As a Doordash driver, you may be wondering how you can avoid paying back a large sum of money when taxes are due. This is a valid concern, especially if you have made a significant amount of income this year. According to the IRS, any individual who earns more than $12,000 per year is required to file a tax return. However, there are certain factors that can affect your tax liability, such as subsidies received from the healthcare marketplace exchange. In this blog post, we will discuss how you can avoid paying back taxes as a Doordash driver.
The Importance of Seeking Professional Advice
Before we dive into the specifics of avoiding tax payments, it is important to note that every individual's tax situation is unique. As a Doordash driver, you are considered self-employed and may have different deductions and expenses compared to a traditional employee. Therefore, it is crucial to seek professional advice from a tax advisor to get a clear understanding of your tax obligations and how to best handle them.
Understanding the Subsidy Received from the Healthcare Marketplace Exchange
One of the main concerns for Doordash drivers when it comes to taxes is the subsidy received from the healthcare marketplace exchange. This subsidy is a form of financial assistance provided to individuals who purchase health insurance through the marketplace. The amount of subsidy you receive is based on your income, and it is meant to help you afford the cost of health insurance premiums.
However, it is important to note that this subsidy is not a tax credit. This means that if you earn more than the income threshold, you will have to pay back the entire amount of subsidy received. So, how can you avoid paying back this subsidy?
Earning Between 100% – 400% of the Poverty Level
To avoid paying back the subsidy received from the healthcare marketplace exchange, you must earn between 100% – 400% of the poverty level. This income range is determined by the federal poverty guidelines, which are updated each year. For 2023, the range is between $13,590-$54,360. If you fall within this range, you will not be required to pay back the subsidy received.
Ensuring You Meet the Income Threshold
Now, going back to the original question, if you have made $12,000 this year as a Doordash driver, you may be wondering how you can ensure you meet the income threshold to avoid paying back the subsidy. The good news is that there is still time to increase your income and reach the minimum amount required.
Firstly, it is important to note that any income earned before January 1st of the current year will be counted towards that year's taxes. This means that the last week of December, even though you will not receive payment until the first week of January, will still count towards this year's income. So, technically, you have seven weeks left to earn an additional $1,600 and reach the minimum income threshold.
Maximizing Your Earnings as a Doordash Driver
So, how can you increase your income as a Doordash driver to reach the minimum income threshold and avoid paying back the subsidy? Here are a few tips:
- Work more hours: The more you work, the more you can earn. Consider working additional shifts or extending your working hours to increase your income.
- Take on higher paying orders: Some orders may pay more than others, so be selective in which orders you accept. This can help maximize your earnings in a shorter amount of time.
- Track your expenses: As a self-employed individual, you can deduct certain expenses from your income, such as car maintenance and gas. Make sure to keep track of these expenses to reduce your taxable income.
- Consider other income sources: If you have spare time, consider taking on other side jobs or gigs to increase your overall income.
Keep in mind that these are just some suggestions and may not apply to your specific situation. This is why it is crucial to seek professional advice from a tax advisor to ensure you are maximizing your income and minimizing your tax liability.
In summary, as a Doordash driver, there are ways to avoid paying back a large sum of money when taxes are due. By understanding the income threshold for the subsidy received from the healthcare marketplace exchange and maximizing your earnings, you can ensure you meet the minimum requirements and avoid any additional tax payments. However, it is always best to seek professional advice from a tax advisor to ensure you are following the correct procedures and making the most out of your income. With the right guidance, you can successfully navigate your tax obligations as a Doordash driver.