Bookkeeping for rideshare and delivery drivers

The payout is not your income

Picture a Saturday. You log on at 4 p.m., drive until 1 a.m., and the app shows $286. That number is real money, but it is not your income for tax purposes, and it is not your profit.

Your income is what riders and customers paid for the trips, before the app took its service fee. The app reports that larger number on the Form 1099-K or 1099-NEC it sends you, and the IRS compares it with your return. Your profit is that income minus the fees, minus the cost of the car, the phone and the small things, and the car is by far the biggest piece.

So the books for a driver have three parts: gross earnings from each app, the fees the app kept, and the miles you drove. Get those three right and the tax return mostly writes itself.

Reading the app’s annual summary

Each app gives you a yearly tax summary, usually in January. It lists gross earnings, the service fees and other amounts it deducted, tips, and often an estimate of your online miles. Weekly statements show the same parts at a smaller scale.

In your books, record the gross from each app as income, and record the app’s fees as commissions and fees, line 10 of Schedule C. Record tips as income too. Tips paid in the app are already in the gross. Cash tips from riders are also income, and they are easy to forget. Keep a note in your phone and enter them weekly.

Do not record the bank deposit as income and stop there. If you do, your income will be lower than the 1099 shows, and a mismatch is the most common reason a driver gets a letter from the IRS. The Schedule C instructions say to report all gross receipts, whether or not you get a form.

Some apps send a 1099-K, some send a 1099-NEC, and some send both, for rides and for promotions. The threshold for a 1099-K has changed several times in recent years. It does not matter for your books: all of it is income, whether a form arrives or not.

Miles are the whole game

For most drivers, the standard mileage rate gives the biggest deduction. For 2026 the IRS rate is 72.5 cents a mile from January 1 to June 30, and 76 cents a mile from July 1 to December 31 (IRS Announcement 2026-11). Because the rate changed mid-year, your log must show which miles fell in each half. A total for the year is not enough this year.

Which miles count? Under Publication 463, business miles include:

• Driving to a pickup after you accept a trip.
• Driving with a passenger or an order.
• Driving between trips while the app is on and you are waiting for the next one, in most cases.
• Trips to get the car washed or serviced for the business, and to buy supplies.

The drive from home to the area where you start, and the drive home after the last trip, are often treated as commuting. The rules depend on your situation, so ask your preparer how to treat them, and log them separately so the choice can be made later.

The app’s mileage number is a useful check, but it usually counts only miles while you are on a trip, and it can miss miles between trips. Use a mileage app or a simple log that records the date, the starting and ending odometer for each shift, and the business purpose. Publication 583 covers what records the IRS expects.

If you choose the standard rate, it replaces gas, oil, repairs, insurance, registration and depreciation. You still deduct business parking and tolls separately, on line 9 with your miles. You also deduct the business share of interest on a car loan, which goes on a different line, so ask your preparer.

If you want to use the standard rate for a car you own, you must use it in the first year the car is in service for business. If you use actual costs that year, you cannot switch to the standard rate later for the same car. When in doubt, the standard rate is the safer first-year choice. The mileage deduction tool handles the two 2026 rates for you.

When actual costs make sense

Some drivers do better with actual costs: an expensive car, high repair bills, or a lease. With actual costs, you add up gas, insurance, repairs, tires, registration, lease payments or depreciation, and car washes, then multiply by your business-use percentage. If you drove 31,000 miles and 24,800 were business, your business share is 80%.

This method needs every receipt and a mileage log anyway, because you still need the percentage. Depreciation on a car also has limits. It is worth a conversation with a preparer before you choose.

The phone and the small things

Your phone is a work tool, but it is also your phone. Deduct the business share of the plan on utilities, line 25. If you drive 30 hours a week and estimate that the phone is used for business half of the time, 50% is a reasonable starting point. Write down how you got the number.

A new phone is a mixed-use item too. Deduct the business share of its price. A phone under $2,500 can be deducted as a supply in the year you buy it under the de minimis safe harbor in the tangible property regulations, if you make that election on your return.

Small items go on supplies, line 22: phone mounts, chargers and cables, water and mints for riders, an insulated bag for food delivery, seat covers.

A worked example

Marcus drives for two apps. Here is one month in April 2026.

The apps paid out about $3,865 for the month. His gross income for tax was $5,240. After fees, miles and the rest, his profit was about $1,736.50. That is the number he pays tax on, and it is also the honest answer to “what did April pay?” He drove about 160 hours, so the month paid about $10.85 an hour after the car. Looking at the payout alone, he thought it paid $24.

Marcus also pays $25 a month for a car wash membership. He uses the standard rate, which already covers the cost of keeping the car, so he does not deduct it separately.

Setting money aside

No one withholds tax from app earnings. You owe self-employment tax of 15.3% on 92.35% of net profit, plus income tax (Publication 334). Because the mileage deduction is large, many drivers owe less than they fear. A common rule is to set aside 15 to 25 percent of profit, but your number depends on your other income.

Pay quarterly estimates if you expect to owe $1,000 or more. The dates are in the estimated tax dates tool, and the self-employment tax calculator gives you the size. If you also have a W-2 job, you can raise the withholding there instead of paying estimates. Publication 505 explains both methods.

Common mistakes

• Recording the payout as income. Record the gross and the fees.
• Losing the first half of the year’s miles. In 2026 you need the split at July 1.
• Deducting gas and miles. Pick one method.
• No log. An estimate at tax time from memory is weak if anyone asks. Odometer readings at the start and end of each shift take ten seconds.
• Forgetting cash tips. They are income.
• Deducting the whole phone. Use a business share you can explain.

A weekly and monthly routine

Each week, record the shift odometer readings in your log, and download the weekly statement from each app. Each month, import the app statements and your business bank account into Righto. It reads CSV, OFX and QFX files, and PDF statements, including scanned PDFs read on your Mac (importing statements). Set a rule once for each app so the gross and fees go to the right lines (rules). Then reconcile the bank account to its statement balance (how to reconcile) and add the month’s miles.

Every quarter, check profit to date and pay the estimate.

What to hand your preparer

At year-end, Righto builds a package with profit and loss by Schedule C line and the transaction detail (year-end). Add:

• Each app’s annual tax summary and every 1099 form.
• Your mileage log, with business miles before and after July 1, total miles for the year, and commuting miles.
• The date the car was first used for the business, and whether you used the standard rate in that first year.
• Your phone business-use percentage and how you got it.
• Estimated tax payments with dates.

If you would rather talk than type, you can connect your own AI agent to Righto at an access level you choose (agents). Every change is recorded and undoable.

General information, not advice for your situation. Ask a tax professional about your own return.