Top deductible expenses for rideshare and delivery drivers
You can use either Actual Costs or Standard Mileage method of deduction, but there are a few additional Common Operating Expenses that you list in Part II of Schedule C. Please note that the Actual Expenses method already includes all costs connected with the business use of your car. At the same time, Standard Mileage method already includes those expenses that you would otherwise add to the Actual, such as:
- Vehicle registration
- Maintenance and repairs
- Registration fees
- Lease payments.
So you cannot additionally deduct their costs. However, there are certain things that you pay for connected to your business that are deductible. They are referred to as Common Operating Expenses.
Common operating expenses
As a rideshare driver, you are likely to purchase additional goods and services that are necessary for your business and are therefore deductible. However, you need to carefully collect checks and always note a business purpose of this or that expense. Here are a few examples.
Parking fees. If you pay for parking while driving for Uber, these costs are 100% deductible.
Tolls. If you have to pay a toll fee when driving to pick up a rider, you can again deduct 100% of this sum.
Car wash. When you buy any cleaning supplies for your vehicle or pay for professional cleaning services in order for your car to be suitable for riding passengers, you can deduct 100% of these expenses.
Car accessories. Bought chargers for passengers and a phone mount? Make sure to deduct their costs. However, if you use your car for personal purposes too, make sure to mark the percentage of business usage.
Passenger goodies. Bottles of water, snacks and gums for your passengers are all 100% deductible Common Operating Expenses.
Roadside assistance plan. You can completely deduct the cost of your AAA membership or another roadside assistance plan.
Business meals. Please pay attention to this point. While you cannot deduct any meal you take, if you meet someone during lunch to discuss business, you can then deduct 50% of the lunch cost. For example, you can meet with potential drivers to explain them the nuances of ridesharing or meet with other Uber drivers to discuss the latest regulations in your city.
Phone/tablet and data plan. Did you buy a phone specially to use the Uber driver app on it? Congrats, you can deduct 100% of its cost. However, if you use one phone both for your personal calls and for driving for Uber, you will also need to state the percentage of time you use it for business. The same applies to your data plan.
Paid apps and subscriptions. You can deduct the cost of any application that you use for your rideshare business, for example, Spotify, Pandora or RYDAR. And again, if you listen to Spotify in your free time too, don’t forget to note that.
In Rydar, you’ll find a convenient list of Common Operating Expenses. All you need is to add the expense to the appropriate category, mark the date and its business purpose. You’ll also clearly see the difference between Actual Costs and Common Operating Expenses and won’t get confused.