It’s hard to beat Uber when it comes to cool jobs. You can make your own hours, listen to music that you like, and generally work as much or as little as you like. Where things get confusing, however, is tax time.
Uber provides you with basic info about the trips you took and the mileage involved, but in the confusion of tax-filing it’s easy to miss deductions that can save you serious money. Today we’ll tell you about tracking ALL of your mileage, including travel related deductions you have coming, and finally a big mistake almost everyone is making – double-billing vehicle expenses.
Let’s get a more complete picture of what you need to know about Uber mileage and deductions!
First off, you need to count ALL of your mileage
One of the most common mistakes that Uber drivers make is simply failing to claim ALL of their mileage. While Uber will tell you how many miles you drove on each trip, you’ve got to keep in mind that this is only the actual trip. It starts when you pick up the customer and ends when you drop them off.
You drive more miles than that.
You’ve got to factor in the miles that you drive picking people up. You’ve got to consider trips to get gas, so that you can drive in the first place. Even miles that you drove only to have someone cancel – these things are all considered ‘business related mileage’
Apps like Hurdlr and TrackMyDrive are ways to track your complete mileage for your records and when it comes to filing, there are two ways that you can calculate all of this:
- IRS standard mileage deductions – The IRS has a formula that takes into consideration both the miles and the estimated wear-and-tear on your car. In 2020, the rate was 57.5 cents for every business mile. Check your current rate at the time of filing and you can do your deductions this way.
- Dededuct actual totals – The harder, but more accurate way is a complete deduction of all operating expenses. This includes repairs, lease payments on your car, gas, maintenance, and more! This is more time-consuming but worth it for some people, as you can get absolutely every penny you are entitled to.
You can only choose ONE of these, however, and we’ll talk more about this later!
Don’t forget travel-related expenses, either
Mileage is more than distance. Just about any expense that you incur for your Uber work is going to be a potential deduction that you can make. So, aside from mileage and things like snacks and your celphone, here are some examples of deductions that you should be making:
- Business licenses
- Tollbooth charges
- Roadside assistance coverage
- Airport and city-specific fees
- Portable ‘jumpstart’ kits
- Tire inflators and patch kits
These are just a few examples, but they should give you a good idea of what you might be missing out on. Anything that relates to your work as a driver is a potential deduction and if you don’t factor these in, then you are losing money yearly.
Deducting mileage AND vehicle expenses is a mistake
We mentioned how you can use the IRS standards to deduct for your mileage and vehicle attrition or you can simply calculate your costs manually… but not both. A very, very common mistake for new Uber drivers is to try to claim both, because not everyone knows that the IRS formula accounts for this.
A mistake like this can get your claim refused or if accepted, might lead to an eventual audit! If you want to simplify things with the IRS model, just multiply your business miles by the per-mile rate which the IRS has assigned and you are done, or you can choose to deduct your expenses manually. Just don’t do BOTH.
Also, consider just using an accountant when tax time arrives and you might find that this is money well-spent. With an accountant, you can just keep your expense receipts and actual mileage and hand it over to them, so that you can forget about it and just get back to making money.
They can opt for a full deduction of actual expenses and you might just get a good amount back that the IRS formula didn’t account for.
In conclusion: Track ALL of your mileage and don’t forget deductions you are entitled to
Today we’ve talked about the proper way to track your mileage as an Uber driver. It all breaks down into tracking ALL of your mileage, understanding business-related mileage deductions, and avoiding the mistake of double-filing for vehicle expenses.
Use these tips and when you file this year, you can make sure that you get all of the money back that should be coming to you. After all, you earned it!