How To Write Off Gas On Taxes: A Doordash Driver’s Guide to Maximizing Deductions

Navigating the world of self-employment and taxes can feel like you’re driving through rush hour traffic. As a Doordash driver, you’re essentially a small business owner, and that means you can take advantage of various deductions to lower your tax liability. One of the biggest expenses, and therefore, the most significant potential deduction, is gas. This article will guide you through how to write off gas on taxes as a Doordash driver, ensuring you understand the ins and outs and maximize your potential savings.

Understanding the Basics: Gas Deductions for Doordash Drivers

Before diving into the specifics, it’s crucial to grasp the core concept. The IRS allows you to deduct certain business expenses, including gas, to reduce your taxable income. This means you’re not paying taxes on the money you spent to earn money. For Doordash drivers, this is particularly important because you need gas to get those deliveries done. There are two primary methods for deducting vehicle expenses: the standard mileage method and the actual expense method. We’ll explore both, focusing on gas, in the following sections.

Method 1: The Standard Mileage Method – Simplicity at Its Finest

The standard mileage method is often the easiest approach, especially if you’re new to self-employment. This method allows you to deduct a set rate per mile driven for business purposes. The IRS updates this rate annually, so it’s important to check the current year’s rate.

Keeping Track of Your Miles: The Cornerstone of the Standard Mileage Method

The key to success with the standard mileage method is meticulous record-keeping. You must track your mileage accurately. This isn’t just about logging the total miles you drive; you need to differentiate between business and personal miles. Here’s how to do it effectively:

  • Start and End Dates: Record the date you began and ended your Doordash driving.
  • Trip Log: Maintain a log that includes the date, the starting and ending odometer readings for each trip, the total miles driven for business, and the business purpose (e.g., delivery to restaurant, delivery to customer).
  • Mileage Tracking Apps: Consider using mileage tracking apps like Everlance, MileIQ, or TripLog. These apps automatically track your mileage using your phone’s GPS, making record-keeping much easier.
  • Consistency is Key: Be consistent with your record-keeping. Even seemingly small trips add up over time.

By meticulously tracking your mileage, you can calculate your deduction using the IRS-provided rate.

Calculating Your Standard Mileage Deduction

Once you have your mileage log, calculating your deduction is straightforward. Multiply your total business miles for the year by the IRS-approved mileage rate for that year. For example, if you drove 10,000 business miles and the rate is $0.67 per mile, your deduction would be $6,700. This deduction covers gas, maintenance, insurance, and depreciation of your vehicle.

Method 2: The Actual Expense Method – Delving into the Details

The actual expense method requires a more detailed approach, but it can potentially yield a larger deduction, especially if you have significant vehicle expenses. This method allows you to deduct the actual costs of operating your vehicle, including gas, oil changes, repairs, insurance, and depreciation.

Tracking Your Gas Expenses: Receipts are Your Best Friend

With the actual expense method, you need to keep detailed records of all your vehicle expenses. This includes meticulously tracking your gas purchases. Save every gas receipt! Each receipt should include the date, the amount spent, and the gas station’s name. You’ll need this information to calculate your deduction.

Other Vehicle Expenses to Consider

Beyond gas, the actual expense method allows you to deduct other vehicle-related costs, such as:

  • Oil Changes and Maintenance: Keep receipts for all oil changes, tune-ups, and other maintenance.
  • Repairs: Document all repair costs, including receipts.
  • Insurance: You can deduct the portion of your car insurance premium that relates to business use.
  • Depreciation: You can deduct the depreciation of your vehicle over time. This is a more complex calculation, so consider consulting with a tax professional.
  • Tires: Keep records of your tire purchases and installation.

Allocating Expenses: Business vs. Personal Use

Since you likely use your vehicle for both business and personal purposes, you need to allocate your expenses accordingly. This is where your mileage log comes in handy again. You’ll calculate the percentage of miles driven for business and apply that percentage to your total vehicle expenses.

For example, if you drove 60% of your miles for business, you can deduct 60% of your gas, insurance, and other vehicle expenses.

Choosing the Right Method: Which is Best for You?

