What can you write off for your taxes as an Uber Eats independent contractor? Other than mileage or car expenses, what else is there?
Independent contractor status allows you to deduct business expenses. Missing legitimate deductions hurts your pocketbook, as you pay more than you have to. However, if you claim things that aren't allowed, you could get a (not so) friendly visit from the IRS.
How do you maximize your deductions without getting in trouble? We'll help you answer that by looking at what defines a legitimate business for Uber Eats deliveries, what the IRS says about what you can and cannot claim, and then examining several typical Uber Eats tax write-offs.
I've made a living off delivering for Uber Eats and several other gig economy companies for several years, much of that time as a full-time delivery contractor. I found that my business background and experience managing and owning small businesses prepared me for how taxes work for Uber Eats contractors. I wanted to pass some of that experience and understanding on to you.
Uber Eats taxes can be overwhelming. If you're like me, you just want to make some money. Who knew we had to be accountants?
The thing is, taxes don't have to be that mysterious. There are some basic things to understand about taxes for Uber Eats delivery drivers. That's why I put this tax series together, to simplify that and give you the information you can use to get it handled and return to making money.
About this article
This is not tax advice and should not be taken as such. My purpose here is to describe how tax deductions work for Uber Eats contractors. I'm trying to help you see how the IRS looks at business expense deductions, and I won't tell you what you should claim. We'll discuss the following:
- Can you claim expenses if you don't itemize your deductions?
- What qualifies as a deductible expense?
- Why tracking is extremely important
- Why some expenses may be deductible for rideshare but not for delivery
- 49 common UberEats tax deductions and whether they are legitimate
We focus on how earnings and expenses for UberEats deliveries (and other gig companies) impact U.S. income and self-employment taxes. State and local taxes, as well as taxes in other countries, have their own regulations.
We'll focus on some specifics about Uber Eats. Still, many of these concepts work for several platforms in the gig economy.
I'll repeat this: This is not tax advice. You should seek a tax professional who can guide you and advise you on your tax situation.
This is part of our series on Uber Eats taxes. I didn't want to just give you an overview but instead provide in-depth detail about different subtopics where you need them. I'll link to other posts where applicable, and you can see a complete list of Uber Eats tax series articles here.
Can you claim expenses for Uber Eats if you don't itemize your tax deductions?
You absolutely CAN claim Uber Eats expenses regardless of whether you take the standard deduction or itemize. This is because those write-offs are handled differently than your personal tax deductions.
There are two popular but very costly myths among gig workers:
- You can not claim expenses if you don't itemize your deductions
- You can not write off ANY business expenses if you claim the standard mileage allowance
Uber Eats expenses are deductible regardless of your tax deduction method because you claim them on IRS Schedule C.
Business expenses and tax deductions are actually two very different things. A business expense is an operating cost that is deducted from your gross earnings to determine your profit. That profit is then moved to the income part of your Form 1040.
Tax deductions are personal costs that are done later in the tax process.
Secondly, some are confused by the either/or nature of claiming car deductions. The IRS says you must choose between claiming miles or using the actual expense method. That decision only relates to how you write off your Uber Eats car expenses. It does NOT prohibit you from writing off other costs.
What qualifies as a deductible expense?
Understanding the criteria for what you can claim is better than browsing a list like the one we have at the end. That's because a list may not have everything. It's also because the presence of something on a list doesn't always mean it's deductible for you.
Understanding the criteria helps you identify which is which. A list can still be good for examples or reminders, but you should match your circumstances to the requirements.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.IRS Publication 535
Is the item you spent money on ordinary for operating a delivery business? Is it something you need for your business?
Here's what the IRS meant by not needing to be indispensable: It's possible to operate your business without some things, but those things can improve your business. You can still write them off if they have a business purpose.
An article by WCG Certified Public Accountants really explains it well. They explain that a business expense is legitimate if it meets the following tests:
- It's ordinary and necessary for your business
- You paid for it in the tax year
- The expense is directly related to your business
- The expense is reasonable and not lavish or extravagant.
Why tracking is so important
You need to have evidence of a purchase if you want to claim it as an expense. Lack of evidence prohibits you from claiming the deduction.
A good system of tracking expenses and collecting receipts will do three things for you:
- Allow you to claim the write-offs
- Give you backup if audited
- Make things MUCH easier come tax time.
