The fundamental difference between employees and contract laborers (also known as freelancers, gig workers, self-employed) is that employees have their taxes withheld and contractors don’t. Employees receive a W-2 tax form reporting their wages and the withheld tax amounts while contractors receive a 1099 form. As drivers are considered to be gig workers, they receive 1099 forms and are responsible for paying SE tax and federal income tax. However, delivery drivers get to do something pretty huge that W-2 employees cannot– turn business expenses into tax deductions.

When you work for someone else, Social Security taxes are deducted from your paycheck without fail – precisely 6.2% of it. There’s a limit on how much of your income is subject to this tax, set at $160,200 in 2023 and rising to $168,600 in 2024. However, if you're self-employed, the dynamics change because you serve as both the employer and the employee. You're responsible for a 12.4% contribution from your earnings. To break it down, 6.2% is your share as the employer, and another 6.2% is your share as the employee. Additionally, you need to allocate 2.9% of your income for Medicare taxes, resulting in a self-employment tax rate of 15.3%. Since self-employed individuals often don’t receive regular paychecks, they must pay taxes quarterly through estimated taxes. These payments are reported using Form 1040-ES. Calculating your Social Security liability is crucial because it affects the benefits you'll receive later in life. You'll do this through Schedule SE.

All self-employed business deductions are reported on Schedule C. As a driver, this would include business expenses like car insurance, fuel, repairs and maintenance, mileage and other vehicle-related expenses. Delivery driver tax deductions help lower your self-employed tax liability, so make sure you write off all the expenses you’re eligible to claim. FlyFin’s A.I. can easily find your tax deductions just by scanning your expenses.

Mileage

Some of the first questions drivers new to the field ask are "Can delivery drivers deduct mileage?" and "Can delivery drivers deduct gas?" One of the easiest tax deductions for 1099 drivers is the mileage deduction. It can be a bit of a pain to keep track of the miles you drive for work, but this delivery driver tax write-off is always worth it. You can use a vehicle mileage tracker app to record your business miles instead of doing it manually. You can also use a car mileage tax calculator to figure out how much you can write off. When calculating business miles, drivers can also include miles driven outside deliveries and/or trips like the mileage for taking your car to the repair shop or going to the car wash. These expenses are ordinary and necessary for your line of work so they qualify as a delivery driver tax deduction. You can use the standard mileage or actual expenses method to deduct vehicle expenses. In 2023, the standard mileage rate is 65.5 cents/mile. It increases to 67 cents/mile for the 2024 tax year. This rate covers all vehicle-related expenses so is the simpler of the two methods. The actual expenses method involves finding the business use percentage of your vehicle and multiplying that by your total vehicle expenses.

Cell phone

A common 1099 driver tax write-off is your cell phone. If you use a separate phone just for your work making deliveries, you can claim every cent you paid for the phone and the monthly cost of your minutes and data plan. Even if you use the phone only partially for work and the rest is for personal use, you can still deduct a portion of those expenses.

Commissions and fees

With so many more options for delivery services on the market, it's a good time to be a delivery driver. Many of the newer app-based services charge drivers a commission, which they can typically deduct from their taxes. The same goes for fees drivers often have to pay to the platforms.

Supplies

It's no secret that take-out food is a more popular delivery item than ever. With so many more kinds of food deliveries and drivers carrying multiple deliveries at a time, the need to keep foods hot or cold has drastically increased. You can deduct the cost of things like hot bags or courier backpacks for this purpose. The same is true for other items delivery drivers may need like phone chargers, a system to mount your phone or a mileage tracking app subscription.

Bike and accessories

Delivery drivers on bikes are a common sight. If you use a bike instead of a car to make your deliveries, the cost of the bike, repairs and accessories can be tax write-offs.

Roadside assistance

This can be a lifesaver for any driver, but especially for delivery drivers, whose livelihood depends on not being stranded on the side of the road. And yet, it's not a well-known delivery driver tax write-off. If you subscribe to a roadside assistance plan, you can deduct the business use percentage of the fee.