Track Mileages and Tax Deductions: How Filance AI Can Help You Pay Less at No Cost

Maximize tax deductions and simplify payments as a gig worker with Filance AI. Track mileage, expenses, and earnings across platforms—all for free.

Being a freelancer comes with a lot of flexibility and freedom but also a lot of responsibilities that you probably wouldn't have if you were working as a formal employee. One of these responsibilities is paying federal taxes. It’s not just the act of spending that can be frustrating because it means less money in your pocket but also filing your 1099 form, which demands a lot of attention and information to ensure you only pay what’s required for your current occupation.

September is here, and in a few days, it’s time to pay your quarterly taxes. Even if you’re delivering or ridesharing as a side hustle, after earning $600 from freelancing, whether by yourself or through platforms, you’ll definitely owe taxes. In today’s post, we will dive deep into the following topics:

Summary:

How do you calculate your taxes and deductions?
What are the conditions that require you to fill out the form and pay taxes?
When do you need to pay your annual taxes?
How can you pay your Federal taxes?
Frequently questions answered (FAQ)

If you work for an employer, they automatically take out 1.45% for Medicare and 6.2% for Social Security—both of which are part of FICA (Federal Insurance Contributions Act), which every American must pay. There’s no getting around it, unless you're a church employee who has taken a vow of poverty, but I doubt you’d be reading this article if that were the case.

You can deduct your operational expenses, which can help you pay less in taxes

As an independent contractor, you’re considered both the employer and employee, which means you’ll pay 15.3% of FICA from your net income. But don’t panic—here’s where we come in with great news! You can deduct your operational expenses, which can help you pay less in taxes. To make this happen, it's important that you keep records of all your costs, such as:

📊 Gas

🅿️ Parking

🚧 Tolls

🛣️ Mileage

📱 App fees

🚗 Lease payments

📲 Mobile phone

🆘 Roadside assistance

🚙 Car expenses

📋 Registration

🏥 Health insurance

🔍 Inspections

🧊 Temperature-controlled bags and courier

💸 Depreciation

📦 Supplies

It's important to mention that if you're working as a side hustle, these taxes won’t apply to your daily income, just your freelancer activity.

So, how do you calculate your taxes and deductions?

First things first, there are two different methods you can adopt: standard mileage or actual expenses. What's the difference between them? The IRS created a standardized and simplified way of deducting car expenses to make tracking easier. They looked at the average costs of operating a vehicle and came up with a standard rate per mile that has increased over the years:

2024 - 67 cents per mile

2023 - 65.5 cents per mile

2022 - 62.5 cents per mile (July through December)

2022 - 58.5 cents per mile (January through June)

2021 - 56 cents per mile

And here's what it covers:

⛽ Average costs of gas

🚗 Average costs of car insurance

📝 Average costs of lease payments

🔧 Average costs of maintenance

📉 Average costs of depreciation

This method can be chosen only if you own or lease your vehicle. If you rent it, you should select the Actual Expenses method. As the name suggests, you'll need to track not just your mileage but also all involved expenses and report them on your form. Before diving into the best practices for filling out the forms, it's crucial to understand which method is best for you. Here are some reasons why you might choose each one:

• Standard mileage:

  🚗 Your car is efficient, and you spend little on maintenance and repairs

  📦 You aren’t good at keeping receipts

• Actual expenses:

  🚕 You drive a lot for your job

  🆕 Your car is new and depreciating fast

  🛢️ Your car is a gas-guzzler and expensive to maintain

Now that you know the basics of FICA taxes, let's learn more about which 1099 form you should choose.

The IRS 1099 form is a type of information return about taxable payments—in other words, it's a declaration of everything you earned from a person or a company that isn’t your employer. For self-employed people, the most common form is the 1099-NEC. This form is used not just b

y platform workers but also by small business owners and rental property owners.

So, what are the conditions that require you to fill out the form and pay taxes?

💰 Earned at least $600 from a client or platform that paid you directly through check or direct deposit. If you earned less than $20,000 per year, you can select the 1099-NEC.

🏦 If you earned more than $20,000 and logged at least 200 transactions through credit, debit card, or payment apps, you should move forward with the 1099-K.

When do you need to pay your annual taxes?

If you owe more than $1,000 in taxes annually, you should pay them quarterly according to the following dates:

📅 April 25th for January 1st through March 31st

📅 June 15th for April 1st through May 31st

📅 September 15th for June 1st through August 31st

📅 January 15th for September 1st through December 31st

How can you pay your Federal taxes?

You can pay online through the IRS, by mail, or by phone. But before you do, you'll need to fill out your form with all your expenses, track your mileage and earnings in Section C. This is where Filance AI helps you thrive, especially if you work across multiple platforms, all at no cost.

With Filance AI, you can connect and sync all your work platforms completely free of charge. Get reports about your weekly earnings from all your connected accounts without having to calculate them one by one. Plus, get deeper insights into your average earnings per mile, which can help you decide which tax payment method will cost you less. 

Moreover, gain insights into your performance evolution over the weeks, and talk to Aimee, your personal AI assistant, who analyzes your data and provides personalized insights on various subjects, including when and where to drive, more profitable platforms, financial products, and much more.

Don't forget to keep your taxes paid on time and meanwhile, download Filance AI, connect your accounts, and enjoy all these benefits with no hidden costs—completely free of charge.

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Frequently Asked Questions (FAQ)

1. What is FICA, and why do I need to pay it?

• FICA stands for Federal Insurance Contributions Act, which includes Social Security and Medicare taxes. If you're an independent contractor, you’re responsible for paying both the employer and employee portions, totaling 15.3% of your net income.

2. What is the difference between the standard mileage and actual expenses methods?

• Standard Mileage: This method uses a flat rate per mile driven for business purposes, covering gas, insurance, maintenance, and depreciation. It's easier if you don’t want to keep detailed records of all your expenses.

• Actual Expenses: This method requires tracking all your vehicle-related expenses (like gas, repairs, insurance) and calculating deductions based on these actual costs. It may be more beneficial if your expenses are high.

3. How do I know which 1099 form to choose?

• 1099-NEC: Use this form if you earned at least $600 from a client or platform through direct deposit or check.

• 1099-K: Use this form if you earned more than $20,000 and had at least 200 transactions through a credit/debit card or payment app.

4. When are my quarterly tax payments due?

• Quarterly tax payments are due on the following dates:

  • April 25th (for January 1st - March 31st)

  • June 15th (for April 1st - May 31st)

  • September 15th (for June 1st - August 31st)

  • January 15th (for September 1st - December 31st)

5. How can Filance AI help me with tax deductions?

• Filance AI simplifies your tax deductions by syncing all your work platforms, automatically tracking your earnings and expenses. You’ll receive comprehensive reports and insights that can help you determine the best tax strategies, including whether to use the standard mileage or actual expenses method.

6. Is Filance AI really free?

• Yes, Filance AI is completely free with no hidden costs. You can connect your accounts, track your earnings, and receive personalized insights all at no charge.