Uber and other rideshare drivers must keep an IRS approved mileage log in order to maximize their tax deduction. You are entitled to take a tax deduction for all mileage driven for business purposes. Don’t be afraid to take this tax deduction.
If you’re thinking to yourself that you don’t have a business, well, think again. For tax purposes, working as an independent contractor means you are running your own business. You can include more mileage than just what you drove during your fares. You are allowed to include miles to get to your fare from your home, between picking up passengers, and going to a car wash, among others.
Uber would only report to you the fare mileage you drove for the year. This is the minimum deduction you are entitled to. You should deduct more! Just keep a log of your mileage. Lyft does a better job of tracking your total business mileage. Your log would be required for tax purposes even if you just use Uber’s or Lyft’s mileage amounts.
So long as you are tracking all information needed, you can keep track of your mileage any way you choose. You need to track the following information:
- Business purpose
- Miles for the trip (ideally with starting and ending odometer readings)
- Description and amount for any relevant expenses for the trip
Following are a couple examples of methods you can use:
- The old-fashioned method: keep a journal in your car and jot down your beginning and ending odometer readings and other required information. You can later transfer this to an excel sheet to do the calculations for you.
- There are also several apps available to help you. Some track mileage using a GPS, others act as a way to input your needed information. Examples include Expensify, TripLog, SherpaShare Driver, Ride Companion, Drive Companion, among many others.
Whatever you decide to use, take the write off/tax deductions that you are entitled to. Keep a detailed mileage log. This will help minimize your taxes and increase your overall cash flow from the business.