things you can claim, but White's treatment of the different expenses and why you can and cannot claim them really helped me understand some of those issues. His was a strong common sense approach. It was helpful to understand how auditors use ‘reasonable and necessary' as a way to determine if an expense is allowable.
Information in the Book
I think where the book was particularly useful was how it went into detail on what you can claim without going overboard. His focus on the use of your car was especially helpful. He did a good job explaining depreciation and what was involved in actual car expenses.
White dives in pretty quickly into explaining income and expenses and what they mean to your taxes. I do kind of wish he'd laid more of a foundation before doing so. There are a lot of pieces to the tax puzzle. Sometimes better knowing the bigger picture helps us better put those together.
The greatest strength of the book is its treatment of business expenses and how they can impact your taxes. It may be the most definitive thing I've seen yet about what you can and cannot claim. He lays a good foundation explaining how expenses and deductions impact your profit as an independent contractor. That alone made it well worth the $2.99 I spent for the Kindle version of the book.
The Rule of Seven
Going forward, I'll probably steal one term from Mr. White. He defines the Rule of 7, and frankly it's brilliant. He may have borrowed it from someone else, but I haven't found any other references to that rule in relationship to taxes, so it could be original.
The Rule of Seven is essentially this: For every seven dollars you identify in legitimate expenses for your business, you reduce self employment tax by a dollar. One in Seven. It really works. Our self employment tax rate is 15.3% but there's a deduction on your self employment income that basically brings it down to slightly less than 1/7 of every dollar you earn. That rule helps you understand how important it is to track your expenses.
The rule of seven is especially important in our line of business. The mileage deduction means we can claim more than our actual expenses in most cases. I think that means a higher portion of drivers are able to avoid income taxes. However, self employment tax is paid on every dollar of profit. What that means is that for a lot of us, self employment tax is our ONLY tax.
Understanding Standard Mileage, Actual Expense, and Depreciation.
White's “Income Tax Guide” is especially appropriate for those of us contractors who use our cars. He goes into signficant detail on the differences between actual cost and using the mileage rate. He also spends a fair bit of time trying to explain depreciation without getting too technical. Personally, I haven't found many at all who do a good job bringing that concept down to ordinary terminology, and White does better at it than most. I think a lot of drivers lose sight of what a huge expense depreciation is, and that it is a very real expense. Because of depreciation, it's not as unusual as you might think that actual expense could be higher than the standard mileage rate.
Should You Buy This Book?
Personally, I think this book could be the best, single tax resource for contractors who drive for Grubhub, Doordash, Uber Eats and other independent contractor based delivery platforms. It's not perfect but probably closer to perfect than anything I could have put out. It's closer to perfect than anything else I see out there for delivery OR rideshare.
“Income Tax Guide” does list delivery in its title, but it is still clearly focused on Rideshare. White did examine things that were rideshare specific (such as snacks for your passengers) but I didn't see anything delivery specific. For example, information about how to treat your bicycle or scooter when you use that for delivery would be helpful. Having said that, he gives some good enough guidance on other topics that it makes it easier to put the pieces together.
However, the similarities between rideshare and contract delivery, at least from a tax perspective, are enough that this is can be a fantastic resource to help you put the pieces together on your taxes. To my knowledge, it's the best tax book available to help with the specifics related to independent contractor delivery work for gig companies like Grubhub, Doordash, Uber Eats and Postmates.