For-profit carpool mileage calculation?

Question

Last year I provided transportation for two people employed at a business beside the place I work, at $5 per trip, one way. Total last year was about $1750. As the trip fees are paid by the the peoples' employer, I don't think I can claim it's a carpool-- it's a service rendered to the employer.

Here's my question: since I'm running a for-profit thing, how much mileage may I deduct as expense? Their houses are about 6 and 11 miles from work (and home) but as they live along the general route I take to work, it only adds 2 miles total.

(I do my own taxes, otherwise I'd just pass this on to the tax preparer.)

Answer 1

While I have never had to do the calculation you are doing, I have done similar calculations for company local travel vouchers, and for calculating visits to my rental property.

The key is calculating the extra miles travel for that trip.

Their houses are about 6 and 11 miles from work (and home) but as they live along the general route I take to work, it only adds 2 miles total.

Lets say that driving distance from your house to your work is 15 miles, but if you pick them up then it takes a total of 17 miles. That means that the mileage you can claim is 2 miles.

If that side trip adds to the tolls you are paying, that can also be deducted from the amount you are charging.

Answer 2

I would calculate the miles from the first person's home, to the second home, and finally to the destination because that is when additional people enter the vehicle which introduces faster wear-and-tear on your vehicle and increased gas consumption.

Your workplace being conveniently located next to the final destination should have no bearing on miles rendered for the service. In fact, I think you are undercharging but that is a separate conversation.

Think of it this way:

• Your commute is from your house to the first person's house because you are being paid to provide this service (work).
• From the first person's house onward you are working until you've reached the destination.
• Your main job being conveniently located within walking distance of your first job has no bearing on the fact that you started providing a service once you arrive at the first person's house.

You are basically operating a small-scale Uber.