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If you're a gig worker and you’re wondering “what expenses can I claim as a delivery driver?” or “is this expense deductible?”, keep reading this blog post!
Whether you’re working full-time or part-time as a delivery driver or rideshare driver, understanding the expenses you can claim is crucial for maximizing your take-home pay and staying compliant with tax regulations.
Navigating the intricacies of allowable expenses can seem daunting, but it's important to ensure that you're not leaving money on the table.
As a gig worker, you’re responsible for more than just delivering meals or providing rides—you also need to keep track of your business expenses throughout the year! Fortunately, the IRS allows you to deduct many of these expenses, which can significantly reduce your taxable income.
In this guide, we’ll explore the key expenses that delivery drivers and rideshare drivers can typically claim on their taxes, helping you keep more of your hard-earned income while minimizing your tax liability.
Plus, we’ll also share the best and easiest way to manage your expenses as a gig worker!
1. Mileage and Vehicle Expenses
One of the most significant deductions available to delivery and rideshare drivers is related to vehicle expenses.
You have two options when it comes to claiming vehicle expenses (note that you cannot opt for both methods, you must choose one or the other):
Standard Mileage Rate: This is the simplest method, where you track the miles you drive for business purposes and multiply it by the standard mileage rate set by the IRS. For 2024, the rate is 67 cents per mile. This rate accounts for gas, maintenance, depreciation, and insurance, so you can’t deduct these costs separately if you use the standard mileage rate.
Actual Expenses: Alternatively, you can deduct the actual costs of using your vehicle for business, including gas, oil changes, tires, insurance, registration, repairs, and depreciation. This is a more manual, nuanced approach that requires you to keep detailed records and receipts for all vehicle-related expenses if you choose this method.
Regardless of whichever method you choose, it’s essential to keep accurate records of your mileage. It’s also best practice to keep a record of any receipts for your business.
We recommend using an app like Solo to automatically track your mileage and sync it with your expense records. This will ensure you don’t miss out on this valuable deduction!
2. Mobile Phone and Data Plan
As a delivery or rideshare driver, your smartphone is an essential tool for managing your work. You can deduct a portion of your phone bill and data plan that is related to your business.
For example, if you use your phone 80% of the time for work and 20% for personal use, you can deduct 80% of your phone expenses. Be sure to keep a record of your usage and phone bills as proof of this deduction.
If you have a separate device that you use solely for your delivery driving or rideshare driving gigs, you can deduct 100% of the cost of the phone and your monthly data plan. You should plan to keep track of your usage and phone bill as proof of this dedication, as well.
3. Tolls and Parking
Any tolls or parking fees that you incur while driving for your gig work business are fully deductible. It’s important to keep receipts or use the Solo app to track these expenses automatically.
Parking tickets, speeding tickets, and traffic fines or violations are not deductible. Make sure you’re keeping track of these personal penalties to keep them separate from your deductions come tax time.
4. Insurance
Car insurance is another deductible expense if you use the actual expense method.
Note that you cannot deduct car insurance costs if you opt for the standard mileage method, as it is already considered as part of that deduction.
If you opt for the actual expense method, it’s also important to note that you can only deduct the portion of your car insurance costs that relate to business use. If you have separate insurance for business purposes, that entire cost can be deductible.
As an independent contractor, you can also deduct the cost of health insurance premiums if you’re not eligible for coverage through a spouse’s employer or through a traditional employer!
5. Car Loan Interest
If you're financing your vehicle, you can still deduct the portion of your car loan interest that corresponds to your business use of the vehicle.
This deduction is available even if you're using the standard mileage method! Make sure to keep track of your car loan interest payments so you can deduct these come tax time.
6. Work-Related Education and Training
If you take any courses or training specifically related to improving your driving business, these expenses can be deducted.
For example, a defensive driving course or training on how to better manage your small business finances could qualify.
7. Tax Preparation Fees
The cost of hiring a tax professional to prepare your taxes or any tax software you purchase is also deductible.
Since your taxes can be more complex as an independent contractor, this can be a significant expense worth claiming.
