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Should I Itemize or Take the Standard Deduction as an Independent Contractor?

If you read much on this site, you'll notice that I'm always telling people to track their miles and expenses. It makes a tremendous difference when tax time rolls around.

But what if you don't deliver that much? What if this is a part-time gig and expenses don't add up to the $12,950 standard deduction? Isn't it just a waste of time?

Which is better for a 1099 independent contractor for gigs like Doordash, Uber Eats, Instacart, Lyft, Uber, Grubhub, or others? Should you itemize or take the standard deduction?

Read on, and you'll understand why it doesn't matter which type of tax deduction you take. We'll explain why you should track your mileage and expenses regardless. We'll discuss:

An independent contractor deciding between standard or itemized deductions misspells it as Standart, writing on a table next to calculator and stack of money.
Even though this person didn't spell “Standard” properly, it doesn't matter if you itemize or take the standard deduction as an independent contractor for Doordash, Uber Eats, Instacart, Grubhub and others.

About this article

The purpose of this article is to discuss how standard and itemized deductions impact your delivery driver taxes. It's part of a series of articles about taxes for gig economy contractors. We'll link to other articles in the series where appropriate, and you can see a complete list of articles at the end.

This is not tax advice, and you should not take it as such. The intent is to educate and explain how taxes work for gig workers. We only write about taxes in the United States. You should seek a tax professional who can guide you in your specific situation and understands your local and national tax rules.

The difference between business expenses and tax deductions

There's a lot of lousy tax advice out there, especially on social media. One of the worst bits of advice is that you don't need to track expenses because of the standard tax deduction.

People who tell you that make one critical mistake: They don't realize that we're talking about business expenses, not tax deductions. Those are two different things and are handled differently in your taxes.

When you agreed to be an independent contractor for gig economy companies (Doordash, Instacart, Uber, Lyft, Uber Eats, etc.), you agreed to provide services as a business. You're not an employee.

As a result, you file taxes as a business. That changes everything about how you write off the cost of doing business.

The root of the error comes from how the standard tax deduction works. For personal tax deductions, you can choose between itemizing all of your tax deductions or taking a lump sum standard deduction. In 2022, that deduction for single filers is $12,950. If your deductions don't add up to more than $12,950, itemizing doesn't make sense.

That dynamic creates confusion for people who mistake business expenses for business deductions. Tax deductions are related to personal finances. They involve things you're allowed to write off, like mortgage interest and charitable donations.

Business expenses are part of your business finances. They go into a different part of the tax process and should not be included in the tax deduction discussion.

Why you can claim business expenses on top of the standard deduction

3d figuring scratching head next to a big red question mark trying to figure out deductions for independent contractors.

You can claim your miles and business expenses, even when taking the standard deduction because you claim expenses elsewhere on your taxes.

There's a process you follow when filling out your 1040 form.

  • Add up income.
  • Subtract adjustments and tax deductions
  • Figure out your tax bill
  • Apply payments and credits to determine a refund or what's owed.

Business expenses are claimed in the income part of the tax process. 

This is because, as a small business owner, your business income is your profit, or what's left over after expenses.

In other words, you must subtract expenses from what you earned from gig companies to get your income.

All of that happens with IRS form Schedule C. Add up the money you made from customer tips and from gig companies like Uber, Doordash, Instacart, Grubhub, Lyft, and others. Put that on Schedule C. Also, put down your business expenses and mileage. Subtract expenses from earnings to determine profit.

A US Federal tax Schedule C for 1040 income tax form on a keyboard
Schedule C is the form in the income section of your tax filing where you list your business income AND expenses.

Your profit is now added to other income on form 1040.

The implication of all of this is that because it's done in a different place on your taxes, it doesn't matter what type of tax deduction you claim. You can claim the $12,950 standard deduction ($25,900 if you're married) and still claim every business expense.

I know, there's a lot of stuff on the form, but the concept is actually pretty simple: What did you make, and what were your expenses?

The whole idea of this form is to be a place where you enter both, and THEN you list the profit (money left over after deducting expenses from income) as personal income on your tax form.

What does this mean to delivery and rideshare gig workers?

Three sets of hand working on notepads, calculator and laptop as they figure standard and itemized deductions, with tablet showing  a chart and words Lessons Learned.

It means you should track and claim your business expenses. They have nothing to do with whether or not you itemize your deductions.

Understanding this can make a difference of hundreds, or thousands, of dollars at tax time.

If you're in the 10% tax bracket, with 15.3% self-employment tax, one-fourth of your earnings go back to Uncle Sam. Remember that your taxable business income is based on what's left over after expenses (profit).

Every expense dollar reduces your taxable income by one dollar. It reduces your income tax bill by 25¢.

You may put thousands of miles on your car if you drive for your delivery or rideshare work. In the second half of 2022, the IRS will let you write off 62.5 cents per mile.

Suppose Clyde drives 30,000 business miles. That reduces taxable income by $18.750. Clyde can claim that even while taking the standard tax deduction. It allows him to save over $4,600 in taxes by simply tracking and claiming their miles.

Can you see how expensive a mistake it can be to listen to bad advice?

The Delivery Driver's Tax Series

The Delivery Driver's Tax Information Series (Grubhub, Doordash, Postmates, Uber Eats, Instacart)

The Delivery Driver's Tax Information Series is a series of articles designed to help you understand how taxes work for you as an independent contractor with gig economy delivery apps like Doordash, Uber Eats, Grubhub, Instacart, and Postmates. Below are some of the articles

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?

Could this help someone else? Please share it.

About the Author

Ron Walter made the move from business manager at a non-profit to full time gig economy delivery in 2018 to take advantage of the flexibility of self-employment. He applied his thirty years experience managing and owning small businesses to treat his independent contractor role as the business it is.

Realizing his experience could help other drivers, he founded EntreCourier.com to encourage delivery drivers to be the boss of their own gig economy business.

Ron has been quoted in several national outlets including Business Insider, the New York Times, CNN and Market Watch.

You can read more about Ron's story,, background, and why he believes making the switch from a career as a business manager to delivering as an independent contractor was the best decision he could have made.

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