When working for Lyft your miles are part of your business expenditure process, in fact, there are three ways to define expenses in ride-sharing;
Direct expenses: all expenses related to and compulsory for the actual driving process, includes gas, insurance, taxes, car washes, communication fees (the way you are contacted and contact via the Lyft app) Uber fees, maintenance, tire changes, etc. Minutes and Miles are the measurements of the spending process.
Indirect expenses; all the expenses related to non-compulsory items that help in the driving process, such as dash cams, eating, toilet breaks, etc.
Fixed Assets; this is your car purchase price and the loans you take to buy it as well as the depreciation factors.
It is important to know which miles driven are deductible, since not all the miles you drive and the time you spend to drive them are part of the expenditure list.
Another issue regarding deductible miles is mile track, and finding a good mileage tracker is imperative to maintaining a comprehensive list of miles driven. There are some solutions such as QuickBooks Self-Employed (QBSE) which stands at the top of the list of software apps for this issue. However there are some good mileage tracking apps, and we will consider them later in this article.
Logged out, driving to your first destination is the moment you started your shift. Wherever you decide to start it, the moment you started the engine to drive to a pickup spot is the moment you started a deductible mile.
Logged in, you have reached a destination and you not logged into the Lyft system. You are driving around the area waiting for a request, while you drive around and until you find a parking space if you need one, are deductible miles.
Pick-up request; from the moment you received a request till you pick up the client are all deductible miles.
Rideshare; you have picked up a passenger and are driving to the drop off point, is a deductible mile.
Drop off and waiting; You dropped off the fare and are now driving to a parking point, you will log off or stay logged on, irrelevant, so long as you are driving to a point where you wait for a fare these are deductible miles
Driving to eat or relieve yourself; if you logged off and are driving for a personal reason, these are not deductible miles.
Returning home, unless you have a similar app like Uber's destination filter, driving home is not deductible.
The recorded miles comparison chart
Uber and Lyft both record miles, but the way they record them are not for tax purposes; they are for internal calculation purposes. Lyft offers total miles when in driver mode but does not include everything. Uber only includes on trip or period 2 and 3 miles, which is much less. QBSE shows all the deductible miles, so long as you associate a mile with a deductible action.
To emphasize the differences, let take a 40.61 mile spread in 8 trips at a 2016 Lyft standard rate of $.054 per mile:
- Uber would record 28.7 miles giving us $15.50
- Lyft would record 40.61miles giving us $21.93
- QBSE would record 62.90 miles, giving us $33.97
The above comparison shows us that in just a 40-mile spread there is an $18 difference between actual (QBSE) deductible miles and Uber registered miles.
At the end of the year, when you have to report your income and expenditure, this adds up to a lot of money saved.
If we put this in money terms, by assuming a 48,360-mile year, this is what we get over a year.
- Uber give s $11,907
- Lyft gives $16,843
- QBSE proves we get $26,114
The above comparison gives a clear picture of the differences between the ride-share app mile tracking results. A $15,000 saving in deductible miles can mean a $2,000 tax saving, which is $166.66 a month!
The above comparison and results, prove that you must invest in a good mile tracking app to assure you receive the best end of the year result.
Automatic Mileage Recording
The most comprehensive mile tracker is also an accountancy app that will solve all your on the job expenditure calculations as well as count your miles, this is Quickbooks Self-Employed (QBSE) App. This app gives a bookkeeping system with mileage calculator, so it links resources and costs to the actual driven mileage and works every time you use your vehicle. This app itemizes and automates all your recurring expenses and categorizing your miles once a week. It also syncs with banks.
Stride Drive is a free app that gives you a comprehensive expense tracking solution for your mileage. It runs in the background and records every driven mile. Stride Drive is an expense management system, that means you define every resource and cost you spent during work hours. Stride is not a memory hog, so it won't interfere with your rideshare app.
Triplog 2.0, is a mile tracking app, you can estimate your gas usage and find the best gas prices. What makes this app stand out from the rest is its tracking capabilities. Triplog 2.0 is a free app, but for cloud backup and AutoStart, you must pay a nominal price. It also prepares IRS ready report which is a great add-on.
MileIQ costs $6 per month, and is free for only 40 rides, Since Lyft drivers do more than that, expect to pay. This is a simple app with two states; personal and professional, including secure cloud sync. MileIQ is a resource hog, which is its downside.
Hurdle is another mileage tracking app and includes an expense allocation feature. It comes with some interesting functions; graph displays that display net earnings and time framed expenses. Hurdler connects via Bluetooth and auto-starts the car turns on.