Can Doordash Drivers Write Off Mileage? Your Ultimate Guide to Maximizing Deductions

Being a DoorDash driver offers a lot of flexibility. You set your own hours, you’re your own boss, and you get to explore your city. But with that freedom comes the responsibility of managing your finances, and a critical part of that is understanding tax deductions. One of the biggest deductions available to DoorDash drivers is mileage. Let’s dive deep into how to write off mileage as a DoorDash driver and ensure you’re keeping more of your hard-earned money.

Understanding the Mileage Deduction: The Basics for DoorDash Drivers

The IRS allows you to deduct the cost of using your vehicle for business purposes. For DoorDash drivers, this primarily means the miles you drive to pick up orders, deliver them, and travel between orders. This deduction is designed to offset the cost of gas, maintenance, repairs, and depreciation of your vehicle. It’s a significant tax break, so it’s crucial to understand how it works.

The key is to track your miles accurately. The IRS requires you to keep detailed records to substantiate your mileage deduction. We’ll explore the best methods for tracking later.

What Miles Can You Deduct as a DoorDash Driver? Defining Business Mileage

Not every mile you drive is eligible for the mileage deduction. Only miles driven for business purposes are deductible. So, what constitutes business mileage for a DoorDash driver?

  • Miles driven to pick up an order: This includes the distance from your starting point (where you begin your Dash) to the restaurant or store.
  • Miles driven to deliver an order: This covers the distance from the pick-up location to the customer’s delivery address.
  • Miles driven between deliveries: If you accept multiple orders in a row, the miles you travel between them are also deductible.
  • Miles driven back to your starting point, if you end your dash: If you start and end your Dash at your home, this return trip is generally deductible.
  • Miles driven to a restaurant or store to pick up a delayed order: If you are waiting to pick up a delayed order, the miles driven to get back to the restaurant/store are deductible.

Personal miles, such as commuting to your starting point, are NOT deductible. For example, the miles driven from your home to the first restaurant of your shift are not deductible. The miles driven from the restaurant to the customer are deductible.

The Importance of Accurate Mileage Tracking: Avoiding IRS Scrutiny

The IRS takes mileage deductions seriously. Without proper documentation, you risk having your deduction disallowed, and potentially facing penalties. Accurate mileage tracking is, therefore, absolutely critical.

There are two primary ways to track your mileage:

  • Using a mileage tracking app: This is generally the easiest and most accurate method. Many apps are specifically designed for gig economy workers and automatically track your miles using GPS. Some popular options include Everlance, MileIQ, and Stride. These apps often provide reports that you can easily integrate with your tax software.
  • Using a mileage log: You can manually track your mileage using a notebook or spreadsheet. This method requires you to record the date, starting and ending odometer readings, total miles driven, the purpose of the trip, and the location. While a manual log is acceptable, it’s more time-consuming and prone to errors, so a mileage tracking app is often the preferred choice.

Regardless of the method you choose, maintain detailed records. You should keep your records for at least three years after filing your tax return, just in case the IRS has any questions.

Essential Information to Record in Your Mileage Log or App

Whether you use an app or a manual log, you need to record specific information to satisfy IRS requirements. This includes:

  • Date of the trip: The date you drove the miles.
  • Starting and ending odometer readings: This allows you to calculate the total miles driven.
  • Total miles driven for each trip: The difference between your starting and ending odometer readings. Your mileage tracking app will automatically calculate this.
  • Purpose of the trip: Clearly state the business purpose of each trip (e.g., “Pick up order from McDonald’s”).
  • Location of the trip: Include the addresses of the pick-up and drop-off locations, or the general area if the app automatically tracks this.

The more detailed your records are, the better. This will help you substantiate your deduction if you are ever audited.

The Standard Mileage Rate vs. Actual Expenses: Choosing the Right Method

The IRS offers two methods for calculating your vehicle expense deduction:

  • The Standard Mileage Rate: This is a per-mile rate that the IRS sets annually. For 2024, the standard mileage rate for business use is 67 cents per mile. To use this method, you simply multiply your total business miles by the rate. This is often the simpler method, especially for those who don’t want to track all their vehicle expenses.
  • Actual Expenses: This method allows you to deduct the actual costs of operating your vehicle, including gas, oil, repairs, insurance, depreciation, and other vehicle-related expenses. To use this method, you must keep meticulous records of all your vehicle expenses. You then calculate the percentage of business use (business miles divided by total miles) and apply that percentage to your total vehicle expenses.

Which method should you choose? It depends on your individual circumstances. The standard mileage rate is generally easier, but if you have high vehicle expenses, the actual expense method might result in a larger deduction. It’s a good idea to compare both methods to see which one benefits you the most.

