Tracking deductible business mileage is notoriously difficult. Especially for individuals who rack up a lot of miles as part of their job.
For Uber and Lyft drivers, accurate mileage tracking and reporting are essential. One of their major sources of income is through their mileage deductions.
However, manual mileage tracking will not work for such drivers. It’s ineffective, time-consuming, and rife with inaccuracies.
Furthermore, converting manual records into IRS compatible data adds yet another layer of complexity. This is where technology, in the form of a mileage tracking app, comes in.
The Role of Automation in Your Business Mileage Tracking
As the name suggests, the app helps track your deductible business mileage. What’s more, It can do a lot more to help ease your deductions claiming process.
A mileage tracker eliminates the need for physical records. It automates the tracking process, saving you from the arduous task of maintaining a mileage log.
Advanced mileage tracking apps can track your travel expenses and vehicle health. They can even recommend driving practices to help you get better fuel economy.
Mileage Taxation for Uber and Lyft Drivers
To choose the best mileage tracker app, you first need to understand what the taxman expects from you as a rideshare driver. This way, you can pick an app that helps maximize your deductions come tax time.
The first thing you need to understand is the Standard IRS Mileage Rate.
Every year, the Internal Revenue Service puts out a standardized mileage deductions rate for the use of a vehicle. The deductions rate for the business use of a car in 2020 is 57.5 cents per mile.
If you drive full time as an Uber or Lyft driver, you can rack up as much as 50,000 miles a year on your car. Using the Standard Mileage Rate, this would translate to a deduction of up to $28,750!
But to claim this deduction, you need an accurate record of your mileage and related expenses. Thus, the need for a mileage tracker.
When Is Your Mileage Deductible?
The IRS is very particular about the deductible business drives. For instance, commuting and personal driving expenses are not deductible travel expenses.
A commute refers to the travel between your home and place of work. But since Uber and Lyft drivers drive for work, what does this mean for them?
Does this mean that the drive from your home to pick up a client, or from dropping off a client back home is a commute? Unfortunately, the answer is yes.
Thankfully, you can bypass this rule through the use of a qualifying home office.
A home office negates the IRS’s commuting rule that excludes personal commutes from being deductible. If your home is your principal place of business, you cannot commute to work, as you are already at work.
Be sure to consult a qualified tax accountant to ensure that your deductions claim is above board to avoid conflict with the IRS.
Features of the Best Mileage Tracking App
Although both Uber and Lyft provide their drivers with a mileage total on their tax summary at the end of the year, they don’t track all your ridesharing miles.
Since all business mileage is tax-deductible, you want to track every single mile you drive for work. You should track the miles you cover outside your rideshare driving but related to your driving for Uber or Lyft as well.
You can do this with the help of a mileage tracking app. But with the wide variety of apps available, it can be a little overwhelming trying to find the best one for you.
Here are some of the key features to look out for when selecting the best mileage tracking app.
Detailed Mileage Log
A detailed mileage log is imperative when claiming your mileage deductions. The IRS allows you to deduct every business mile you drive. But to do this, you must keep detailed records.
There are several mileage tracking apps that can help you accurately record your mileage and driving expenses. The top recommendations in this category are:
GOFAR – This app offers you reliable mileage tracking and reporting. It is compatible with any diesel, gasoline or hybrid vehicle manufactured in 2007 or later. What’s more, GOFAR automatically detects when you start or stop driving. Eliminating the need to manually set it up at the beginning and end of your trip.
Hurdlr – This is a solid mileage tracking app with fully automated mileage tracking. It offers auto expense tracking with real-time tax calculations.
IRS-Compliant Mileage Reports
A key feature of the best mileage tracking apps is the ability to generate IRS compliant reports. You don’t want to spend hours on end converting your raw mileage data into IRS compatible reports for your mileage deductions.
The top choices for IRS compatible mileage trackers are:
Everlance – This offers free mileage tracking via GPS for the first 30 trips every month with IRS compatible reporting. It’s an excellent option for part-time drivers who don’t rack up a lot of miles.
GOFAR – Offers one of the best IRS compatible mileage reports. They include: start/stop odometer readings, time and date stamps, and gasoline costs for each trip. Additionally, GOFAR allows you to choose custom or standard IRS mileage rates to suit your location.
The IRS requires that you store your tax records for at least three years. They can sometimes revisit past tax returns to look for mistakes or inconsistencies.
For this reason, you should consider the ability of your mileage tracker to store your mileage records for long periods with easy access.
The best mileage tracking apps with cloud storage options are:
TripLog – This is a mileage tracker that boasts a variety of desirable features like its daily cloud backups. Another one of TripLog’s key selling points is MagicTrip. A proprietary feature that detects when you start or stop driving.
SharpaShare – This is a mileage tracking app explicitly developed for rideshare drivers. It integrates trip detection technology with cloud storage and one-click classification. In addition, it offers a heat map and chat function for drivers to communicate and share real-time information.
Ability to Categorize Trips
The ability to categorize your trips is yet another key feature the best mileage tracking app should have. Don’t risk losing money through rejected deductions for lack of proper documentation.
When choosing the best tracker, ensure it can record:
- The dates of your trip.
- The start and end locations.
- The business purpose of the trip.
The top choices for mileage tracking apps that offer this feature are:
MileIQ – This offers you up to 40 free trips per month. MileIQ allows you to link separate trips together when traveling for business. Often, with other apps, when you take a break from driving, they record the drive as two trips.
GOFAR – GOFAR offers you the ability to tag trips as either business or personal. You can do this through a simple swiping gesture on your mobile app. Additionally, GOFAR gives you the option to export all your mileage reports to your email in a few simple steps.
On top of these key feature, the best mileage tracking apps:
1. Ensure Accuracy
They make it easy to record your business mileage accurately. No more notes, estimates, forgotten expenses, or uncertainty!
Furthermore, they provide access to your mileage data over your mobile app for easy revision. Advanced trackers like GOFAR even allow you to add information like tolls and parking costs for a more detailed expense report.
2. Increase Productivity
The best mileage tracking apps help you work smarter, not harder.
Mileage tracking can add up to 21 administrative hours annually! Imagine all you could do if you were not bogged down with administrative tasks like tracking and recording your business mileage.
3. Provide Peace of Mind
The best mileage tracking apps automatically record your mileage information. They free you up to focus on more important things like keeping your eyes on the road.
Choosing the Best Mileage Tracker for You
Selecting the best mileage tracker from the multitude of options available can seem a daunting task. But the best of them will offer you features above and beyond the ones mentioned above.
GOFAR is one such app. It offers you advanced mileage tracking with tax-deductible mileage reporting.
It provides you with intelligent telematics and real-time feedback that helps you make better driving decisions.
GOFAR can also help you track and schedule your maintenance and repairs to ensure your car is always running at optimum efficiency.
Visit GOFAR’s website today to learn more about their pricing and how it can help improve your mileage tracking experience as an Uber or Lyft Driver.