The best bookkeeping programs allow you to take pictures of your receipts and store them that way. A good program will also give you a report that tells you what to put where on your Schedule C.
The best free resource I've seen tracks your miles AND expenses is Hurdlr's free app. They also have a paid subscription version that adds additional features.
You can learn more here about 7 rules for how to track Uber Eats expenses.
One of the most important things I can tell you about keeping records is: If in doubt, track it. Keep a record of the expense and keep the receipt. You can always ask your tax professional later. It doesn't hurt if you track it but find you can't claim it. It's much more difficult if you didn't record the activity, find out you can claim it, and scramble to find evidence after the fact.
There are some subtle differences between delivery and rideshare expenses.
A lot of the tax articles I see for Uber Eats, Doordash, Grubhub, etc., just copy information that's out there for rideshare taxes. Some things that are deductible for one may not be for the other.
Remember these main IRS rules: The expense must be reasonable and necessary for your business to be deductible.
Many of the rideshare-related expense lists assume that you have passengers. Things that are ordinary and necessary for pleasing passengers and maintaining minimum customer ratings don't apply for delivery.
For example, a rideshare driver might deduct a Spotify subscription because it's for entertaining passengers. However, without passengers, there's no longer a business purpose for the subscription.
Remember, it's not about whether an expense deduction fits a list. It's about whether the expense is necessary and ordinary for YOUR business.
49 Uber Eats business expenses, and whether they are legitimate
We'll examine several expense items. Many of these are deductible, but some are not. There are some where the answer is, “it depends.”
We'll give each one a score:
- Usually deductible. These tend to be more common business expenses IF your use of the item meets the abovementioned qualifications.
- Partially deductible. For certain items with both business and personal uses, you can only claim a percentage of the expense related to how much you used that for your business.
- Grey area. I don't see widespread agreement on these. Some experts will say you can, others that you can not. Definitely consult your tax professional about these items for clarification.
- Rarely deductible. In the right circumstances, these are deductible items. However, they are unusual for delivery contractors
- Deduction but not on Schedule C. These are things where there are special tax deductions elsewhere on your 1040. They cannot be taken as expenses on Schedule C.
- Actual expense method only. These are car-related expenses that 1) cannot be claimed if taking the mileage deduction and 2) are only for the business percentage of the expense.
There's little real need for advertising as an Uber Eats contractor as they provide all the business opportunities through the driver app. Rare exceptions might be:
- Reaching out to restaurants to create independent delivery relationships
- Purchasing stickers or cards to leave with customers encouraging them to tip or leave a rating.
An app that helps you operate your business is deductible. An example would be Hurdlr Premium which helps you with bookkeeping and mileage tracking. Apps that help you manage your business or help you accept or reject deliveries efficiently are deductible expenses.
The business percent of your car insurance premium can only be claimed if you are using the actual expense method for claiming vehicle expenses. It cannot be claimed (even if it's a commercial auto policy) on top of the mileage allowance.
Bank and Instant Pay fees.
If you have a separate bank account strictly for your business, you may be able to claim bank fees from that account. If you use the instant pay feature that assesses a fee for each withdrawal, those fees may be deductible.
Bicycle, Scooter or Motorcycle Expenses
The bad news is you can not claim mileage on bikes, motorcycles or scooters. The good news is you can claim the business percentage of the actual costs of those vehicles, including depreciation, maintenance, repair, and accessories used for delivery purposes.
Business policies are rare for gig workers. However, some other types of non-auto insurance policies may apply, which is why I used the unusual “Usually/Rarely Deductible” caption. Also, see the description above about Auto Insurance. Some insurance types include:
- Business liability policies
- Self-employed worker's compensation that may be required in your state
- The business percentage of insurance for your bike, scooter, motorcycle, cell phone.
If your local government requires you to get a business license in order to operate as a self-employed individual, that license can be written off as a business expense.
Business Loan Interest
Not long ago, I'd have called this “rarely deductible.” Business loans for Uber Eats contractors are rare. The Paycheck Protection Program changed that. If you have had to pay interest for a PPP loan, that is a business loan, and interest is deductible. Interest for large purchases for delivery (such as for a bike or scooter) is deductible for the business percentage of the use of that item.
