What is the difference between business expenses and vehicle expenses?
As a gig economy driver, you need to pay taxes on your own. It’s not always immediately clear how to figure out the whole thing. In particular, all the different expenses – which of them are deductible, which are not, and which ones do you need to track? Read this post to figure out how to keep record of your expenses to reduce your taxable income.
Actual vehicle expenses
These are the money you spend on your vehicle. If you use the Standard mileage method of deducting your vehicle cost, you may not bother with writing down your vehicle expenses. They are included in the Standard mileage rate by default. To put it simple, if you determine the amount of deductions by multiplying the total amount of your business mileage by the rate announced by the IRS (in 2019 it’s 58 cents per mile, in 2018 – 54.5 cents per mile), you no longer need to bother about vehicle expenses. However, if you for some reason are ineligible to use the standard mileage method or want to figure out which of the deduction methods accounts for higher amount, you need to start tracking your vehicle expenses.
What to track? Gas, oil change, repairs, garage rent, insurance, registration fees, etc. In Rydar 2.0, you can easily keep track of your vehicle expenses and then download the Actual expenses report at the end of the year that is ready to be filed to the IRS.
Deductible business expenses
Sometimes they are also called common operating expenses. These are expenses associated with your business and – good news! – they are deductible regardless of which method of deducting vehicle costs you choose.
What to track? For rideshare and delivery drivers, there’s a long list of potentially deductible expenses. They include anything you buy to maintain your gig economy driver business: car accessories such as phone mounts, cables and air refresher, bottles of water and gums you buy for passengers, parking fees and toll roads, car wash – as keeping your car clean is mandatory for driving passengers, even all of the application subscriptions that you use for business are deductible, such as subscription to music apps or Rydar 2.0! You will find a full list of business expenses for drivers available in Rydar 2.0. Tracking business expenses in Rydar is an easy and efficient way to maximize the amount of tax deduction.
Download Rydar 2.0 for iOS and Android to start tracking your expenses and maximize tax deductions.