The “best” method depends on your individual circumstances.

  • Standard Mileage Method: Generally simpler, especially for new drivers or those with lower vehicle expenses. It’s also easier to switch to if you’ve used the actual expense method previously.
  • Actual Expense Method: Potentially more beneficial if you have high vehicle expenses or if your car is relatively new and depreciates quickly. It requires more detailed record-keeping.

It’s crucial to compare both methods to determine which one yields the larger deduction. You can only switch between methods if you use the standard mileage method in the first year of business use; otherwise, you must continue to use the same method.

Beyond Gas: Other Tax Deductions for Doordash Drivers

While gas is a significant expense, it’s not the only deduction available. Here are some other potential deductions:

  • Phone Bill: The portion of your phone bill used for business purposes.
  • Phone Mounts and Chargers: Expenses related to keeping your phone charged and secure for deliveries.
  • Hot Bags and Cooler Bags: Equipment used to keep food at the correct temperature.
  • Tolls and Parking Fees: Any tolls or parking fees incurred during deliveries.
  • Business Insurance: Insurance specifically for your business.
  • Professional Services: Fees paid to tax preparers or other professionals.

The Importance of Professional Guidance

Tax laws can be complex, and the rules for self-employed individuals can be particularly nuanced. Consider consulting with a qualified tax professional, such as a Certified Public Accountant (CPA) or a tax advisor. They can help you understand the specifics of your situation, ensure you’re taking all eligible deductions, and avoid any potential penalties. They can also help you decide which method is best for your situation.

Avoiding Common Mistakes

  • Not keeping adequate records: This is the biggest mistake. Without proper documentation, you can’t substantiate your deductions.
  • Mixing business and personal expenses: Keep your business and personal finances separate. Use a dedicated bank account for your Doordash income and expenses.
  • Overstating expenses: Be honest and accurate in your record-keeping. The IRS can audit your return, and inaccurate reporting can lead to penalties.
  • Forgetting to deduct other expenses: Don’t just focus on gas. Remember to deduct all eligible business expenses.
  • Failing to file quarterly taxes: As a self-employed individual, you’re generally required to pay estimated taxes quarterly.

Maximizing Your Tax Savings: Strategies for Success

  • Organize your records throughout the year: Don’t wait until tax season to gather your documentation. Create a system for tracking your expenses and mileage consistently.
  • Use accounting software: Software like QuickBooks Self-Employed or FreshBooks can help you track your income and expenses, generate reports, and simplify the tax preparation process.
  • Stay informed about tax law changes: Tax laws can change, so stay up-to-date on the latest regulations.

Conclusion: Fueling Your Success as a Doordash Driver

Writing off gas on taxes as a Doordash driver is a crucial aspect of managing your finances and minimizing your tax liability. By understanding the standard mileage method and the actual expense method, diligently tracking your expenses, and staying organized, you can maximize your deductions and keep more of your hard-earned money. Remember to maintain accurate records, consider seeking professional guidance, and always stay informed about tax law updates. By taking these steps, you can confidently navigate the tax landscape and fuel your success as a Doordash driver.

Frequently Asked Questions

What if I only drive for Doordash part-time?

The same rules apply, regardless of whether you drive full-time or part-time. You still need to track your mileage and expenses and allocate them accordingly. You’re eligible for the same deductions.

Can I deduct gas for personal trips if I also use my car for Doordash?

No, you can only deduct gas expenses related to your business use. You can’t deduct personal driving expenses.

What if I forget to track my mileage for a few weeks?

It’s crucial to track your mileage consistently. If you miss a few weeks, try to estimate your mileage as accurately as possible based on your memory and any available records (e.g., delivery confirmations). However, the more complete your records, the better.

Is it better to use the standard mileage method or the actual expense method?

There’s no one-size-fits-all answer. The best method depends on your individual circumstances and your vehicle expenses. Compare both methods to determine which yields the greater deduction.

Can I deduct the cost of car washes?

Yes, you can deduct the cost of car washes as a business expense, provided the car washes are primarily for maintaining the cleanliness of your vehicle for your Doordash deliveries. Make sure to keep the receipts.