If I'm getting paid for mileage, can I still write it off?

[jon6]

I started working for Instacart recently. They also just started a new pay system where we're paid for the shopping, and also for the mileage between the store and the customer. This is called a "payment" not a "reimbursement". A lot of other shoppers are spreading around the idea that now we can't write off our mileage anymore (at least from store to customer). I tried searching online for a definitive answer, but I came up mostly empty. Can anyone give some guidance on the definitive times you can write off mileage and when you can't? If the mileage is being paid directly into our regular income and not separated off as non-taxable reimbursement, that means we should still be able to write it off, right?

[DoninGA]

Are you an employee of the company where you will be receiving a W-2?  If so, then employee business expenses, including mileage, are no longer deductible on a federal tax return starting in tax year 2018.

[jon6]

Sorry I forgot to clarify. We’re independent contractors.

[DoninGA]

Ok...As an independent contractor you still can claim your mileage as a vehicle expense on Schedule C if you use the Standard Mileage method instead of the Actual Expenses method for your vehicle.   
If you have a designated place of work then the travel from your home to the work location and return is commuting mileage and is not deductible.  Mileage to customer locations after arrival at your work location is deductible as an expense.

[DoninGA]

Fixed typo...Not "to your home to the work location" but "from your home to the work location"

[callan-michael]

Has this answer been answered or verified by a CPA or Tax professional?

[Opus 17 · Accepted solution]

Independent contractors who file schedule C can still deduct work-related mileage.  If the payment is included in your taxable income, then you can fully deduct your car expense against that income, using the standard mileage method or the actual expense method.  (The standard mileage rate method is usually more lucrative.)  Of course, this assumes you have accurate records of the date, time, mileage, and business purpose of each trip.

Your mileage from home to the grocery store at the beginning of your work day, and from the last customer's home to your home at the end of your work day, is not deductible.

This is covered in publication 463, chapter 4.  Although the publication is not yet updated for 2018, the deduction for self-employed workers has not changed.  

https://www.irs.gov/pub/irs-pdf/p463.pdf

[jcbmx]

Hi, What if I don't have a designated place of work? For instance everytime I accept an order its usually from home, then I drive to the store, which really could be any store up to 40 miles away. Theres no shifts or start or end of the day.. you just wait around for orders it can be so bad that usually you must return home to wait for the next order.. its a ton of miles. Can i count them cause i have been recording them?

[Hal_Al]

If you go to 2 or more job sites in a single day then the 2nd trip is deductible as a business expense. For example you leave home drive 5 miles to the 1st job then drive 10 miles to the 2nd site. At the end of the day you drive 15 miles home. Only the 10 miles between jobs is deductible. The first trip in the morning, from home and the last trip at night back home are considered commuting and are not deductible*.

If you return home to  wait for another job, the  mileage for the  2nd (and subsequent) run(s)  from your home and back is deductible. That is, you only have one non deductible commute per day.

The cost to get to an "out of town" location, from you home, is deductible and is not commuting. So, in your example, the first  40 mile pick up (and return) is probably deductible. The IRS has no fixed mileage rule for what is out of town. Out of town is outside your metropolitan area. 

*To deduct mileage, to the first client and home from the last client (normally commuting trips) the home just needs to be the "Principal Place of Business".  It does NOT need to qualify for the Home Office deduction (the 'Regularly and Exclusively' rule does not apply). For an IRS discussion on  "Principal Place of Business"see:

 https://www.irs.gov/publications/p587#en_US_2018_publink1000226302