Attention Delivery Drivers: Tax Deductions for You that Maximize Take Home Income
Various tax deductions for delivery drivers and couriers, some are new and unfamiliar. Reduce your gross taxable income.
There are many advantages to being a delivery driver. Also often called a courier. One advantage is self employment. Self employment gives delivery drivers autonomy over their schedule and life. Delivery drivers don’t report to an office every day where they sit at a desk and keep their eyes glued to a computer. Instead, they’re a bit like a small business. In addition, delivery drivers need to make sure there’s enough incoming business (i.e. deliveries) and they have to manage expenses.
Delivery drivers have unique business costs that are important to understand whether you are a DoorDash driver, GrubHub driver, PostMates driver, Amazon delivery driver, UberEATS driver or InstaCart driver to name a few. It’s important to understand the proper way to account for delivery driver taxes and potential tax deduction opportunities. This empowers delivery drivers to maximize their take home income.
There are many new, often unfamiliar, tax deductions a delivery driver can take from their gross income. Many delivery driver tax deduction opportunities are for expenses related to the cost and expense of the operation and use of the car or vehicle used for deliveries. Therefore, there are certain deductible expenses whether it’s your car or a car provided by an employer or car rental company.
Expenses Related to Transportation: Cars, Vehicle, Scooters, Bike
For Deliveries by Car, Choose a Mileage Expense Deduction Method
First you need to choose your mileage expense tax deduction method. These methods are for delivery drivers that use a car or vehicle for deliveries. There are two options:
- Actual Car Expense Method
The actual car expense method is a method where the tax payer deducts each individual expenses. For example, the tax payer deducts depreciation, lease payments, registration fees, etc., all separately.
- Standard Mileage Rate
The standard mileage rate is a method of deducting car expenses using a per mile driven. This amount is predetermined by the IRS. Use this method if you own or lease your delivery vehicle. For the last 5+ years this amount has been in and around fifty cents per mile. The Standard Mileage Rate method is convenient. Instead of spending a lot of time to itemize each expense, as done in the Actual Car Expense method, all expenses are included in a single per mile rate. Each year the IRS takes into consideration the cost of fuel, maintenance and the current economic environment to calculate the standard mileage rate. This method is more straight forward and often easier for many.
Review the following article for detailed information about each of these deduction methods, which one to choose and how to use them, Actual Car Expense Method vs Standard Mileage Rate.
Standard Mileage Rate Method
Please refer to the following article for the most up to date per mile rates if you use the standard mileage rate method, IRS Standard Mileage Rate.
Other, Non Transportation, Deducible Business Expenses
There are other deductible business expenses available to delivery drivers and couriers. These expenses include the following:
- Health insurance
- Communications: Phone and phone accessories such as car charger and car mount.
- The cost of hot bags and hot blankets in addition to backpacks
- Your Falcon Expenses subscription
Top Expense Deductions for Delivery Drivers
Mileage and vehicle related expenses are unarguably the top expense deductions for delivery drivers.
Commonly Overlooked Expense Deductions for Delivery Drivers
It is not uncommon for delivery drivers and couriers to overlook miscellaneous business expenses. For example, expenses for items and services used specifically for work such as expenses for car maintenance (for those using the actual expense method), cost of phone supplies such as car mounts, etc. With that said, most items you purchase to use as part of your work are likely deductible. They are at least partially deductible if not completely tax deductible.
Self Employment Tax
There are also taxes you should be aware as a self employed delivery driver. For example, Medicare and Social Security Taxes. Did you know that self employed individuals pay their own Medicare and Social Security Taxes? Don’t worry, we’ve got you covered.
Read the following article for details about self employment tax, What is Self Employment Tax?
About Falcon Expenses
Falcon Expenses is an iOS solution for expense tracking and management. Scan receipts, we type merchant, date and amount, auto-track mileage expenses via GPS and log billable hours with an integrated timer. Quickly organize expenses by time period, project or client and easily prepare reports for email to anyone in PDF or spreadsheet formats, all from your phone. Use for reimbursements, taxes, record keeping or invoicing. Falcon Expenses is great for professionals, freelancers, realtors, business travelers, truckers and more. Find out more, here.
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