If you want to claim tax deductions for using your car as a Doordash driver or for other gig economy food delivery services or rideshare companies, you need to track your miles.
It doesn't matter if you're taking the standard mileage deduction or using the actual expense method. You have to have a record of your miles. The IRS requires you to have a record either way if you want to claim them on your income taxes.
The biggest mistakes a delivery driver or rideshare driver can make at tax season is to not know how vehicle expenses work with your tax bill. The mistakes can range from paying a lot of money on your tax bill to getting in trouble with the IRS.
To avoid those problems, you should know what miles you should track. We put together the following nine guidelines:
- A general rule for what counts as business miles
- When you can start mileage tracking.
- When you should stop tracking.
- Know the difference between commuting and business miles
- Understand how home office impacts what you can track
- Identify how different platforms work differently
- Advertising does not equal business miles
- Beware of IRS triggers
- Know how to track miles properly
This is not tax advice.
Let me be clear: I am not a tax expert nor am I a tax professional. You should not take any of this as tax advice.
My purpose here is to research what information I can find about tracking and claiming miles as a business tax deduction or as business expenses. There's a lot out there, so what I try to do is to put it together in a context that makes sense for independent contractors in the gig economy.
This is purely for education and presenting information. If you need advice related to your own tax situation, you should seek out your own tax professional.
If you're not sure about this information or you're confused about any of this, get a tax pro. Seriously, it's worth the money. They can look at your situation specifically and let you know what applies.
With that said, the following guidelines come from my understanding of the information that I've researched.
1. A general rule for what counts as business miles for delivery drivers and rideshare drivers.
Very simply, any miles driven specifically and necessarily for your business. The IRS states you can claim business related miles but not personal miles.
If you drove for business purposes, you can claim those miles. If they were for personal use, you cannot.
Reasonable and Necessary
Remember this rule about deductions. They must be reasonable and necessary. Ultimately that will apply to any miles that you drive.
Basically what it means is that wherever you go, if you want to claim it the primary purpose of the trip is to benefit your business.
Here's a general rule about if a trip is reasonable: If you have to stretch at all to call it a business trip, it probably isn't reasonable. If you are making up a business relationship to the trip just so you can call it business related, it probably won't fly.
We'll talk about scenarios related to independent contractor work, but you can use this general guideline. Ask the question: What's the point of the trip? Is it necessary for your business? What does it do for your business?
If you have to spin it and think real hard to come up with a reason to call it a business trip, it probably isn't reasonable.
Some quick examples of business related miles.
As a general rule, if you are logged in as available on any of the food delivery apps or rideshare driver apps with the intent to accept offers if a good one comes along, you are driving for business.
Usually I'm firing up my Uber driver app, my Grubhub app and my Doordash app immediately because I'm looking for a delivery the moment I'm rolling out the driveway. That's when I write down my odometer reading (I use a log on Google Sheets) to start. I continue tracking as long as I'm continuing to take orders.
It is not necessary to record every single delivery or ride individually. You do not have to have food or a passenger in your car to call them business miles. Miles enroute to the restaurant or passenger are trackable. If you're done with a trip and heading back to a better area, as long as you intend to accept a reasonable offer, you're still driving business miles.
The rule of intent
I came up with what I call a rule of intent. I haven't seen anything on the IRS site that uses this rule. A lot of it was inspired by this article in the Stride Tax blog. Ultimately it just says that if you have the intent to accept offers while driving, it's a business mile.
That doesn't mean you have to accept the next offer that comes along. You have your own criteria for what offers to accept or reject. But as long as you're ready to accept a good offer if it comes along while you're driving, I think it's fair to call it a business mile.
Simply having an app turned on isn't enough to call it a business mile, by my interpretation. If there is no intent to accept a reasonable offer, you may not want to track those miles.
Other business purposes
Not all claimable business miles have to be related to a gig. If the purpose of your trip is to support your ability to operate your business, those are business miles.
Driving to meet your accountant. Heading over to the Greenlight Hub to ask a real person something about your account. That trip to the restaurant supply store to pick up a great insulated delivery bag. Those support your business.
