How to Track DoorDash Miles for Your Taxes
DoorDash drivers: Master mileage tracking to effectively reduce your taxable income and maximize your tax deductions.
Tracking mileage accurately is important for individuals who use personal vehicles for business, such as DoorDash deliveries. Proper record-keeping helps manage expenses and can lead to tax deductions, reducing overall taxable income. This article guides you through identifying, recording, and applying mileage data for tax purposes.
Key Information to Record
When operating a vehicle for business, record specific data for each trip. Each entry should include the date of the trip. Note the starting and ending odometer readings for each business use, which allows for the calculation of total miles driven.
The purpose of the trip should be clearly stated, for instance, “DoorDash delivery” or “picking up supplies for DoorDash operations.” Record the starting and ending locations. Document any associated expenses incurred during the trip, such as tolls or parking fees. Maintaining accurate and complete data creates a robust record for financial reporting.
Methods for Tracking Miles
Several tools and techniques can assist DoorDash drivers in capturing mileage information. A straightforward approach involves manual logging, where drivers use a physical notebook or a digital spreadsheet. With this method, you manually record your odometer readings at the beginning and end of each shift or individual delivery trip. This technique offers direct control over your records and can be kept in the vehicle for immediate updates.
Mobile applications designed specifically for mileage tracking offer a more automated solution. These apps typically use GPS to automatically track your driving, categorize trips as business or personal, and generate comprehensive reports. Many applications provide features like automatic trip detection and the ability to add notes for trip purposes, streamlining the data collection process. While convenient, it is still advisable to periodically verify the app’s accuracy against your vehicle’s odometer.
Another method involves using your vehicle’s built-in odometer. This can be done by noting the total mileage at the start and end of each day or every delivery period. While simple, this method still requires manual recording of the readings along with the date and purpose of the driving. Regardless of the method chosen, consistency in recording is important to ensure the data is complete and reliable.
Applying Mileage for Tax Deductions
Once mileage data is tracked, it can be applied for tax deductions using one of two primary methods. The most common approach is the standard mileage rate, which allows a deduction of a set amount per business mile driven. For tax year 2024, this rate is 67 cents per mile. To calculate the deduction, you simply multiply your total documented business miles by this rate.
An alternative is the actual expense method, which involves tracking all vehicle-related costs. This includes expenses such as gasoline, oil, repairs, maintenance, insurance, registration fees, and depreciation. This method often requires more detailed record-keeping and a calculation of the business-use percentage of these expenses. Typically, taxpayers compare the deduction under both methods to determine which provides a greater benefit.
The Internal Revenue Service (IRS) requires thorough record-keeping to substantiate mileage deductions. Your mileage log should be contemporaneous, meaning records are made at or near the time of the travel. Each entry must clearly state the date, the total miles driven, the destination, and the business purpose of the trip. Maintaining organized and accurate records is important, as the IRS may request to review these logs in the event of an audit.