Did you know that you can actually file your taxes directly from the Solo app?! When you file with Solo (partnered with Column Tax), you get access to easy to use pre-filled tax forms, both federal and state tax filing, and an accuracy guarantee!
File your taxes through the Solo app today! You can also deduct the cost of Solo’s tax preparation as an expense on your annual tax filing.
8. Business Licenses and Fees
As a delivery driver or rideshare driver, you may be required to obtain certain licenses or undergo background checks as part of your work with various platforms like Uber, Lyft, DoorDash, or Grubhub. These expenses are considered essential for your business operations and are therefore deductible on your taxes.
Any licensing fees or background check costs required by the rideshare or delivery platforms you work with can be deducted.
9. Subscription Costs
If you pay for any subscriptions or memberships that are necessary for your driving work, such as apps that help you find work or track your expenses, these can be deducted.
For example, if you subscribe to a plan in the Solo app the payment is deductible!
If you have other apps, tools, or services that you use for your business and that you pay a fee for or pay a subscription cost, these are also tax-deductible.
10. Phone or Delivery Accessories
Phone accessories that help you do your job as an independent driver, like car chargers, cables, and phone holders, are all tax deductible.
For food delivery drivers, some gig app platforms require their drivers to carry an insulated food bag while delivering orders. Because this is a necessity for your job as a food delivery driver, you can deduct the cost of buying the insulated bag.
Other equipment and accessories can be deducted as well, including electric vehicle chargers, first-aid kits, car floor mats, phone mounts, drink holders or car seat covers as long as they’re for professional use and are “ordinary and necessary” expenses for your delivery or rideshare driving business.
Frequently Asked Questions About Claiming Expenses as a 1099 Driver
What kind of records should I keep as a rideshare driver?
It’s best practice to keep all receipts related to any business expenses and vehicle expenses. It’s also easier to track expenses as you go rather than trying to back-track expenses come tax time.
Tips for Organizing Expense Records:
- Use the Solo App: Consider using the Solo app, an app specifically designed for gig workers that tracks mileage, expenses, and income. The Solo app integrates with your rideshare platforms and can automatically log many of your business activities!
- Keep Digital Copies: In addition to physical copies, scan and store all receipts and documents digitally. This makes it easier to organize and retrieve records when needed.
- Separate Business and Personal Finances: If possible, use a separate bank account or credit card for business expenses to simplify tracking and record-keeping.
What expenses can I claim as a delivery driver?
All business related expenses, including miles driven, work equipment like delivery bags, phone plans, or a Solo subscription, can be deducted from your gross income at tax time.
Save and share this blog post to reference back to during tax time!
How do I track my miles as a delivery driver or rideshare driver?
With Solo’s Trips feature, you can automatically track your mileage on every job and categorize your miles between work and personal.
You can also easily add additional expenses through the Expense tracker and upload receipts to keep things organized.
With all your work expense information at your fingertips, you can maximize your deductions and keep more of your hard-earned cash!
How do I know how much I’ll owe in taxes as a delivery driver or gig worker?
It can be easy to forget to set money aside in case you owe when tax season comes around.
Solo’s Tax Projection feature helps alleviate the stress by using your income and expenses tracked to monitor your Net Income and provide you with updated tax projections to estimate how much you’ll owe.
When you track your work information, Solo can help you maximize your deductions so there are no surprises when Tax Day arrives!
Final Thoughts on Claiming Expenses as a Rideshare Driver or a Delivery Driver
By familiarizing yourself with the expenses you can claim as a delivery driver, you can effectively reduce your taxable income and improve your financial well-being.
It’s always advisable to keep thorough records and consult with a tax professional to ensure that you're making the most of the deductions available to you.
Whether you're just starting out or are an experienced driver, staying informed about your expenses is a smart move that can have a significant impact on your bottom line.
Plus, with Solo’s built-in expense tracking and automatic mileage syncing features, staying on top of your finances has never been easier! Download the Solo app today to make managing your gig work business easier, especially come tax time!