You can claim only the costs of your car related to business use. The IRS gives you two ways to determine business related car costs:
- A flat rate standard mileage allowance (58.5¢ per mile for the first half of 2022, 62.5¢/mile for the second half
- Determining what percentage of total miles driven were for business and claiming that percent of actual costs.
You can not claim any car operating costs if you use the mileage method. We go into a lot more detail in another part of this series on claiming mileage or actual expenses as an Uber Eats contractor. Other car expense items in this list are marked as Actual Expense Method Only, meaning you can only claim them if choosing the second of the above options.
Car Lease Payment
If using the actual expense method and leasing a car, you can write off the entire lease payment. This does not apply to loan payments and cannot be taken if using the mileage allowance.
Car Loan Interest
This is one of those rare car expenses you CAN claim even when taking the mileage deduction. Loan interest is not part of the IRS list of actual expense items and is a cost of ownership, not a cost of operation. Calculate what percent of total miles were for business, and you can claim that percentage of your loan interest (but NOT the premium).
Car Loan Principle
There is no circumstance allowing you can write off the payment for a car loan. You can claim the business percentage of the interest (see above) but never the principle. That's because the principle is not an expense. In its place, you can claim the business percentage of depreciation (loss of value) IF taking the actual car expenses instead of miles. We cover car payments in more detail in this article.
Car repairs can be claimed for the business percentage of the total only if claiming the actual expense method. They are included in the standard mileage allowance.
Some experts write that rideshare drivers can claim car washes even with the mileage allowance because extreme cleanliness is needed for high ratings. However, the IRS has sent out the following alert to tax volunteers that clarifies this issue:
The IRS Counsel considers car washes as part of the expense of maintaining the car, and as such, that expense is included in the standard mileage rate. Therefore, if a taxpayer is taking the standard mileage rate, he or she cannot also deduct the car wash expense. 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.IRS Volunteer Tax Alert VTA 2019-01.
Based on that, it's best to assume that car washes cannot be claimed on top of the mileage allowance in any circumstance.
A smartphone is necessary for delivering Uber Eats. However, most contractors use their personal phone. If there is personal use of the phone, you can only claim the portion that relates to your business-related use of the phone.
If you lease your phone, you would claim the business percentage of the lease payment under Rentals on Schedule C. However, iIf you bought your phone, you would claim the purchase price or depreciation of the phone. Consult your tax professional to see whether you need to capitalize the cost and use depreciation.
Cell Phone Repair
Say you cracked the screen and decided to repair the phone instead of replacing it. Or maybe you had to pay a deductible if you had insurance. You can claim the amount proportionate to what percentage of your phone usage is for business.
Cell and Data Services
You can claim the business percentage of the cost of your mobile, cellular, and data services. You would use the same percentage as you do for the cost of your phone. I list this separately from the cost of the phone because often, phone service and phone costs fit into different IRS expense categories.
Generally, you can not claim clothing that you wear during your deliveries. The standard is that if the clothing can be worn as every day wear, you may not claim it as a uniform.
Work clothes are tax deductible if your employer requires you to wear them everyday but they cannot be worn as everyday wear, such as a uniform. However, if your employer requires you to wear suits – which can be worn as everyday wear – you cannot deduct their cost even if you never wear the suits outside of work.H&R Block on claiming a uniform.
Uber Eats can not require independent contractors to wear a specific uniform. Generally, that takes away any justification for uniform costs. However, some will make an argument that clothing with a prominent Uber Eats logo or an independent delivery logo is deductible. This is a good one to get advice from your tax pro about.
A dashcam can be one of the best tools for protecting your ability to earn. All of the major food delivery services are notorious for deactivating drivers for unknown reasons or because of a false claim from customers. Many drivers get dashcams to document their deliveries. This creates a legitimate business purpose for the purchase.
Gas can not be claimed if you are claiming the standard mileage deduction. However, if using the actual expense method, you can claim the percentage of fuel costs that equals what percent of miles you drove for your business.
Health Insurance for Self Employed
Some health insurance plans for self-employed individuals can be taken as a special tax deduction, but not as a business expense. There's a special place on the 1040 form where you take that deduction.
This is an important distinction because when it's not a business expense, it doesn't lower your profits. A tax deduction reduces your taxable income for income tax purposes but does not reduce your tax basis for self-employment tax.
