A recent IRS ruling gives gig drivers a break when it comes to maximizing earnings. The IRS increased the optional standard mileage rate to $0.625 per mile.
How does this affect drivers? Read on as we address key subjects and questions in this latest development for gig drivers. Subjects include
- What is the new mileage rate for the remainder of 2022?
- How does the new policy work?
- Surcharges removed by some companies using gig drivers
- An overview of other measures to soften the blow of high fuel prices
What is the new mileage rate for the remainder of 2022?
The change to $0.625 a mile is a $0.04 increase over the current optional standard mileage rate of $0.585 per gallon. The IRS release notes that this is a rare mid-year change in the optional standard mileage rate. The last time the IRS made such a mid-year change was in 2011. The IRS typically updates the mileage rates in the fall for the next calendar year. The increase in deduction is effective July 1, 2022. Gig drivers will have to claim their mileage for the first six months of the year at the previous rate.
The IRS release made no mention of a possible readjustment of the deduction once gas prices return to lower levels.
How the new the policy works
The optional standard mileage rate is a per-mile deduction that drivers apply against their gross earnings, allowing them to reduce their taxable income. This only applies to miles driven as part of self-employment. At tax time, drivers tally up the miles driven during the year for business and multiply it by $0.585 per gallon (until July 1). They deduct that amount from their total gross income. This, along with any other deductions they take, determines their taxable income.
For drivers that average 20,000 miles a year in rideshare miles on their car (typical for a part-time rideshare driver), this increase allows them to lower their gross income by an additional $800. For some that might be enough to drop them into a lower tax bracket.
The optional standard mileage deduction is used in lieu of tracking actual costs. It covers fuel costs related to business driving, as well as other fixed and variable costs such as depreciation, insurance, repairs, and other costs.
Surcharges removed by some gig app companies
In recent months rideshare and food delivery drivers have benefitted from other measures designed to provide them with extra money to offset the cost of fuel. Most notably, both Lyft and Uber announced 55-cent-per-ride surcharges, all of which went to the driver. These surcharges took effect in mid-March. Both rideshare companies, as well as DoorDash, announced that the surcharges would be re-evaluated after 60 days.
Uber Eats and DoorDash removed the gas surcharges in May, as reported in a Gridwise blog post titled Uber Eats and DoorDash Remove Gas Incentives for Delivery Drivers. Uber kept the surcharges in effect for rideshare drivers, as did Lyft.
An overview of other measures to soften the blow of high fuel prices
So far, gig drivers are compelled to piece together a patchwork of different benefits that still probably don’t come close to offsetting the increase, but everything helps. The major measures include:
Gridwise’s mileage tracking app for delivery drivers
When used in unison with the increased IRS optional standard mileage rate deduction, the Gridwise mileage tracking app helps keep more accurate track of mileage. This allows drivers to maximize tax deductions for rideshare and food delivery driving, too. Users report that the Gridwise mileage tracker app for gig drivers is more accurate than the figures reported for the individual drivers from the rideshare companies. One driver said that at tax time he found 8,000 more miles through the Gridwise app. Many drivers refer to it as the best mileage tracking app available. The Gridwise app is also a mileage tracker for DoorDash and other food delivery drivers as well.
The rideshare fuel surcharge
For part-time rideshare drivers averaging 40 rideshare rides a week, this means extra income in their pocket. At $0.55 a ride, this computes to as much as $22 a week. Full-time drivers will realize more.
The Gridwise Gas discount for rideshare and delivery drivers
Gridwise reported in a recent blog post titled Gridwise Increases Gas Discount to Help Rideshare and Delivery Drivers that it increased the discount on its GasBuddy card from $0.10 up to as much as $0.50 a gallon. The card, which is a free benefit of Gridwise, is available to drivers when they sign up on the website.
Other Gridwise features
The Gridwise app has a number of other features providing drivers with a clear picture of where their money comes from. Gridwise also features an earnings tracker app for drivers. This is essential for those that multi-app, meaning that they drive for both Uber and Lyft, and might also incorporate food delivery into their gig driving activities. Drivers can also maximize their earnings by checking out the Where to Drive and When to Drive features in the Gridwise app. The Gridwise app also keeps drivers informed of peak times at airports and lists special events that also generate extra rides.
Being in the right place at the right time is an excellent way of avoiding useless miles and wasted gas.
Are all these measures enough?
As we mentioned earlier, even if drivers maximize their usage of all these tools, it is difficult to offset all the increases in gas prices since early this year. According to the AAA, gas prices nationwide averaged $4.955 cents per gallon as of June 22, 2022. A year ago, they were almost $2.00 less—$3.069 a gallon.
What is driving these higher prices? Any number of events both domestically and internationally affect the price of gas, but the Ukrainian-Russian conflict is seen as a major part of the problem. There is no projection as to when those hostilities will end.
Gridwise empowers gig drivers
One absolute for gig drivers is that they can benefit from using the Gridwise app. Gridwise is dedicated to helping gig drivers work smarter and protecting more of their income. In addition to keeping drivers informed about saving money on fuel, Gridwide also helps them choose the best phone plans,find the best source of service for their car, and even learn how to protect themselves from danger when they are driving.
Every gig driver can drive smarter and become more profitable. Interested?