This can be a great way to keep personal and driving expenses separated. Keep a separate bank account or credit card for business expenses. The IRS is strict about how you must log miles for tax deductions, so it’s important to plan out how you will keep records before you start driving. In addition, any driving done for personal reasons during the day (picking up lunch, running an errand), cannot be deducted. These miles are considered commuting miles, which are not deductible. Likewise, your last ride commuting home cannot be deducted. The first drive of the day, from your home to the location where you wait for passengers, cannot be deducted for business mileage. Any other mileage related to the business.Miles driven returning from drop-off points to a place to wait for another ride request.Miles driven with a passenger in the car.The following are eligible for tax deductions: Not every mile counts as a tax deduction. If you choose to get help filing your tax return, free tax preparation sites like VITA or Tax-Aide cannot prepare returns that use actual car expense method because it is out of scope. Learn more about the actual expenses method. Fully track your expenses, try both calculations, then determine which method is best. You must keep track of all expenses and receipts related to your car, in addition to the number of business miles driven. Tracking actual car and truck expenses requires detailed record-keeping. You may be able to claim a larger tax deduction with actual car and truck expenses, especially if you drive an expensive vehicle (by claiming vehicle depreciation), or if you paid a lot for car upkeep. It can be a good idea to use standard mileage the first year you drive so that you have flexibility to choose between the two methods in future years. If you want to keep it simple, standard mileage may be best. The exception is leased cars-whatever method you pick the first year you must stick with for the duration of the lease period. If you use actual expenses the first year, then you must continue to use actual car expenses for as long as you drive with that vehicle. If you use standard mileage in your first year of driving for Uber or Lyft, then you can choose whether you want to use actual car expenses or standard mileage in the future. However, you can include tolls and parking fees.Ĭan you use either deduction tracking method? Standard mileage includes these expenses. If you use standard mileage, you cannot deduct other costs associated with your car, including gas, repairs/maintenance, insurance, depreciation, license fees, tires, car washes, lease payments, towing charges, auto club dues, etc. Actual car expenses are difficult to track, so seek professional tax assistance. Track all of your driving expenses yourself. This is the more common and easiest option. This rate includes driving costs, gas, repairs/maintenance, and depreciation. Multiply your business miles driven by the standard rate (56 cents in 2021). There are two ways to claim the mileage tax deduction when driving for Uber, Lyft, or a food delivery service. The most important tax deduction for rideshare drivers is the mileage deduction, since it will be your biggest driving expense. You will need to carefully track these deductions yourself in case the IRS chooses to audit your taxes. As self-employed workers, you can take tax deductions for your driving expenses that can substantially lower your taxes.
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