Home Office Deduction
Very few Uber Eats drivers qualify for the home office deduction. You can only claim a home office expense if you have space used EXCLUSIVELY for business AND is used substantially for your business. The nature of delivery work, where the app manages almost everything, makes it unusual to meet those criteria. You can read more about delivery contractors and the home office deduction here.
Hot Bags and Drink Carriers
Uber Eats does not provide delivery bags or hot bags to their contractors. Many restaurants require you have a hot bag, and many customers will rate your delivery on if the food was kept warm. This can make the use of insulated delivery bags a necessity. I have always included my delivery bags under Supplies on Schedule C.
There aren't many situations where one would have legal fees for being a delivery contractor. The most common use is if you create an LLC or corporate structure for your business. If the legal costs are strictly related to your business, they are legitimate business expenses.
Oil Changes and Car Maintenance
Car maintenance and oil changes are included under the standard mileage allowance and can not be claimed unless using the actual expense method. If using actual expenses, you can claim the business use percentage of oil and maintenance costs.
Meals eaten while on delivery are not deductible as business expenses. They do not meet the IRS requirements for claiming meals. You can read more about claiming meals as a business expense.
You can only claim business meals if meeting with someone for a business purpose. For example, you buy dinner with a friend to recruit them to sign up using your referral code. That meeting has a potential business benefit for you and could be deductible.
For most years, you can only claim 1/2 of the cost of meals. However, for the 2021 and 2022 tax years, the IRS is allowing 100% deductions.
If you have a membership with a specific business purpose, you may be able to claim that membership. For example, a Kover membership designed to protect your business income, or membership to an association of independent contractors might qualify.
We used this example to discuss how rideshare and delivery can be different with what you can claim. If doing delivery only, there is no business purpose to a music subscription. Entertainment while working is a personal expense and is not deductible as a business expense.
Any parking fees you have to pay related to your deliveries are deductible even when claiming miles. However, parking fees from personal trips not related to your business are not deductible.
If you need to obtain any permits for your business, the fees for those permits are deductible. Examples include special parking permits or permits that allow you to operate a business.
For occasional driving, a person normally doesn't need a phone charger. However, with heavy phone use while doing app-based work, a charger becomes a necessity to keep your phone operating for longer periods of time.
You can usually tell if someone does rideshare or delivery work by the fact they have a phone holder. The driver app often guides us to our deliveries, or we need easy access to accept or reject delivery offers. A phone holder becomes an efficiency tool, making it ordinary and necessary for a more profitable business.
I nearly called this “rarely deductible,” as I'm not sure how many delivery contractors would use this. However, I'm seeing more people offer books or classes to help one improve their gig work business. Such costs would be deductible. However, if professional development is not directly related to your delivery business, it is a non-deductible personal expense.
You can write off the business percent of property taxes on anything you use for your business. In the delivery space, that's generally going to be your vehicle. Whatever percentage of miles you drove for business, you can take that percentage of your property tax as a deduction. This IS deductible for your vehicle property taxes even when claiming the standard mileage allowance.
Registration and Licensing of your Car
Car licensing and registration fees are part of the standard mileage allowance and can only be claimed when using the Actual Expense method. Then, the business percentage of fees are deductible. The exception is the property taxes paid when registering in some states, as the business portion of taxes is deductible even when claiming miles.
If you need to rent items to operate your business, that rental fee is a business expense. A rental example would be renting an e-Bike or scooter to let you deliver more efficiently in congested areas.
The repair of business property or items you use for business is a deductible expense. Examples include cell phone repair or bicycle repair if using those items for business. I call this partially deductible, because I believe most items gig workers would have repair are mixed-use items. If the item is used partially for business and partially for personal reasons, you must estimate what percentage of the usage is business related and claim that percentage. If the repaired item is used entirely for business, you can write off the total cost of repair.
This does NOT include your car if you are using the standard mileage allowance. Car repairs are covered by the mileage rate.
There is a place on Form 1040 for SEP, Simple, and qualified retirement plans where you can take a deduction for your contributions. Those contributions do not count as an expense. In other words, they do not reduce your profit and thus do not lower your self-employment tax. As an actual tax deduction, they only reduce your income tax.
I went back and forth on whether to call Roadside Assistance services like AAA a Grey Area. There's some debate over whether you can claim it when taking the mileage deduction. However, I've read enough experts who point out that this is not a normal part of running your car. Instead, it's a supplemental program, and often necessary due to the large number of miles driven. Consult with your tax pro for clarification in your situation.
