Amazon Flex is a delivery service that allows you to earn extra income by delivering packages for Amazon using your own vehicle. However, as an Amazon Flex driver, one of the key aspects you need to consider is tracking and calculating your mileage. This is essential for tax purposes as well as maximizing your earnings. In this comprehensive guide, we’ll delve into everything you need to know about calculating mileage for Amazon Flex.
To calculate mileage for Amazon Flex, you’ll need to use a separate mileage tracking app as the Amazon Flex app does not have built-in mileage tracking. Start tracking your miles when you leave for your first delivery and stop when you return home after your last delivery. Maintain a daily log of the total miles driven during your shift, categorize your trips as business or personal, and regularly backup your mileage data. Remember, you cannot deduct the miles you drive from the Amazon warehouse to your home and vice versa.
Understanding Amazon Flex
Amazon Flex is a program that allows independent contractors, called Flex drivers, to deliver packages, groceries, and even cater to Amazon’s Prime Now customers. Drivers can pick up shifts (or “blocks”) through the Amazon Flex app and get paid for their time and effort.
The earning potential for Flex drivers ranges between $18 and $25 per hour, depending on factors such as location and the specific delivery block. However, these earnings are gross income, and drivers have to account for costs such as vehicle maintenance, fuel, and most importantly, mileage.
Why Mileage Matters
As an Amazon Flex driver, you’re considered an independent contractor, not an employee. This means you’re responsible for your own taxes. The IRS allows you to deduct business expenses, including the standard mileage rate for the miles you drive for Amazon Flex.
In 2022, the standard mileage rates were $0.585 per mile from January to June and $0.625 per mile from July to December. This deduction can significantly reduce your taxable income. However, it’s essential to note that you cannot deduct the miles you drive from the Amazon warehouse to your home and vice versa.
How to Track Mileage
Since the Amazon Flex app does not have built-in mileage tracking, you’ll need to use a separate app to track your mileage. Some popular mileage tracking apps among Amazon Flex drivers include Gridwise, Stride, and TripLog.
Here’s a simple step-by-step guide on how to track your mileage:
- Download a Mileage Tracking App: Choose a reliable mileage tracking app that suits your needs and download it onto your smartphone.
- Start Tracking: Start tracking your miles when you leave for your first delivery and stop when you return home after your last delivery.
- Log Your Miles: Maintain a daily log of the total miles driven during your shift. This will help you accurately report your mileage for tax purposes.
- Categorize Your Trips: If your chosen app allows it, categorize your trips as business or personal. This will help you separate deductible miles from non-deductible ones.
- Backup Your Data: Regularly backup your mileage data. Many apps offer cloud storage, ensuring your records are safe even if you lose or damage your phone.
Common Mistakes to Avoid
When tracking and calculating mileage for Amazon Flex, it’s crucial to avoid the following common mistakes:
- Not Tracking Mileage: This can lead to under-reporting your business miles, resulting in paying more in taxes than necessary.
- Poor Record Keeping: The IRS may disallow your mileage deduction if you cannot provide detailed mileage logs.
- Including Commuting Miles: The miles you drive from your home to the Amazon warehouse and back are considered commuting miles, which are not deductible.
- Relying Solely on the Amazon Flex App: The Amazon Flex app only tracks the miles you drive while delivering packages, not the total business miles you drive.
Wrapping Up
Calculating mileage as an Amazon Flex driver may seem complicated, but with the right tools and a bit of diligence, it can be a straightforward process. By accurately tracking your mileage, you can maximize your tax deductions, reduce your tax liability, and ultimately increase your earnings.
Remember, the key to successful mileage tracking is consistency and accuracy. So, choose a reliable mileage tracking app, track your miles diligently, and keep detailed records. This way, you can focus more on delivering packages and less on worrying about your taxes.
Frequently Asked Questions
What if I forget to start tracking my mileage at the beginning of my shift?
If you forget to start tracking at the beginning of your shift, try to start as soon as you remember. However, this is not ideal as it may lead to inaccurate mileage logs. It’s best to develop a habit of starting your mileage tracking app every time you begin a shift.
Can I manually add miles if I forget to track them?
Yes, most mileage tracking apps allow you to manually add miles. However, be aware that the IRS prefers automated tracking for accuracy. Manual entries should be used sparingly and only as a last resort.
How often should I back up my mileage data?
It’s recommended to back up your mileage data regularly. The frequency depends on how often you work. If you’re a full-time Amazon Flex driver, consider backing up your data weekly. If you’re part-time, a monthly backup may be sufficient.
Can I deduct other vehicle expenses in addition to mileage?
Yes, you can choose to deduct actual vehicle expenses instead of using the standard mileage rate. This includes costs like gas, repairs, insurance, and depreciation. However, once you choose this method, you can’t switch back to the standard mileage rate for that vehicle.
What should I do if I get audited by the IRS?
If you get audited by the IRS, provide them with your detailed mileage logs. If you’ve been diligent about tracking and documenting your miles, you should have the necessary proof to substantiate your mileage deduction. It’s always best to consult with a tax professional in these situations.