Other Deductions for DoorDash Drivers Beyond Mileage

While mileage is often the biggest deduction, there are other expenses DoorDash drivers can write off:

  • Vehicle Maintenance and Repairs: You can deduct the cost of oil changes, tire rotations, brake repairs, and other vehicle maintenance. If you use the standard mileage rate, these expenses are already factored in. However, if you use the actual expense method, you can deduct these costs.
  • Gas: Gas is a significant expense. If you use the actual expense method, you can deduct the cost of gas. If you use the standard mileage rate, the cost of gas is already factored in.
  • Car Insurance: If you use the actual expense method, you can deduct the portion of your car insurance that relates to your business use.
  • Phone Expenses: You can deduct the portion of your phone bill that relates to your DoorDash work. This includes the cost of data and phone calls used for accepting and managing orders.
  • Hot Bag/Food Delivery Supplies: You can deduct the cost of items like insulated food delivery bags, phone mounts, and car chargers used to facilitate your work.
  • Tolls and Parking Fees: You can deduct tolls and parking fees related to your DoorDash deliveries.
  • Business Licenses and Fees: Any business licenses or fees required to operate as a DoorDash driver are deductible.

Remember to keep receipts for all deductible expenses.

Tax Forms and Filing: Where to Report Your Mileage Deduction

As a DoorDash driver, you’re considered a self-employed individual. This means you’ll file your taxes differently than someone who is an employee. You’ll typically use the following forms:

  • Schedule C (Form 1040): Profit or Loss from Business (Sole Proprietorship): This is where you report your income and expenses from your DoorDash work. This is where you will report your mileage deduction.
  • Schedule SE (Form 1040): Self-Employment Tax: You’ll use this form to calculate and pay self-employment taxes (Social Security and Medicare) on your net earnings.
  • Form 1040 (U.S. Individual Income Tax Return): This is your main tax return form.
  • Form 1099-NEC (Nonemployee Compensation): DoorDash will send you a 1099-NEC if you earned $600 or more during the tax year. This form reports your earnings.

Consider using tax software or consulting with a tax professional. Tax laws can be complex, and a tax professional can help you ensure you’re taking all the deductions you’re entitled to.

Tips for Maximizing Your Mileage Deduction and Minimizing Your Tax Liability

Here are some additional tips to help you maximize your mileage deduction and minimize your tax liability:

  • Start tracking your mileage from day one. Don’t wait until the end of the year to start tracking. The earlier you start, the more accurate your records will be.
  • Keep your records organized. Use a dedicated folder or digital system to store your receipts and mileage logs.
  • Review your mileage logs regularly. Make sure your records are accurate and complete.
  • Consider the actual expense method if you have high vehicle expenses.
  • Consult with a tax professional. A tax professional can help you understand the tax laws and ensure you’re taking all the deductions you’re entitled to.
  • Don’t forget about other deductions. Explore all the other deductions available to DoorDash drivers.
  • Stay organized. Keep your income and expense records separate from your personal finances.
  • File on time. Avoid penalties by filing your taxes on time.

The Benefits of Accurate Record Keeping

Accurate record keeping is the cornerstone of successful tax deductions. It not only helps you save money but also protects you from potential issues with the IRS.

By keeping detailed records, you can:

  • Maximize your tax savings.
  • Avoid penalties from the IRS.
  • Simplify the tax filing process.
  • Gain a better understanding of your business expenses.
  • Make informed financial decisions.

Frequently Asked Questions

Can I deduct the cost of my car payment?

Unfortunately, no. Car payments are not directly deductible. However, the depreciation of your car is factored into the actual expense method.

Do I need to have a separate bank account for my DoorDash income and expenses?

While not required, it’s highly recommended. Having a separate bank account makes it much easier to track your income and expenses and keep your personal and business finances separate.

What if I use my car for both business and personal use?

You can only deduct the portion of your vehicle expenses that relate to business use. This is why accurate mileage tracking is so important. You’ll need to calculate the percentage of business use (business miles divided by total miles) and apply that percentage to your total vehicle expenses.

Is it better to use the standard mileage rate or actual expenses?

The best method depends on your individual circumstances. The standard mileage rate is generally easier, but if you have high vehicle expenses, the actual expense method might result in a larger deduction. It is best to compare both methods to see which one benefits you the most.

Can I deduct the cost of gas if I use the standard mileage rate?

No, the standard mileage rate already includes an amount for gas, maintenance, and depreciation. You cannot deduct these expenses separately if you use the standard mileage rate.

Conclusion: Driving Towards Tax Savings

Understanding how to write off mileage as a DoorDash driver is essential for maximizing your tax savings. By accurately tracking your business miles, choosing the right deduction method (standard mileage rate or actual expenses), and keeping detailed records, you can significantly reduce your tax liability. Remember to explore other potential deductions, stay organized, and consider consulting with a tax professional. By taking these steps, you can keep more of your hard-earned money and drive towards a more profitable DoorDash experience.