Does Instacart Track Mileage for Taxes? Here’s What to Know

Gig economy workers, such as those employed by Instacart, face unique challenges in managing taxes. A key aspect of this is tracking mileage for tax deductions, which can significantly affect financial outcomes. Properly accounting for vehicle use can lead to substantial savings during tax season.

Availability of Mileage Tracking on the Platform

Instacart does not offer an integrated mileage tracking feature, requiring drivers to use alternative methods. Third-party apps like MileIQ and Everlance provide automatic trip logging, categorization for business and personal use, and detailed tax reports. While these apps often require a subscription fee, the potential tax savings usually outweigh the cost. Drivers should ensure their chosen app adheres to IRS requirements, which include documenting the date, mileage, and purpose of each trip.

Approaches to Determining Deductions

Instacart drivers need to understand the IRS’s standard mileage rate and the actual expense method to maximize tax deductions. As of 2024, the standard mileage rate is 65.5 cents per mile, covering expenses like gas, maintenance, and depreciation. This method simplifies record-keeping by only requiring a log of business miles driven.

The actual expense method, on the other hand, allows deductions for specific vehicle-related costs, such as fuel, insurance, and lease payments. This approach requires detailed documentation, including receipts for each expense, and calculating the business-use percentage of the vehicle by dividing business miles by total annual miles. While more labor-intensive, it can provide greater deductions depending on the driver’s vehicle costs.

Choosing between these methods depends on individual circumstances. Some may prefer the simplicity of the standard mileage rate, while others might gain more from the tailored deductions of the actual expense method. Comparing potential savings from both options and consulting a tax professional can help drivers make informed decisions.

Documentation for Tax Reporting

Accurate documentation is critical for Instacart drivers to validate deductions and comply with tax regulations. The IRS requires detailed records for claims, including a log of mileage and vehicle-related expenses like parking fees and tolls. Receipts should include the date, location, and business purpose of each expense. Digital tools and apps can simplify this process, offering organized, cloud-based storage for easy access.

Drivers should also track income from Instacart and reconcile it with 1099 forms to ensure accuracy. Addressing discrepancies promptly is essential, as errors can result in incorrect filings. Maintaining a separate bank account for business transactions further streamlines income and expense tracking, providing clear records in case of an audit.