What about taking your car in for maintenance? A number of tax articles say you can claim miles to the shop and back. That's a judgment call. The IRS doesn't specifically say. I did find this quote supposedly from a tax expert, but cannot verify if there's any authority behind it. However, it was one of the best answers I could find.
I can find nothing about this in IRS publication or elsewhere. However, common sense would tell us that the cost of driving to make car repairs should be deductible. If you use your car for business, it is a business expense, just like transporting any other piece of business equipment for repairs is a business expense. This should be so whether you use the standard mileage rate or actual expense method. You should probably reduce the amount of your deduction by the percentage of personal use of the car during the year.Email response reported to be from Stephen Fishman related to the question of driving for maintenance purposes.
In the end, use good judgment. I think that one could go either way.
2. When can you start tracking your miles as a gig economy contractor?
The moment you go available in a delivery app with intent to accept offers, you can begin tracking your miles. As long as you are logged into one or more delivery platforms with intent to accept opportunities, those are business miles.
If I go available immediately, I start tracking immediately. If I drive downtown first before turning on the apps, I'll wait until the moment that I go available on the app with intent to start delivering.
3. When should you stop tracking your miles?
I personally go by the rule of intent. The moment I decide I'm done and I do not intend to accept any offers, I'll go ahead and record my “end” odometer reading (or shut off the mileage tracker app).
That means if I stop delivering to run an errand, I stop tracking. If I take a lunch break and decide to drive somewhere, I don't record that.
But here's what I don't believe you have to do:
You don't need to shut down at the end of each trip. The IRS has no requirement to keep a record of every trip individually. Even if I drop off one order, then head to a spot closer to restaurants, the fact that I've got the apps on and I'm intending to accept the next good offer tells me my miles are still business related.
If at some point you have to do personal driving, that's the point where you stop. If you pause to go pick up one of the kids, or to drive to meet someone for coffee, do not track those miles for your business.
Once you no longer intend to accept offers, that's a good point to stop tracking.
4. Know the difference between commuting and business miles.
You're not driving to the office any more, so you don't commute, correct?
You might be surprised. Even independent contractors can have commuting miles.
Can you track from driveway (leaving) to driveway (getting home)? When is it a business mile and when is it a commute?
The easiest way to answer that question is to ask a different question: When do you go available with the intent to start delviering?
If you have to drive somewhere before you can begin delivering, that's a commute. Even as an independent contractor, driving somewhere to be able to conduct your business can be and often is considered a commute. The IRS doesn't see commuting miles as a tax deductible expense.
It all goes back to that rule of intent. If you aren't actively and intentionally looking for orders, you'll have a hard time convincing an auditor they are business miles.
Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses.IRS Publication 463 under Transportation
Some examples of commuting and personal miles
Understand, these are my interpretations of how commuting works. Here are some examples that might help.
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 track your business miles immediately.
You are scheduled for a time block
For example, you scheduled yourself to deliver at 3 PM. Prior to 3 PM, you head out to a hotspot so you can be ready to accept orders when your schedule starts.
At this point, you're neither active on the app, nor are you willing or able to take deliveries. That means, to my understanding, you are not able to claim you are driving for business. That would make those miles commuting miles.
However, if you were to log on to another app such as Uber Eats and had the intent to accept a good offer if it came along, now you've met the first definition and those are now business miles.
You do not live in the region in which you deliver
If you are unable to go available from your house and reasonably accept offers, the miles you drive until you CAN go available are commuting miles.
What about driving home after the last delivery?
Can you claim the miles on the way home? Or are they commuting miles?
I think it really comes down to that rule of intent. If you've absolutely decided you're done and you do not intend to take any offers, that trip is a commute.
If you keep the app on, remain logged in, and are willing to accept a reasonable delivery offer, you're still working. Those are business miles.
A typical day for me.
I tend to focus on deliveries closer to downtown, which are four to five miles away. However, I don't set a hard rule that I have to be downtown.
What that means is, I turn on my apps the moment I leave the house. I start heading towards downtown, but if an acceptable delivery offer comes along while I'm going that way, I'm willing to take it.
I'm willing and able to take deliveries, so I can count those miles right away.
More often than not, when I decide I'm done, I'm done. I'll usually turn off the app and head home. I count those as commute miles.
