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Mileage for Door Dash/Uber Eats


M7047
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I understand that the client can use the standard mileage rate when working for these companies. My question is, does that start when they leave home or when they pick up the food/ passenger? I have read a lot and am getting both versions of this depending on who wrote the article. Some consider the mileage to the pickup as commuting others say the diver has no permanent place of work, so mileage to the pickup counts. Thoughts...

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Thoughts only - Does the driver have another job that is his main employment?  I would then be inclined to count all of the mileage as a driver except that to and from his regular place of employment.  If this is his only employment as a door dash/uber eats driver then I would be inclined to count the first "leg" and last "leg" of his driving for the day as commuting and the rest as deductible business miles.  BUT this is a totally un-researched opinion.

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The miles from pickup location to delivery location are deductible.   What you want to get is the miles from home/garage to pickup location and from delivery back to home/garage location.   That takes a legitimate business office in the home.   

Do they have a legitimate, regular and exclusive office in the home?  Do they check their app from that office in the home?  Do they do their bookkeeping from that location?   Are they running the activity like a business so they can claim the office in the home? 

If they don't have a home office, I only take the miles between stops.

Tom
Longview, TX

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Tom makes great points.  I have been 'round and 'round this one for years when I was training amateur game (but paid) umpires.  Most were going to their gigs from their day job and wanting to claim home office and travel.  I was able to (for instance) swing by my main work before going to my games, even on weekends or for weekend tournaments.  I also had a separate desk for the computer, which I was only using for game scheduling, training prep, etc.  A tiny fraction of one room, but it was still exclusive use.  My main work was less than half a mile from home...

The main person who was spouting the other scenario, where he was claiming mileage to and from home, was another trainer, and since he has never been audited, believes he is in the right.  He would always tell the newbies if they were not showing at least a 3x loss every year (because of expenses) they were doing something wrong.

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This is her only job. It's a rural area so she doesn't go anywhere unless she gets a notification from the app. Once she accepts the job, she leaves home and goes to pickup/deliver whatever. She doesnt really have an office, she's just using her phone to get notices.

 

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Likely only the mileage from the pickup to the delivery is allowable, unless there are back to back gigs before going home.  Maybe during times when there may be multiple gigs, advise to park somewhere along the way for some amount of time, waiting for another gig, instead of always going home?  Since rural, there may be enough miles to make the waiting time worth it?

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I just go with what the report says. I don't add miles to it. 

It is my understanding that Uber now count the miles when you first connect to their application. So technically, you could drive a lot of miles before you pick up anyone and those miles will be reported. Remember that it is a business need for the uber driver to move to busy areas after each food or passenger is dropped otherwise they could stay parked all night.

I personally hate home office because they are painted gray.  I have done only a few in my life time and for sure NOT for uber drivers.  Most of the records they present are pulled in two minutes from uber's website and they consist of their 1099 forms and report at tax time. 

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Thanks guys. I was inclined to ignore the commuting miles to first and from  last pickup until I read this (attached) from a "tax advisor" and started second guessing myself. I had already told her no commuting mileage and I'm not venturing into a home office with her when all she's doing is answering her phone there.

 

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I looked on the IRS's newish "gig" page and that directs to the usual IRS Pub 463 for car expenses, which could imply the usual commuting parts are not deductible. However, Pub 463 is being revised currently. Maybe to update for the gig economy?

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I recently completed one of these with a lot of questions and one of those questions was the mileage. The mileage that Uber/Door Dash reports is the mileage of the trip for the customer and as Pacun stated, it may include milage when the app is turned on. They do not break it into any detail.  In my case, my client has a home office for transacting their Uber business. Mind you, this person is well in the five digit figures, and spends nearly all their time driving folks, hanging out at airports; etc. To error on the side of caution, and because there doesn't appear to be any code or regulation, I did not take the commute mileage to either pick up the passenger or go to the airport.  I did use the report mileage and did advise my client to keep a better mileage log. I agree with Tom and Abby on this. 

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I don't have a cut and try answer here, but believe there is confusion over what it means to have a home office and deduct mileage.

With a home office established as your principal place of business, you are allowed mileage for any business travel away from there.  The key here is that your home is your place of business.  

However, I don't believe there is any written authority that says you must have a home office in order to deduct mileage form your home.

Consider the case of an log truck driver owner/operator who leaves his home at 4 am to go pickup his first load of logs in the woods 30 miles away.  I would not consider that commuting and prorate his depreciation, diesel...etc.   Those are ordinary and necessary business expenses that start at the first turn of the key in the morning.

While I do not have any authoritative cites to back this up, in reality, the principal place of business for the log truck and full time "uber/whatever" driver is behind their respective steering wheels; and while there are differences between the two cases there are certainly similar fact patterns.

I do not have any uber driver type of clients but would dig in deeper if I did.  

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23 hours ago, DANRVAN said:

I don't have a cut and try answer here, but believe there is confusion over what it means to have a home office and deduct mileage.

