It's all fun and games until tax time...

Create an Account or Log In

Membership is free. Simply choose your username, type in your email address, and choose a password. You immediately get full access to the forum.

Already a member? Log In.

IRS indicates that there are 3 types of mileage you should be keeping track of: commute miles, personal miles and business miles. Personal miles and commute miles are not deductible. Commute miles are identified as the mileage back and forth to your primary place of business. If you have two places of business, IRS calls the miles to your primary place 'commute miles' and to the second location 'business miles'. It is unclear whether that second place of business has to be a specific location.

I would suggest you read through the tax materials at irs.gov that relate to a small business and small business mileage, but here is how I personally see it and I do not set myself forth as a tax expert but rather as somebody who has tried very hard to read and understand the rules. If I normally drive 23.6 miles to work, then any day that I go to that place of work, 23.6 of the miles I drive are 'commute' mileage. If I perform shops before, after or during my lunch hour from that job and my total mileage from home, to work, to shops, to home is 28.6 miles, my business miles would be 28.6-23.6=5.0 miles.

Over the years different folks have asked their tax preparers and gotten answers from 'it is all commute mileage' to 'just take half of it' to other more nonsensical answers. If you go to your regular job M-F and then go out to do shops on Saturday and Sunday, there would be no commute miles involved and you would claim door to door.

A self employed person who files a Schedule C is considered a 'business' as long as they show a profit 3 out of 5 years. Failure to show a profit at least that often will lead IRS to the presumption that this is a 'hobby' and therefore entitled to no business deductions and all fees and bonuses (but still not reimbursements) would be fully taxable. Relatively few shoppers show profitability in year 1, but that is most frequently because they are purchasing equipment and driving too far for the low fee jobs.

With business mileage at 56 cents/mile this year you need to be aware of what your shop looks like 'on paper'. The other day I did two grocery shops at $8/$10 and was delighted to be paid to go to the grocery store with about $20 of reimbursements. But I drove a total of 32 miles so on paper these shops were done at a net loss of $1.92. Of course I have other shops where there is significant profit which will offset the loss. I usually hold off until the end of the year to make my equipment and supply purchases when I can see whether I am going to be reasonably profitable or not. I would not care to have my business deemed a hobby.
Sorry, only registered users may post in this forum.

Click here to login