Sometimes I'll keep the app on and be extremely picky. That delivery has to pay very well, or it has to take me in the direction to get home. I'm picky enough that most times I don't end up taking any offers. This is kind of a grey area and you could go either way.
In the end, I stop tracking when I've decided that I'm finished. Sometimes that's when I've dropped off my last delivery. Sometimes that's when I pull into my driveway.
5. Understand the relationship of a home office and commuting.
Here's another grey area. I'm not sure it's that grey, but we'll talk about it.
Some will say that since you are self employed, your home is the base of your business. The IRS allows you to claim business miles from the point you leave your office to conduct business.
Office in the home. If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.IRS Publication 463 under Transportation.
The logic here is, if your home is your office, then there's no such thing as a commute.
The key words here? “that qualifies as a principal place of business.” In other words, your home has to qualify as the principal place of business.
An example in that same section should make us cautious about making this claim.
Example 3. You have no regular office, and you don’t have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses.IRS Publication 463 Example 3 under Office in the Home.
Obviously, the IRS doesn't look at the fact that you are self-employed as meaning your primary place of business is your home. They point out an example where you have no office and don't have a home office.
How to qualify if you have a home office
First, it starts with whether you actually have a qualified home office.
The IRS provides a two part test:
- You have space that is used exclusively for your business. Do you have a spot that is not used at all for personal purposes, and is only used for your business?
- The space is used regularly for your business.
Regular Use. To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use.IRS Publication 587 definition of Regular Use of your home
This is the problem for most gig economy contractors. How often do you really use your home office? For most of us, it's extremely rare. An occasional email or a few minutes updating your bookkeeping app don't count as regular use.
The bulk of what we do involves delivering goods or passengers. There's very little administrative or management. Unless there's another aspect to your business that involves substantial use of a home office, it's really hard to make the case of whether your home qualifies as the main place of business.
That means that for most gig workers, the home office clause doesn't work. If it comes to an audit, you could have a hard time getting the auditor to accept those miles that would otherwise be considered a commute.
6. Identify how different gig apps and situations might work differently.
There are some nuances to how the different delivery companies are set up. Those different requirements in how we work can make a difference in whether your miles are business or commuting.
Doordash, delivery zones, and commuting.
Because Doordash uses micro-zones in most markets, Dashers have one of the highest likelihoods that their first and last miles are commuting miles.
With the Dasher app, you cannot go available or Dash Now in a zone unless you are physically inside that zone. That means if you do not live in the zone you intend to deliver in, you have to wait until you get there before you log in.
This would mean that travelling to that zone would be a commute. Your trip home would also likely be a commute if you do not log into your home zone at the end with the intent to accept deliveries.
Grubhub, Uber Eats and larger delivery zones.
Grubhub and Uber Eats tend to have larger metro areas. With Grubhub, you can only deliver in the market that you are assigned to. For most drivers, that's the area they live in.
With any app where you can immediately go available and start taking orders, it's a lot easier to start tracking miles immediately.
If you live outside your delivery region, the miles you drive to that region are considered commuting miles, not business. If you prefer not to go available until you get to a certain part of town, the miles you drive to that area are also commuting miles.
However, if you're flexible and willing to take an offer along the way, or if you are willign to pick up a delivery on another app while enroute, you can claim those as business miles.
Catering, scheduled deliveries, and third party/warehouse deliveries.
I do a number of catering deliveries for DeliverThat. They're often my first deliveries of the day. I usually cannot just accept these orders on the fly, but instead have to schedule them ahead of time. Because I cannot actively take other deliveries en route to that pickup, the drive to pick that order up is a commute and I cannot claim business miles for the drive to the restaurant.
If you are running deliveries for other apps along the way you may have an easier time claiming those miles leading up to when you pick up.
Another example would be last mile deliveries such as with GoPuff or Veho, where you have to go to a set location to pick up your items to deliver. Unless you're performing deliveries for other platforms enroute to the warehouse, that drive is a commute.
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. For example, I prefer working downtown. If I were doing Doordash only, I couldn't claim the miles between where I live and the closest border of the downtown zone. However, because I multi-app, I will turn on Uber Eats and Grubhub while making my way downtown.
