There's been an explosion of on-demand apps that deliver food straight to your doorstep. Of course, this is a well-worn tradition for pizza restaurants. Can the pizza delivery drivers and on-demand food deliverers claim their mileage on taxes?
The first thing to determine is whether you're an employee or an independent contractor. While there are many specific details to determine your status, it generally boils down to three major tests:
Many of the on-demand food delivery apps follow the Uber model where drivers are independent contractors. In my experience, many pizza delivery drivers are W2 employees. This matters because it's generally easier for self-employed workers to deduct their mileage for work.
Your business miles could be worth¬†53.5 cents per mile. That may not sound like a huge amount but over time, that can really add up to a large chunk of change. If you drive 20 business miles a day on deliveries, that could be up a $2,568 mileage deduction at tax time (assuming you work five days a week for a year). Remember, the more deductions you can legally claim, the less income you have to pay taxes on. That means more money back in your pocket that you can use on your own business or anything you'd want ... including pizza.
If you are a W2 employee who drives to deliver food, you may still be able to claim a mileage deduction. You may receive a mileage reimbursement for your driving and if it's below the 53.5 cents per mile, you may be eligible for a partial mileage reimbursement. This is limited because it's a miscellaneous itemized deduction, so check with your Tax Pro to see if it's worth it.
The IRS also will ask for the total amount of commuting miles and non-commuting personal miles. If you want to keep records that stand up to IRS scrutiny, you're going to need to track and log all your drives.
If you're a self-employed worker at a pizza restaurant or an on-demand food company, you can deduct your car expenses on your Schedule C. If you're using the standard mileage rate for your deduction, you can enter your total deduction on Line 9. If you're using a mileage-tracking app like MileIQ, we've put together a quick guide¬†which shows you how to get the information you need for tax time.