As a gig worker, you are likely filing your taxes as a self-employed, independent contractor. When filing, you can reduce your taxable income by reporting your business expenses.
In order to claim these deductions, you will need to provide proof of your expenses. This means collecting receipts, tracking vehicle mileage, and more. It’s a lot of effort and work. But, it doesn’t have to be. Read on to get our recommendations for the best apps for tracking expenses.
What are business expenses and why should I care?
When businesses file their taxes, they are able to deduct some expenses from their total earnings. If you are filing as self-employed, you can also deduct your business expenses, just like a corporation.
As a self-employed gig worker, you have expenses associated with doing your job. A GoShare delivery pro needs to maintain and drive their vehicle. A freelance copywriter needs a computer and a workspace. These expenses are the real, out of pocket costs that are required to do your job. The IRS would define them as “ordinary and necessary” to complete your work.
A common expense for GoShare drivers is vehicle cost and maintenance. Drivers may be eligible to deduct a standard rate for “business” mile you drove in the past year. For miles driven in 2018, the standard mileage deduction is 54.5 cents per mile. For miles driven in 2019, this rate will go up to 58 cents per mile.
Other common expenses include:
- Office Supplies
- Legal and accounting fees
You can deduct these costs from your earnings when you file your taxes. For example, if John earned $40,000 in 2018, but had $5,000 in expenses, he could deduct or subtract that $5,000 from his original earnings. Instead of taxing him for $40,000 in income, the IRS would only tax him for $35,000 in income. If he was being taxed at 22%, that would be a savings of $1,180.
In order to be considered a business expense, your deduction must be a necessary cost of doing business. For example, the IRS will allow you to deduct the cost and upkeep of a uniform if it is required for your employment and not suitable for everyday wear. So, the IRS may accept the deductible of a clown costume, required to work at children’s birthday parties. But, you can’t deduct the cost of a suit to work in an office building, as this can be worn other places such as a wedding or job interview.
Consult a certified public accountant or tax filing professional when preparing your taxes. They’ll be able to help you catch any missing deductions, or let you know if any you wish to claim doesn’t apply.
The Best Ways to Track Business Mileage and Expenses
Now that we know what business expenses are, and why they are important for gig workers, let’s talk about the best app to track them. These apps make tracking miles for transportation, logistics, and rideshare drivers easy, ensuring you don’t miss an opportunity for savings when it’s time to file your taxes.
- MileIQ – For gig workers that offer transportation or logistics service, mile tracking is essential. MileIQ tracks your drivers automatically. Classify your drives as business or personal with an easy swipe to the right or left. Track your business miles to report on your deductible miles. The app is free for up to 40 drives a month and $5.99 a month after that.
- Stride Tax – This free app tracks your mileage and offers IRS-ready tax summaries to help with filing. In the free version of the app, you will need to start and stop recording your mileage manually. You can also use this app to log receipts so all your expenses are in one place.
- Hudlr – Hudlr tracks mileage expenses, income streams and tax deductions with real-time reporting. The best part? This app is free. Some users complain of high data usage and lots of ads promoting the upgraded product. But, it’s a strong option at no cost.
- TripLog – TripLog features mileage tracking, GPS tracking, and fuel management. This app is perfect for those getting started, as it’s free for single users. The free version offers manual mileage tracking. For $2 a month, you can upgrade to auto tracking.
- Shoeboxed – Shoebox can be used to scan and organize receipts, create expense reports, and track mileage. The opening price for this app may be steep for those doing side gigs with monthly subscription fees ranging from $29 – $99. Full-time freelancers and small business owners may find the software a great way to manage expenses for one or multiple workers.
- Expensify – Link your credit or debit card to your Expensify account and the app will place charges directly on an expense report. Or, you can take pictures of your receipts with your phone. Expensify will automatically scan for relevant information. Pull together reports and track your business-related purchases and expenses. Expensify is available for $5 a month.
However you choose to track your miles and expenses, don’t forget this important step. As a gig worker, you don’t want to miss out on important tax deductions, helping to reduce the impact of income taxes on your total earnings.
Looking for gig projects? Earn $47 – $71 an hour with GoShare providing delivery, assembly, moving and hauling services. Learn more at www.goshare.com/drivers.
GoShare Inc. and our affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.