Top Tax Deductions for Delivery Drivers
Whether you’re a courier for Postmates, Amazon Flex, DoorDash, or any other delivery service, you’ve got business expenses that you can deduct from your delivery income. Here are a few that Stride wants all delivery drivers to know about:
Self-employed individuals can deduct their non-commuting business mileage. This includes miles that you drive to your first delivery pickup, between deliveries, and back home at the end of the day.
Careful--you can’t deduct both mileage and gas at the same time! The standard mileage deduction (53.5 cents per mile in 2017) is calculated by the IRS to include the average costs of gas, car payments, maintenance, car insurance, and depreciation. Think of it like a bulk deduction for all of the costs you incur due to using your car.
Fun fact: Taking the mileage deduction often means you can deduct more from your business income than you would if you had deducted all of your actual car expenses! This means you save more in taxes, and you don’t have to keep track of gas and maintenance receipts along with your mileage log.
Phone & Service
Every on-demand worker needs a great phone, accessories, and lots of data to get through the day. The portion of these expenses that is attributable to work is deductible!
Phone accessories like a car holder, car charger, and any others that are “ordinary and necessary” for your delivery job would be deductible.
Here’s the catch: You can only deduct the expenses as a percentage of business use. What this means is that if you use your cell phone for work 50% of the time, and for personal reasons 50% of the time, you could deduct 50% of the associated costs.
We know it can be tough to estimate how much of your phone usage is due to work. It’s probably best to go through your phone records for a typical month, look at how much of your data and phone calls are occurring during work hours, and apply the average to the rest of the year (or even better, check out your phone records each month!).
Hot Bags & Blankets + Courier backpacks
Those insulated bags and blankets that you use to keep food orders warm? They’re deductible as an “ordinary and necessary” business expense!
Tip: The same “percentage of business use” rule applies here. The IRS can be strict about using business supplies for personal reasons. So if you’re in need of a hot bag outside of work, you would do better to have another bag for personal use.
Any toll fees that you pay while working are tax deductible! Just make sure they're not already being reimbursed to you.
Sometimes you have to pay for parking in the city while working. That’s tax deductible!
One note: Traffic violations, speeding tickets, and parking tickets are not deductible, since they’re incurred because of inappropriate driving and not directly because of work.
If you are required to get a vehicle inspection or a background check because of your delivery job, the expense is deductible! For example, if GrubHub insists that you get a vehicle inspection before you start driving, you could deduct the expense.
Fees for AAA or other roadside assistance programs are tax deductible!
However--take note of how much of this expense is being used for work. For example, if you use your subscription twice in a year while you’re driving for work, and once while you’re driving for personal reasons, take care to only deduct the portion of the expense that covered you for work. You could use your business mileage log to figure the business/non-business mileage ratio for your car, and apply that ratio to find the deductible portion of your AAA membership.
The IRS allows you to deduct your health insurance premiums if you’re self employed, and if you meet a few requirements. You can read more about it here.
Note: If you are getting a government subsidy on your health insurance, only the amount you pay out of pocket each month is deductible!
Disclaimer: The information contained in this Guide is not offered as legal or tax advice. The U.S. federal income tax discussion included in this Guide is for general information purposes only and is not a complete analysis or discussion of all potential tax consequences that may be relevant to a particular individual. In light of the foregoing, each individual should consult with and seek advice from such individual’s own tax advisor with respect to the tax consequences discussed herein. Any information contained in this Guide is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the U.S. Internal Revenue Code of 1986, as amended.