Gig Worker Mileage Calculator

Two Ways to Deduct Vehicle Expenses:

The IRS allows gig workers to choose between two methods for deducting vehicle expenses. You must choose one method for the tax year and use it consistently.

Option 1: Standard Mileage Rate

Simply multiply your business miles by the IRS rate:

Pros:

• Simple calculation, easy recordkeeping
• Covers gas, insurance, depreciation, repairs, tires
• No need to save every receipt (just mileage log)

Cons:

• Cannot deduct actual expenses separately (except parking and tolls)
• May underestimate deduction for high-expense vehicles

Option 2: Actual Expense Method

Calculate all vehicle costs and multiply by business-use percentage:

Deductible Expenses:

• Gas and oil
• Insurance premiums
• Repairs and maintenance
• Tires
• Registration fees
• Depreciation (or lease payments)
• Car washes
• Parking and tolls (also deductible with standard mileage)

Example Calculation:

• Total annual vehicle expenses: $8,000
• Business-use percentage: 70%
• Deductible amount: $8,000 x 70% = $5,600

Pros:

• May be higher for expensive vehicles or high-cost areas
• Includes depreciation which can be significant for newer cars

Cons:

• Requires tracking every expense with receipts
• Must calculate business-use percentage accurately
• Once you choose actual expenses for a vehicle, restrictions apply

Which Method Wins?

For most gig workers driving average vehicles, the standard mileage rate produces a larger deduction. The 67-cent rate assumes approximately:

• 15 cents for gas
• 25 cents for depreciation
• 27 cents for insurance, repairs, and maintenance

If your actual costs are lower than these assumptions, standard mileage wins. Calculate both and choose the higher deduction.

IRS Recordkeeping Requirements for Mileage Deductions:

The IRS requires "contemporaneous records" for mileage deductions. This means documentation created at or near the time of the expense, not reconstructed later.

Required Information for Each Trip:

1. Date of the trip
2. Destination (or route description)
3. Business purpose (delivery, rideshare, etc.)
4. Miles driven (start and end odometer, or GPS tracking)

Acceptable Documentation Methods:

Digital Apps (Recommended):

• Stride, Everlance, MileIQ, Hurdlr
• Automatic GPS tracking
• Generates IRS-compliant reports
• Many are free for gig workers

Paper Mileage Log:

• Spiral notebook in your car
• Record each trip immediately
• Include date, destination, purpose, miles
• Keep for at least 3 years (7 years recommended)

Spreadsheet:

• Google Sheets or Excel
• Must be updated contemporaneously
• Include all required fields

What the IRS Does NOT Accept:

• Estimates based on "I drive about 100 miles per day"
• Reconstruction from memory at year-end
• Google Maps calculations for "typical" routes
• Bank statements showing gas purchases (proves expense, not mileage)
• Calendar appointments without actual mileage

Audit Red Flags:

• Round numbers (exactly 50 miles/day every day)
• No variation in daily mileage
• Business percentage over 90% without explanation
• Mileage that exceeds what is reasonable for income earned
• Log created all at once (same pen, same handwriting style)

Best Practices:

1. Start tracking on January 1, not April 14
2. Use an app with automatic tracking
3. Categorize personal vs business miles immediately
4. Back up your data regularly
5. Keep records for at least 7 years

What Counts as Business Miles:

Deductible Miles (YES):

• Driving to pick up a passenger or delivery
• Driving during a delivery or ride
• Driving between gigs (waiting for the next order)
• Driving to pick up supplies for work (hot bags, phone chargers)
• Driving to the bank to deposit cash tips
• Driving to a tax preparer or accountant

NOT Deductible (Personal Miles):

• Driving from home to your first gig of the day*
• Driving from your last gig home*
• Personal errands while working (grocery stop for yourself)
• Driving to get food for yourself during a shift

*Exception: If your home is your principal place of business (where you do admin work, scheduling, etc.), the first and last trips may be deductible. Consult a tax professional.

Business-Use Percentage Calculation:

Business-Use % = (Business Miles / Total Miles) x 100

Example:

• Total miles driven in year: 25,000
• Business miles driven: 20,000
• Personal miles driven: 5,000
• Business-use percentage: 20,000 / 25,000 = 80%

Typical Gig Worker Business Percentages:

Splitting Expenses When Using Multiple Apps:

If you drive for Uber, DoorDash, and Instacart:

• Track total business miles across all platforms
• Deduction is for all business miles combined
• No need to separate by platform for tax purposes

Dead Miles vs Paid Miles:

"Dead miles" (driving to pickup, between deliveries) are just as deductible as paid miles. Many drivers mistakenly only count miles while a passenger is in the car or while delivering. Track ALL business miles.

Strategies to Maximize Your Mileage Deduction:

1. Track Every Single Mile

The average gig worker underreports mileage by 20-30% because they forget to track:

• Waiting for orders in a parking lot
• Driving to the "hot zone"
• End-of-night drive to get gas
• Weekly car wash trips

These add up to thousands of additional deductible miles.

