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If you drive for Uber, Lyft, DoorDash, Instacart, Amazon Flex, or any similar gig platform, you're a self-employed independent contractor. The platform doesn't withhold taxes from your earnings, and you'll owe income tax plus self-employment tax on your net profit. The car expenses you're allowed to deduct can significantly offset what you owe.
Your Income Documents
If you earned more than $600 from a single platform, you'll receive a 1099-NEC. Some platforms send a 1099-K instead if payments went through their payment processing system. Check your app's earnings section and tax documents tab in January. Report all your earnings on Schedule C even if you don't receive a form.
Vehicle Deductions: The Big One
Your biggest deduction is your vehicle. You have two options: the standard mileage rate or actual expenses. The standard mileage rate is simpler — you multiply your business miles by the IRS rate (67 cents per mile for 2024). Actual expenses means deducting the business-use percentage of your gas, oil changes, tires, insurance, registration, and depreciation. Track your mileage carefully for every trip — the apps may not capture all your business miles (like driving to your starting location or between deliveries with no passenger).
Other Deductible Expenses
Beyond the car, you may be able to deduct: phone plan costs (business use portion), phone mount, chargers and other accessories, car cleaning and detailing for business use, insulated delivery bags (for food delivery), parking fees and tolls paid during trips, and a portion of any health insurance premiums if you're not covered elsewhere.
Quarterly Estimated Taxes
If you expect to owe more than $1,000 in taxes for the year, make quarterly estimated tax payments. A simple rule of thumb: set aside about 25-30% of your net earnings (after vehicle deductions) each month and pay quarterly.
Record-Keeping
Keep a mileage log, your 1099s, and receipts for all deductible expenses. The IRS can question vehicle deductions without documentation. Apps like Everlance, MileIQ, or Stride make tracking mileage easier.