The debate goes on. What can I write off? Should I itemize and try to get the most from my deductions or should I take the standard mileage deduction that the IRS calculates at $0.575/mile for tax year 2020.
Let’s look at the numbers and compare. First, you will need to calculate your vehicle’s depreciation, which can be done in the calculator below.
Estimate your vehicle’s value at the beginning of the year and use that number as “initial value“. KBB has a good tool for that, but you can estimate since this is just for practice.
The depreciation period should be 1 year, as we are only looking at depreciation for one tax year.
Keep in mind that while doing rideshare, you are likely putting on more miles and more wear and tear on your vehicle, so the numbers shown are likely on the low side.
The initial value minus the car value after one year is the depreciation. Use the resulting number in the deductions calculator below.
( initial value – value after 1 year = depreciation )
We go into more detail in the article 2020 Tax Tips for Uber and Lyft Drivers. Hopefully this tool helped you understand the difference. In most cases, the standard mileage deduction is your best bet, but you do the math and decide for yourself or, better yet, use a tax professional or a professional service like TurboTax to get expert advice. There is also a great app called Hurdlr that will track your mileage and expenses automatically so you can see your income and tax estimates in real time.
This article is for informational purposes only and ‘The Rideshare Guru’ does not make any guarantees to its accuracy as each individual’s tax situation is unique. We recommend that you hire a tax professional if you are uncertain of how to properly file your taxes as a rideshare driver. We may get a referral fee to services or products linked to from this site.