The fact that I'm available, logged into apps, and willing to take a good offer if it comes up along the way means I can claim those miles while I'm heading towards downtown.
There's a common question about working multiple apps: Do you have to track miles for each one separately? Is your Doordash mileage kept separate from Grubhub and Uber Eats etc.?
It depends on if you are tracking for different businesses. In other words, if you're operating more than one business, you want to keep track of your mileage for each business individually.
However, when delivering for multiple platforms, you treat each food delivery app (or rideshare app) as though they were a customer. It's just another source of revenue. You fill out one Schedule C and you only have to keep one mileage log for the whole business.
Personally, I'll go ahead and track each trip individually. I do this because I like to see how much I'm driving for each app and how profitable I am for each app. This is a preference thing for my own analytics, and not a requirement by the IRS.
7. Advertising does not equal business miles.
There's always that person who says “just put a Doordash sticker on your car and now you can claim every mile because you're advertising.
Don't listen to them. It's a great way to get nailed in an audit.
About the only way you could get by with that is if you were one of those people who operated a mobile billboard. That only works when the advertising is the entire business model. If your main business purpose is strictly advertising, you might have a case.
But sticking ads on your car doesn't allow you to claim extra miles. The IRS makes that pretty clear.
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.IRS Publication 463 on Adertising display on car.
That looks like a pretty solid no to me.
8. Beware of IRS Triggers and Patterns
The IRS is always on the hunt for deductions that are out of the ordinary. With the millions in the gig economy who pay taxes as small business owners, the IRS doesn't have the manpower to sort through every return and evaluate each one.
But they do have computers. And the thing is, those computers are looking for patterns. The IRS uses those computers to look for the telltale signs of when a tax return looks out of line. And then the computer can kick out a report that says, you might want to look into this.
Come tax time, when you fill out your tax form, you fill out IRS form Schedule C. On there you tell them what kind of business you run. You also have to tell them how many total miles you drove and how many are for business.
In the gig economy, rideshare and food delivery drivers can rack up tens of thousands of miles. Claiming that many miles for my blogging business is maybe the best way to trigger an audit, but it's normal for my delivery business.
That's how these patterns work. Schedule C audit triggers on business mileage deductions may be different for bloggers than they are for delivery drivers.
The thing is, the pattern thing can work against you. If you're driving five miles for every dollar you earned, that can still seem excessive. If you are part time and claim 100% of your car's miles, that can fall outside normal patterns.
Don't be intimidated by this if you're on the up and up. But if you're tempted to manufacture miles or track more than your business miles, those patterns can catch up to you.
9. How to track those miles.
Understanding what miles you can track is huge. In 2021, every mile you can claim knocks 56 cents off your taxable income. In 2022, that mileage allowance jumps to $0.58. With the hundreds or thousands of miles that we can drive, that's a great thing for your bank account.
However, it's important to know how to track them.
The Internal Revenue Service requires a detailed record. An IRS-compliant report has to have four things on it.
- The date of the trip
- How many miles you drove
- Where you went
- The business purpose of the trip
It's important that you develop a system that works for you, that accurately tracks all those miles, and that meets the IRS requirements. Continue reading as we go into more detail about how to track miles.
The Delivery Driver's Tax Information Series
This is part of a series of articles related to different tax topics for independent contractor delivery drivers. Below is a list of other articles in the series.
- Introducing the tax guide for Grubhub, Uber Eats, Doordash, Instacart and other gig economy contractors
- Independent contractor taxes 101: What you are taxed on.
- What your real income is for gig economy contractors
- Understanding business-related expenses for gig economy independent contractors
- Deducting your car expenses
- What non car expenses can gig economy independent contractors claim?
- How to file taxes for Uber Eats, Grubhub, Instacart, Doordash, Lyft etc.
- How to save for next year's taxes
Tax Guide: Understanding Your Income
The following three articles help you understand what your real income is as an independent contractor.
Tax Guide: Understanding Your Expenses
The following eight articles help you understand the expenses you can claim on your Schedule C. Most of these are about your car, your biggest expense.
Filling Out Your Tax Forms
Once you understand your income and expenses, what do you do with them? Where does all this information go when you start filling out your taxes?