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 Doordash, Grubhub, Instacart, 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 talk about which miles you can track here. This article talks about how to track your miles.
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. I record every delivery, so I can use that data to evaluate when and where deliveries are most profitable.
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. 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.
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.
You're not driving to the office any more, so you don't commute, correct? This might surprise you. Even as an independent contractor, you may have commuting miles.
Can you just start tracking from the moment you leave the house?
When is it a business mile and when it is commuting?
I'll answer that question with a question. When do you go available to start delivering?
If you have to drive somewhere before you turn on the app, those miles are commuting. They are not business miles.
Let's call it the rule of intent.
If you are logged in with the actual intent and ability to accept delivery offers, 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 think this article by Stride puts it pretty well.
I know, how can anyone know your intent? That's what makes it tricky.
But the thing about an audit is that you have to show evidence for your deductions. The burden of proof is on you, not the IRS. If every single time you deliver, your deliveries start in the same area several miles away, you'll have a hard time convincing someone that those miles to that spot aren't commuting.
What miles can I claim are business for Doordash, Instacart, Uber Eats etc., and what miles are commuting?
Here are some examples of different situations that might help understand.
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.
If you are unable to take offers on the way, or are unwilling to take offers because it will get in the way of starting your delivery block, those miles are commuting miles.
If you log on with another app and are willing to take offers while on the way, you can count those miles for business.
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.
You drop off your last order and it's time to call it a day.
Can you claim the miles on the way home?
If you've absolutely decided you're done, no. Remember the rule of intent. If you are not available and willing to accept deliveries, that trip home 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 probably a grey area. I tend to count those as commuting miles.
However, if along the way I do take an offer, I count all those miles as business.
I think it's easier to make the case that you're available and willing to work from the moment you leave home, than it is to claim that for your return from your last delivery.
Driving patterns, commuting miles, and the IRS
The IRS computers look for patterns. They're looking for deductions that are out of the ordinary.
Tens of thousands of miles can be out of the ordinary, depending on what kind of business you have. If I claimed that many miles as a blogger, that could be a trigger that sets off those computers. For a delivery contractor, it's not as unusual.
On your Schedule C, you have to list how many miles you drove your car in total and how many were for your business. If you put the same thing for both, that's the kind of thing where the computer can think something is out of place here.
If your miles are 100% business and it's legitimate, by all means you should claim them. Don't leave money on the table. However, make SURE those miles are all legitimate and make SURE you have documentation.
How the differences between delivery companies can impact commuting miles
There are some nuances to how the different delivery companies are set up. Those nuances can make a difference in whether your miles are business or commuting.
Doordash is the one most likely to have commuting miles.
Doordash works with smaller delivery zones in most markets. For example, in an area that's considered one big market by Grubhub, Uber Eats and Postmates, Doordash might have a dozen zones.
If you are scheduled for a particular zone, it's impossible to go available on Doordash if you are not physically in that zone.
If you are scheduled to work in a different zone than where you live, your drive to that zone is considered a commute.
Claiming miles with Grubhub.
With Grubhub, you have the ability to log in immediately even if you are not scheduled. This gives you a lot more flexibility to go available with intent to deliver.
If you live outside your delivery region, the miles you drive to that region would be considered commuting miles, not business.
If you have a certain area you like to start out, and you make your way there before your scheduled block starts, if you are not available or willing to take a delivery that drive is considered a commute.
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.
Claiming miles with Postmates and Uber Eats.
These are the more flexible platforms. They give you the ability to log in on the fly. You don't have to wait until a scheduled time to take those offers.
It's a lot easier to make a case that you're available and willing to take offers from the moment you leave your home on these platforms.
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. Because I'm willing to take an Uber Eats delivery while I'm on my way to my favorite areas for a Grubhub block, that gives me more freedom to claim every mile.
Can't I claim every mile because I work from home?
For example, if I drive to interview someone for my podcast, I can claim all those miles because my office is at home. Can't I do the same thing with delivery?
I would call this a grey area.
One factor to keep in mind is that you don't do the bulk of your work from home. Your base of operations is really your car. For that reason, I tend to be more conservative and choose not to use that reasoning.
If I stick a sign on my car, wouldn't all the miles be business since I'm advertising?
I actually heard someone claim this one.
He said the Doordash stickers on his window are advertising. That meant he was advertising, thus every mile had a business purpose.
At which point I asked how much Doordash was paying him for the advertising. Did he have a contract with them?
You have to establish an actual business purpose.
And oh, by the way, there's this from the horse's mouth. From IRS Publication 463
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
That looks like a pretty 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.
Be reasonable in the miles you claim for business and you should be okay.
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?