If you’re a rideshare driver, you should be tracking the miles you drive while logged into the app. Why? Because it positions you to receive the largest possible rebate come tax time (and don’t forget you can benefit from tax incentives for buying an electric vehicle, too). These deductions reduce your taxable income, keeping more money in your pocket. In fact, rideshare drivers can claim other operating expenses, too, like fees/tolls, snacks/refreshments for passengers, phone chargers and mounts, and even your phone plan – so long as you track those expenses carefully.
Your most significant deduction, though, will be in mileage. Just like with the other expenses, your mileage must be logged accurately, or you risk an audit and a penalty. But don’t worry – like with most things, there’s an app for that!
Tax Benefit of Mileage Tracking
The easiest option, and the one most people take, is to choose the standard mileage deduction. In 2022, the IRS set this to 62.5 cents per mile (until 12/31/22). The standard deduction accounts for all driving costs, including gas, repairs and maintenance, and vehicle depreciation. To benefit from this deduction, you simply need to track your business mileage.
There is a second, more complicated option: actual car expenses. These expenses include depreciation, license and registration, gas and oil, tolls and parking fees, lease payments, insurance premiums, garage rentals, repairs, and tires. You will need to keep very detailed records to claim these expenses, so either seek out professional tax help or stick with the standard deduction.
Regardless of which option you choose, these incentives add up. If you drive full-time and put 40,000 miles in at the standard rate, you’re looking at a $25,000 deduction.
Apps to Track Rideshare Mileage
As an independent contractor, it’s important to track mileage so you have a record if the IRS audits you. A ton of mileage-tracking apps are available to help you do this seamlessly. While many of them have extra features, the primary ones you should be looking for are automatic mileage tracking (so it begins tracking your rides as soon as you drive), mileage classification capabilities (so you can mark a drive as either personal or business), and tax-compliant data reports (because that’s the whole purpose!).
Let’s look at four apps you can use to track your rideshare mileage easily.
This automatic mileage tracking app uses your GPS to silently track mileage in the background while you go about your business.
- Easily classify rides as business or personal
- Connect your bank account to withdraw money for tax payments automatically
- Free plan available
In this case, you will need to open the app and click to start the ride tracking, but it’s still a fairly easy app to use.
- Additional expense tracking and data reports available
- Integrate with H&R Block’s tax program and import all expenses with one click
- 100% free
This mileage tracking option is particularly beneficial if you have other business expenses to track.
- Mileage converts to a receipt
- Auto-imports receipts from Gmail
- 30-day free trial available
Advertised as the “ultimate rideshare driver assistant,” this app comes with bells and whistles beyond just mileage tracking.
- High accuracy, which some other apps lack
- Heatmap to direct you to underserved areas
- Analysis of past routes to maximize profits
This is just a small sampling of the mileage-tracking apps available on the market right now. Soon, you’ll be able to track miles right in the You.Car app but, until then, find the app that has the features that meet your needs.
Need more info before you decide to become a rideshare driver? Learn how driving for You.Car can cut your car payment in half.