2. Use Your Car Strategically

If you have two vehicles, use one primarily for gig work to maximize business percentage. A 90% business-use vehicle is easier to document than a 50/50 split.

3. Consider Multi-Apping

Working multiple platforms (Uber + DoorDash) means more miles driven per hour worked. More miles = larger deduction. A slow Uber night becomes deductible if you are simultaneously waiting for DoorDash orders.

4. Track Personal Miles Too

To prove your business percentage, you need accurate total mileage. Note your odometer on January 1 and December 31. The difference is your total miles; subtract business miles to get personal.

5. Understand the First-Year Choice

For a new vehicle, you can choose either method. Once you use actual expenses, you are locked into that method for that vehicle with some restrictions. The standard mileage rate is often the better long-term choice for flexibility.

6. Do Not Forget Parking and Tolls

Both parking fees and tolls for business trips are deductible IN ADDITION to the standard mileage rate. Many gig workers miss these.

Annual Deduction Potential by Miles Driven:

Uber and Lyft Drivers:

What counts as deductible miles:

• Driving to pick up a rider (even if they cancel)
• During the ride with passenger
• Between rides while app is on and waiting
• Driving to "surge" areas
• End of shift driving to get gas

What does NOT count:

• Commuting from home to first pickup location*
• Personal errands during breaks
• Driving home after last ride*

*May be deductible if home is principal place of business

DoorDash, Uber Eats, and Delivery Drivers:

• Miles from accepting order to restaurant: YES
• Miles from restaurant to customer: YES
• Miles between deliveries while waiting: YES
• Miles to pick up supplies (hot bags, chargers): YES
• Miles returning items you couldn't deliver: YES

Instacart Shoppers:

• Driving to the store: YES (after first order accepted)
• Between stores for multi-store orders: YES
• To customer delivery location: YES
• Back to the store for next batch: YES

Amazon Flex Drivers:

• Driving to pickup station: Often NO (considered commute)
• During delivery route: YES
• Between packages: YES
• Returning undeliverable packages: YES

Multi-App Strategy: If you run multiple apps simultaneously:

• ALL miles count while any app is active
• Avoid double-counting same miles across platforms
• Keep one unified mileage log, not separate logs per app

Audit Rates for Gig Workers:

Schedule C filers (self-employed including gig workers) are audited at 3-4x the rate of W-2 employees. The IRS specifically scrutinizes:

• Mileage deductions
• Home office deductions
• Business vs. personal expense classification

Red Flags That Trigger Audits:

What Happens During an Audit:

1. Letter audit (most common): IRS requests documentation by mail
2. You provide: Mileage log, app records, bank statements
3. IRS reviews: Compares to income, checks for consistency
4. Outcome: Accept your records, partially disallow, or fully disallow

If Your Deduction Is Disallowed:

• Back taxes on disallowed amount
• Interest (currently ~8% annual)
• Potential penalties (20-75% of underpayment)
• For $10,000 disallowed mileage at 22% bracket: ~$2,200 owed + interest

How to Survive an Audit:

1. Contemporaneous records are your protection
2. Digital records (GPS apps) are most credible
3. Match mileage to income and platform records
4. Show variation in daily logs (reality has variation)
5. Be organized and responsive
6. Consider professional representation for large amounts

Statute of Limitations: IRS can audit returns for 3 years (6 years if >25% income understatement). Keep all records at least 7 years.

Why Quarterly Taxes Matter:

Unlike W-2 employees, gig workers have no automatic tax withholding. You must pay estimated taxes quarterly to avoid penalties.

Quarterly Due Dates:

How to Calculate Quarterly Payments:

1. Estimate annual gig income
2. Subtract deductions (mileage is often largest)
3. Calculate tax owed (federal + SE tax + state)
4. Divide by 4 for quarterly payments

Example Calculation:

The Self-Employment Tax Shock:

SE tax is 15.3% (Social Security 12.4% + Medicare 2.9%) on top of income tax. This is the #1 surprise for new gig workers. Your mileage deduction reduces BOTH income tax AND SE tax.

Avoiding Underpayment Penalties:

To avoid penalties, pay at least:

• 90% of current year tax, OR
• 100% of prior year tax (110% if income >$150K)

Many gig workers use the "prior year safe harbor" method.

What Is Vehicle Depreciation?

When you use your car for business, it loses value. The IRS lets you deduct this loss—but ONLY if you use the actual expense method (not standard mileage rate).

Standard Mileage Rate vs Actual Expenses:

If Using Actual Expenses:

MACRS Depreciation Schedule (5-year recovery):

Example: $30,000 Car at 70% Business Use:

Section 179 Expensing: For vehicles over 6,000 lbs (SUVs, trucks), you may be able to deduct the entire business portion in year 1—up to $28,900 (2024).

When Actual Expenses Win:

• Expensive vehicles (>$40,000)
• High operating costs (premium gas, frequent repairs)
• Low mileage but high expenses
• New vehicles (maximum depreciation)

When Standard Mileage Wins:

• Average-cost vehicles
• High mileage drivers
• Older vehicles (past depreciation)
• Simpler recordkeeping preference