With a home office established as your principal place of business, you are allowed mileage for any business travel away from there.  The key here is that your home is your place of business.  

However, I don't believe there is any written authority that says you must have a home office in order to deduct mileage form your home.

Consider the case of an log truck driver owner/operator who leaves his home at 4 am to go pickup his first load of logs in the woods 30 miles away.  I would not consider that commuting and prorate his depreciation, diesel...etc.   Those are ordinary and necessary business expenses that start at the first turn of the key in the morning.

While I do not have any authoritative cites to back this up, in reality, the principal place of business for the log truck and full time "uber/whatever" driver is behind their respective steering wheels; and while there are differences between the two cases there are certainly similar fact patterns.

I do not have any uber driver type of clients but would dig in deeper if I did.  

I can see what you're saying here. Makes you want to use the whole mileage, but I would still be inclined to forgo a home office deduction. I've been digging but there doesn't seem to be any case giving a definitive  answer.

 

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I thought most preparers hated home office due to the fact that we know that very few people comply with the exclusive use requirement, but I guess I am wrong.

This is my idea: I will suggest my clients to make a tiny room big enough to have a chair and 12 inches for leg room (Maybe 40X30 inches). have a chair over there and have the driver go every day, sit at that chair, with cell phone on hand check where the uber heavy business volume is for the day, check if your payment hit your bank, etc. That will cover the exclusive and regular use. 

Again, it seems that Uber is now counting every mile as soon as the driver opens the application and connects to the uber platform. 

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16 hours ago, Catherine said:

There is a difference between running a home-based business, for mileage purposes, and the sole-and-exclusive space requirements for the home office deduction.

Exactly, for example, I have a client who has a part time baking business she runs out of her home on a wheat ranch.  She also sells organic ground wheat flour.  She does not have an area exclusively used for her business.  But she does have travel cost from her home to deliver her goods, pick up supplies.... etc.  She takes a deduction for the travel although she does on have a home office.

But that is different from the OP fact pattern since her home is her principal place of business.

 

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On 2/25/2022 at 7:55 AM, M7047 said:

I've been digging but there doesn't seem to be any case giving a definitive  answer.

And it is possible that there is not any case law with similar facts and circumstances.

In my opinion, the driver is in the business of transporting people or goods, and mileage to pick them up is an ordinary and necessary business expense as in the example of the truck driver.  Also consider the expense of driving back home.  What if the last drop off was 20 or 30 miles for home?  That is not commuting in my mind.

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Based on the pubs, I don't think that the IRS would agree with your interpretation.  Relevant quotes from Pubs 463 and 587:
 

Quote

Example 3.

You have no regular office, and you don’t have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.

...

You can’t deduct commuting expenses even if you work during the commuting trip.

Example.

You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities don’t change the trip from personal to business. You can’t deduct your commuting expenses.
...
If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.
...
Your home office will qualify as your principal place of business if you meet the following requirements.

  • You use it exclusively and regularly for administrative or management activities of your trade or business.
  • You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses.

 

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3 hours ago, DANRVAN said:

And it is possible that there is not any case law with similar facts and circumstances.

In my opinion, the driver is in the business of transporting people or goods, and mileage to pick them up is an ordinary and necessary business expense as in the example of the truck driver.  Also consider the expense of driving back home.  What if the last drop off was 20 or 30 miles for home?  That is not commuting in my mind.

I can appreciate the logic of your argument, but I agree with TexTaxToo.

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33 minutes ago, TexTaxToo said:

Relevant quotes from Pubs 463 and 587:

But what are the facts and circumstances of the given example?  Sounds like a case where taxpayer drives to work location A, spends some time working there; then goes to location B, spends some time working there and so forth.

In the OP, driver spends the day engaged in the business of transporting goods or people.  The driver is not going from one work location to the next, driver is performing services with his or her vehicle.  

How would you handle my log truck driver example?

On 2/24/2022 at 8:41 AM, DANRVAN said:

Consider the case of an log truck driver owner/operator who leaves his home at 4 am to go pickup his first load of logs in the woods 30 miles away

 

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2 minutes ago, DANRVAN said:

How would you handle my log truck driver example?

Or change the scenario, say client is owner operator of a small delivery van in large metro are and spends an hour (or more) driving x miles from one end of the city to the other to pick up his first delivery.  

Are you going to say the time and distance he spent in traffic burning fuel was commuting?

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6 minutes ago, DANRVAN said:

But what are the facts and circumstances of the given example?  Sounds like a case where taxpayer drives to work location A, spends some time working there; then goes to location B, spends some time working there and so forth.

In the OP, driver spends the day engaged in the business of transporting goods or people.  The driver is not going from one work location to the next, driver is performing services with his or her vehicle.  

How would you handle my log truck driver example?

 

In my mind the key difference is the log truck driver isn't driving a personal vehicle and more than likely has a home office.

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