As independent contractors, we pay double for Social Security and Medicare. It's called Self-employment tax, because the self-employed get to pay both the employer's half AND the employee's half of those taxes.
Employers can write off the payroll taxes they pay for their employees. To level the playing field for self-employed individuals, the government allows you to write off 50% of your self-employment taxes. However, that write-off comes in other places and is not added as an expense on Schedule C.
This is another of those rideshare vs delivery things. Rideshare drivers who provide snacks or bottles of water to their passengers might get to write off that cost. Most years that's only a 50% reduction, though for 2021 and 2022 tax years, the IRS allows a 100% write off.
However, for delivery drivers this is a much less common deduction. Snacks for yourself are NOT deductible, they are a personal expense.
Some drivers, who put together snack packets or give away cold water bottles to customers when delivering on hot days, might be able to write those items off.
If you pay subcontractors to help you with deliveries, that is a deductible expense. Understand that you do have to issue 1099 forms once you've paid them $600 or more. I say this is rarely deductible because the Uber Eats structure makes it difficult to truly use subcontractors.
While tax preparation fees can’t be deducted for personal taxes, they are considered an “ordinary and necessary” expense for businesses. This means, if you are self-employed, you can deduct your preparation and filing costs as part of your business expense deductions.From Can you deduct tax preparation fees by Steward, Ingram & Cooper PLLC.
You may have noticed this as an independent contractor: Tax software and tax preparation fees cost quite a bit more when you start including things like Schedule C. Most free programs won't work with 1099's and business expenses.
Typically you can only claim the portion that relates to your business. You need to identify how much more you would pay because of your business than if just filing a normal personal return. That additional amount is deductible. Check with your tax pro to see how that applies to you.
Which by the way, the fees from your tax pro fit in this topic.
Tires are part of the actual expense of operating your car. That means that you can not claim the cost of replacement if using the standard mileage method. However, if using the actual expense method, you can claim the business use percentage of the cost of tires.
Tolls incurred directly as a part of your delivery work are deductible even when claiming the mileage allowance on your car. Any tolls paid as part of a commute or other personal trip are not deductible.
There are a lot of misconceptions about what qualifies as a business trip. Driving in another town nearby is not a business trip. The general rule of thumb is that it's only a business trip if it requires an overnight stay and that the primary purpose of the trip is for your business. That kind of trip is rare for Uber Eats contractors.
Maybe some day there will be a trade group for independent delivery drivers, or someone will create a driver's convention. Travel for something like that, which has a definite business purpose, is far more likely to be deductible.
I've never needed an inspection for Uber Eats. However, I've heard of some who claimed they needed an inspection. I don't know if somehow their account was set up to do both rideshare AND delivery. Uber Eats does provide insurance, so inspection requirements are always a possibility. If a car inspection is required, that cost is outside the normal cost of operations for your car, and I understand that it is a deductible expense.
Uber Service Fees
Uber Eats does a weird thing with their 1099 forms. They claim you made more money than you actually did, and the difference is in the form of a service fee.
In the example above, the number on the right is what the driver was actually paid. The number on the left is what Uber claims to have paid. The difference is the expenses, fees and tax number in the middle. This driver would claim the larger number as their income, then claim the $2,135.04 as an expense.
Some drivers claim that fee in the Schedule C line item for Commissions, while others report it as a line item under Other Expenses.
Vehicle depreciation is included in the standard mileage rate and can not be claimed unless using the actual vehicle expense method. If you are not claiming miles, you can claim the business use percentage of the depreciation (or loss of value) of your car. Depreciation can never be claimed on a leased vehicle.
The thing is, everyone's tax situation is different.
Many of the designations I gave to different expense types are based on my understanding of how the typical Uber Eats contractor runs their business. Your situation may allow some deductions that might not be claimable for someone else.
There are a lot of nuances, which is why I strongly suggest finding a tax pro. No internet article (including this one) can pretend to know everything about your circumstances.
The best thing you can do with this is to understand the main principle: The expense item must be ordinary and necessary for the type of business you operate. Start with that, and use lists like the one above for inspiration or to pique your curiosity.
But in the end… get a tax pro. It's worth it.