The information in this article is up to date through tax year 2023 (taxes filed in 2024).
In the gig economy, companies like Uber, Lyft, Instacart, Grubhub, and DoorDash have transformed how we travel and shop and created a unique opportunity for individuals to earn income as independent contractors. As a delivery or rideshare app driver, you are considered a self-employed independent contractor. That means you’re entitled to unique tax deductions that reduce your tax liability. Here is a list of important expenses you can write off when you file your income tax return.
Business-related deductions
- Membership expenses – AAA is an example of a business-related membership you can deduct.
- Cell phone expenses – If you use your cell phone exclusively for your business, you can deduct the entire amount. If not, you can deduct the portion associated with your rideshare business. The same holds true for your wireless plan.
- Refreshments – Snacks or drinks you provide for your clients are deductible up to 50%.
- Self-employment taxes – Deduct the employer-equivalent portion of your self-employed taxes when calculating your AGI for personal income tax. Learn more
- Supplies – If you purchased hot bags, blankets, and courier packs for delivering or keeping food warm, this may be considered an “ordinary and necessary” expense that can be deducted. Remember, only the business use percentage can be deducted if items are also used for personal use.
Vehicle-related deductions
As a rideshare driver, you can claim a tax deduction for the miles you drive on the job. If you use the standard mileage rate, you’ll deduct $0.655 per mile driven for business. If you use the actual expense method to calculate the deduction, you’ll add up all your vehicle-related costs and deduct a certain percentage of the total.
For example, if you drove your vehicle a total of 10,000 miles in a year and 5,000 were business miles, 50% of your vehicle was used for business. You would use this percentage to determine what portion of an expense was for business use. Vehicle-related costs may include:
- Fuel – Deduct the cost of gas when you’re driving for work.
- Maintenance expenses – This includes oil changes, tires, inspections, brakes, and other costs that keep your vehicle in good running condition.
- Auto insurance – Calculate how much this expense was dedicated to the business using the actual mileage percentage.
- Vehicle depreciation
- Registration expenses – These may be partially deductible, depending on your state.
- Car washes
- Parking fees and tolls – You can only claim fees and tolls paid while on the job.
Read also: Deducting Business Mileage: The Standard Rate vs. The Actual Expense Method
What records do I need to claim these deductions?
Keep track of any receipts when you spend money on job-related expenses. It’s also a good idea to keep a mileage log that shows a list of the dates you drove, where you drove, and the total miles driven. By keeping detailed records, you’ll have an easier time filing your tax return, and you’ll be able to prove that what you report on your tax return is true if you are audited.
Read also Rideshare Drivers: 5 Tax Mistakes You Must Avoid
How can I get help filing my self-employed taxes?
Your self-employed tax situation might have you asking a lot of questions:
Do I have to pay quarterly estimated taxes?
Do I make enough to pay taxes?
Are my taxes too complicated to do myself…? (Hint: they’re not!)
When you use TaxSlayer’s Self-Employed Edition, you’ll have all the instructions, forms, and additional support you need to e-file with a 1099 (or without). All the calculations on your tax return are automatic, which means you don’t have to worry about doing the math yourself. And if you need more help, you’ll have access to an experienced tax pro specializing in self-employed tax situations.
