How to Track and Claim DoorDash Mileage for Tax Deductions

For DoorDash drivers, accurately tracking and claiming mileage can lead to significant tax savings. As independent contractors, these drivers can deduct certain expenses from their taxable income, with mileage being one of the most substantial deductions. Properly managing this aspect of finances is crucial for maximizing tax benefits.

Calculating Eligible Distance

DoorDash drivers must follow IRS guidelines to determine eligible miles for tax deductions. The IRS allows deductions for miles driven during business activities, specifically from the moment a driver accepts a delivery request until the order is completed. However, miles from a driver’s home to the first delivery location and from the last delivery back home are generally not deductible, as they are considered commuting miles.

To ensure accuracy, drivers should use reliable mileage-tracking apps like MileIQ or Everlance. These apps automatically log miles driven for deliveries and provide detailed reports separating business and personal miles, simplifying the deduction process. The IRS requires contemporaneous logs for deductions, making these tools invaluable.

Understanding the IRS standard mileage rate is also key. For 2024, the rate is set at 65.5 cents per mile. Drivers can calculate their potential deduction by multiplying their total eligible miles by this rate. For example, logging 10,000 eligible miles could result in a $6,550 deduction, significantly reducing taxable income.

Tax-Deductible Categories

While mileage is a major deduction, DoorDash drivers can also deduct other business-related expenses. Vehicle maintenance costs, such as oil changes and repairs, are deductible if directly tied to business use. Insurance premiums attributable to the vehicle’s business use, tolls, and parking fees incurred during deliveries are also eligible. Keeping receipts and organized records is critical to claim these deductions under IRS guidelines.

Cell phone expenses related to delivery work, including a portion of the phone bill for calls and data usage, are deductible. Drivers should document business-related phone usage to substantiate this claim. Additionally, equipment like phone mounts and insulated bags qualifies as business expenses and can further reduce taxable income.

Maintaining Accurate Logs

Accurate and detailed logs are essential for claiming mileage deductions. The IRS requires contemporaneous records, meaning mileage must be logged at or near the time of the activity. Digital tools and apps can automate this process, reducing errors and ensuring drivers don’t miss out on deductions.

Drivers should also include additional details in their logs, such as the date, purpose of the trip, starting and ending locations, and any related expenses. This documentation is crucial in the event of an IRS audit. Insufficient or inconsistent records may lead to disallowed deductions, so thoroughness is vital.

Using GPS-enabled apps enhances accuracy, as they automatically track routes and calculate distances. Many of these apps offer cloud storage, safeguarding records and ensuring they’re accessible when needed. Integrating mileage data with accounting software can simplify tax preparation, saving time and effort.

When Mileage May Not Qualify

Not all mileage qualifies for deductions, and understanding these distinctions is important. Mileage during personal errands or detours, even if they occur between deliveries, is non-deductible. Drivers must accurately differentiate between business and personal use of their vehicles to avoid penalties or denied deductions.

Mixed-use trips, where personal errands are combined with delivery routes, require careful categorization. Only the mileage directly related to business activities can be claimed. Misclassifying these trips could lead to scrutiny from the IRS, so precise records are necessary to validate deductions.

Keeping Long-Term Records

Maintaining long-term records is crucial for DoorDash drivers claiming mileage deductions. Drivers should retain records for at least three years, in line with the IRS’s statute of limitations for audits. In cases of suspected underreporting, the IRS may review records from up to six years prior, emphasizing the importance of diligent record-keeping.

Digital storage offers a secure and organized way to keep records. Cloud-based platforms protect documentation from physical loss and allow for easy retrieval. Drivers can categorize records by date or expense type for efficient review during tax preparation or audits. Many digital tools provide automatic backups and encryption, further safeguarding sensitive information.