How exactly do I track/prove my mileage for tax purposes? Do I need some kind of special app or documentation?

You can track mileage several ways - there are apps specifically for this like Stride, Everlance, or MileIQ that automatically track your drives. Or you can simply keep a mileage log (notebook or spreadsheet) where you write down the date, starting mileage, ending mileage, and purpose of each trip. For tax purposes, you'll want to record your starting odometer reading at the beginning of the year, track all business miles throughout the year, and note your ending odometer reading. The IRS accepts digital or paper logs, but the key is being consistent and thorough. Make sure you note which miles were for Instacart vs Uber Eats if you want to know the profitability of each platform.

Wait really? I thought the $600 rule was already in effect! So if Uber Eats paid me $900 but it was less than 200 transactions, they don't have to send me a 1099-K?

I actually called my old bank and they only keep records for 7 years so that only helps with the most recent missing returns. Did you have any luck explaining your situation to the IRS? Were they understanding about the estimation approach?

In my experience, the IRS was surprisingly reasonable once I explained my situation clearly. The key was documenting my estimation methods and being consistent. For the years where you have absolutely no documentation, focus on being realistic rather than punitive to yourself. I included a detailed cover letter with each return explaining exactly why I had no records and the methodology I used to create my estimates. The agent I eventually worked with appreciated the transparency and it made the negotiation process much easier. Remember that they deal with record loss situations frequently - you're not the first person to go through this.

This is a great tip! I had a similar issue and the SSA earnings record was super helpful in establishing baseline income amounts. Much of my self-employment income hadn't been reported properly, but it still gave me a starting point.

Thanks for this warning! This is making me rethink our plan. Maybe instead of claiming 100%, we should just track the mileage super carefully and go with the actual percentage. I definitely don't want to deal with an audit. Do you know if we need to keep paper logs or if the delivery apps' records are enough proof?

The delivery apps aren't enough for the IRS if you get audited. You need a detailed mileage log showing starting and ending odometer readings for each delivery shift, dates, and business purpose. There are some good apps like MileIQ or Stride that make it easier. Also don't forget you can deduct more than just the car itself! Hot bags, phone mounts, portion of phone bill, extra car chargers - all that stuff is 100% deductible separately from your vehicle expenses. I even deduct part of my Spotify since I play music during deliveries lol.

That's somewhat misleading. Most food delivery people aren't driving vehicles over 6000 lbs - that's like a large SUV or truck. For regular cars, the Section 179 deduction is capped MUCH lower - around $19,200 for 2024 I believe. And remember you can't claim more in deductions than you earn from your delivery work!

You're right - I should have been clearer about the weight limitations. For most standard cars used for food delivery, there are lower caps on Section 179. For 2024, passenger vehicles are limited to around $19,200 for the first year if they weigh less than 6,000 lbs. And you made another great point - your total deductions can't exceed your business income, so if you're just starting out in delivery, you might not have enough income to take advantage of the full deduction in year one. Any unused portion can be carried forward to future years though!

Is there a deadline for banks to issue corrected forms? I just noticed my credit union 1099-INT has my old address on it even though I updated it last year.

Financial institutions technically have until the end of February to send corrected forms, but they can issue them after that if errors are found. However, it's in everyone's best interest to get corrections made ASAP. For your address issue, a wrong address on the form won't affect your tax filing as long as your SSN is correct. The IRS matches documents by your SSN, not your address. But you should contact your credit union to update it for future forms.

They need to be reported separately. Interest goes on line 2b of your 1040, and ordinary dividends go on line 3b. If you have qualified dividends, those go on line 3a. They're taxed differently - qualified dividends get preferential tax rates while interest is taxed as ordinary income.

Wait can you really deduct parking and tolls separately? I thought those were included in the standard mileage rate! I've been tracking everything together in one log. Do I need separate records for those?

Yes, parking fees and tolls related to business travel are deductible separately from your standard mileage rate! The standard mileage rate only covers the basic costs of operating your vehicle (gas, maintenance, depreciation, etc.). You should keep separate records of your parking and toll expenses for business trips. Save those receipts or take photos of them, and note which business trip they were associated with. This is one of the most overlooked deductions for freelancers who drive for work.

I use MileIQ and it's pretty decent. Automatically tracks all your drives and you just swipe left for personal or right for business. Costs like $6/month but it's worth it to me.