Tracking mileage for business miles driven can unlock substantial IRS deductions, but getting it right is essential. With IRS mileage rates recalibrated annually, each business mile you drive becomes an asset that can lower your tax burden. This is particularly important information for rideshare drivers, as you are likely to lose the majority of your take-home pay to taxes without taking a mileage deduction. 

Here’s how to track your mileage accurately, navigate IRS guidelines, and leverage our downloadable mileage tracking spreadsheet for maximum benefit.

Why Track Mileage Manually?

Mileage tracking apps are convenient, but they may not always capture the full scope of your trips, sometimes underestimating your total business mileage. Manual tracking allows for precision (if you do your part), ensuring you’re capturing each business mile to its full value. A reliable way to track this data is by noting down your starting and ending odometer readings for each business trip. Our spreadsheet is designed to help you do this efficiently, ensuring that no mile is missed, and every deduction opportunity is maximized.

The IRS Mileage Deduction: How It Works

The IRS allows business owners and self-employed individuals to deduct a per-mile rate on their tax returns. This deduction rate is designed to cover typical car expenses such as:

• • Fuel

• • Maintenance

• • Insurance

• • Depreciation

• • Car Washes

Keep in mind, however, that the per-mile deduction rate changes each year, so you’ll need to check the IRS website for the latest rate if you choose to calculate a dollar cost for your miles driven (for optional double checking).

Tips on Deductible vs. Non-Deductible Mileage

To stay within IRS guidelines, it’s important to differentiate between business and personal trips:

• • Home Office or No Home Office? Deductions are clear-cut for trips beginning or ending at a qualifying home office. Without a qualifying home office, however, the IRS requires excluding the segments between your home and your first and last business stops. There are some other IRS rules that confuse this point; if you want more details, check out the IRS website: https://www.irs.gov/

• • Personal Trip Segments: The IRS requires that deductible mileage be strictly business-related. For mixed-use trips, you’ll need to subtract any personal portions.

Essential Tracking Details for Each Trip

For accurate and compliant tracking, the IRS requires that your mileage log include:

• • Date of the trip

• • Starting and ending odometer readings

• • Purpose of each trip

If you’re working in rideshare, this can be challenging due to the frequent stops. In such cases, logging your odometer reading at the start and end of your shift, along with noting addresses for each ride, can streamline your recordkeeping.

Actual Cost Method: An Alternative Approach

The actual cost method allows you to deduct specific car expenses individually, rather than using a per-mile figure. If you choose this method, you’ll need to keep receipts and records of all car-related costs, including car washes, fuel, maintenance, insurance, and depreciation (depreciation is beyond the scope of this article, but is a critical piece for this method).

A good rule of thumb, even if you’re using the mileage deduction, is to keep receipts for all car expenses and track them on this spreadsheet. This can serve as a backup in case of IRS questions or issues with your mileage log. Also, paper receipts should ideally be scanned into an electronic form as the ink on most receipts won’t last long!

Tracking these expenses can also help you know the actual cost of using your vehicle. If through tracking this information, you find that your vehicle costs more than the IRS mileage deduction, it would benefit you to use the actual cost method, vs the per mile deduction.

Additional Deductible Expenses

Besides mileage, there are additional business-related expenses that the IRS allows for deductions. These can be claimed on your tax return regardless of whether you’re using the per-mile or actual cost method.

Below I have listed a few examples specifically relating to rideshare drivers:

• • Phone Bill

• • Clothing Used for Work

• • Music Streaming Subscriptions

• • A New Device (Phone or Tablet) Used for Rideshare

• • Signage

• • Refreshments or Snacks for Passengers

Anything purchased specifically for your business is deductible. If you use something for both business and personal use, you will need to decide on a reasonable percentage of the purchase price to deduct based on how much you use it for your business vs personal use.

Track Your Weekly Revenue (optional)

While not necessary for tax purposes, this spreadsheet includes a tab for weekly revenue tracking. This helps you gain a snapshot of your gross revenue and deposits over time, adding an extra layer of insight into your business operations.

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Get started with our free mileage documenting spreadsheet!

Download our mileage tracking spreadsheet to start logging your trips, expenses, and revenue today. By maintaining accurate records, you’ll have everything you need to make the most of your IRS mileage deductions come tax season.