So you know you need to track your mileage in a log, but do you know exactly which miles are deductible? The answer is not 100% clear-cut. There are certain situations where the miles are certainly deductible, but other situations enter into a gray zone. I believe the best way to determine your deductible miles is by going through some examples.
Let’s get the obvious one out of the way. If you are a rideshare driver for companies such as Uber or Lyft, the mileage you incur while transporting passengers in your car is deductible. No questions asked here. Just make sure to keep an accurate log and this one is done.
Next, we have the mileage going from one passenger (pax) pick-up to the next. For example, it’s a busy night. You drop the pax off at their destination, and you immediately get a ping for another pick-up. You proceed the 4 miles to get to the new pax pick-up location. Though some may disagree, I believe this mileage to be deductible. There is no doubt you are on the job, and you are driving to the next pax to continue earning money for the night. Log it all.
Then, we have the concern about the initial and final pax for the night. Some people do not have the luxury of sitting at home waiting for a ping to head out a few blocks and get working. Instead, they might make a trip 10-15 miles into the city to be in a better location. If your intent is to drive into the city to be in a better location to work for the night, I believe this mileage to be deductible. You can also include your return trip back home. Basically, as soon as you leave your house to make some money you are working, and those miles should be deducted.
Intent is the key in the previous example. You can’t just load your app and drive into the city to go to the mall and expect those miles to be deductible. You were never intending to work in the first place, and thus, those miles would be considered personal.
If you are driving out to get some gas prior to a night of rideshare driving, those miles are deductible. If you make a quick detour to get some gas while out driving for the night, same thing – those miles are deductible. If you need to make a supply run, deduct the miles you drove for that. Note in your log the reason for the trip and the expenses incurred.
It’s impossible to go through every scenario, but understand that intent is the most important aspect. If you are intending to work, to drive and pick up passengers, or make deliveries and earn some income, then those miles are deductible. At the very least, you should be able to explain the nature of your claimed business mileage and be able to support it with a mileage log and any receipts for expenses incurred.
It’s not clear cut
I can help answer your specific mileage questions. There are a lot of gray areas, and it may just come down to how aggressive you want to be. Please feel free to contact me. If you are a current client, I will work with you to figure out the best approach we can take.