DoorDash Dasher Tax Guide

If you’re a Dasher for DoorDash, you’re responsible for tracking and paying your own taxes. Here’s what you need to know about how much to set aside for taxes and how to file your tax return.

What tax form do you get from DoorDash?

Most Dashers sign an independent contractor agreement. You won’t get a Form W-2. Instead, you get a 1099-NEC tax form at the end of the year. A 1099 means you get taxes as a business owner.

Does DoorDash provide a 1099?

DoorDash uses Stripe to process their payments and tax returns. If you earn more than $600 in a calendar year, you’ll get a 1099-NEC from Stripe. (Stripe also sends 1099-Ks for other companies or payments, but the way they’re set up with DoorDash means DoorDash work will go on a 1099-NEC for DoorDash.)

DoorDash no longer uses Payable for 1099-NEC forms, so if you never got your 1099 from Payable, that’s why.

You can view DoorDash’s tax information here.

DoorDash 1099 Form Information

Company NameDoorDash, Inc.
EIN/Tax Identification Number46-2852392
Business Address901 Market
Suite 600
San Francisco, CA 94103
Business Activity Code722511

What’s your income?

Your income includes all the money you receive for your delivery services. This includes both cash and electronic payments whether or not you receive a 1099.

Tips are taxable self-employment income the same as your order fees. Waiters and taxi drivers have previously tried to have tips taxed as non-taxable gifts and failed. Trying to say that tips are gifts could result in heavy fines or tax evasion charges for taking a frivolous or fraudulent position.

If you took out a PPP loan, remember that Congress said PPP loan forgiveness would not be taxable income as part of the COVID-19 relief package.

How can you provide proof of DoorDash income?

Depending on who is asking, there are several different ways you may need to provide proof of DoorDash income.

  • DoorDash earnings report
  • Bank statements showing deposits
  • Tax returns (most lenders will add back certain deductions like your mileage)

Can you deduct mileage?

You can generally take a deduction for all mileage while you are doing DoorDash deliveries or working through multiple apps. This includes when you have an order in your car and when your picking up the next order.

DoorDash doesn’t track mileage for you. You can either download a separate app or keep a manual mileage log from your car’s odometer.

Standard Mileage Deduction Rate

  • 2022: 58.5 cents per mile
  • 2021: 56 cents per mile
  • 2020: 57.5 cents per mile

Tip: DoorDash does not reimburse mileage, and even if they did, it would still be taxable income.

What car expenses does the standard mileage deduction cover?

The standard mileage deduction covers the expenses necessary to keep your car running. This includes:

  • Gas
  • Maintenance
  • Depreciation
  • Insurance
  • DMV fees

You can choose to track all of these expenses separately and claim that amount instead of taking the standard mileage deduction. This requires you to keep track of all of your receipts and why they were necessary business expenses. In addition to saving that hassle, most people with consumer cars come out ahead taking the standard mileage rate.

DoorDash Driver Checklist of Tax Deductions

The following items are also generally allowed deductions.

  • Fees to apply for a platform or for a background check.
  • Transaction fees (if your income was reported as the gross amount before fees instead of the net amount after fees).
  • Signs or lighting to identify you as a delivery driver.
  • Business software you use to help you find the best times to drive.

The following items are generally not deductible because they are also for your own personal use.

  • Cellphone bills.
  • Phone chargers, cellphone mounts, and similar accessories.
  • Dash cams.
  • Floor mats and other improvements to your car.

Some of the above items could be partially deductible if you can prove to the IRS what portion of the expense was for business use. This is hard to do because so many people try to deduct personal expenses, and the IRS auditor will be very skeptical.

Can you deduct your meals while you’re working?

No. Stopping for lunch in the middle of your shift does not make it a business expense. You can typically only deduct meals while entertaining a client or on a multi-day trip away from home.

Are Dashers eligible for the 20% Qualified Business Income deduction?

Yes, Dashers are eligible for the QBI deduction. This means that you will effectively pay income tax on 80% of your net profit instead of 100% of your net profit.

Here are the income limits to get the full QBI deduction:

Filing Status20222021
Single and Married Filing Separately$170,050$164,900
Married Filing Jointly and Qualifying Widower$340,100$329,800
Head of Household$170,050$164,900

Can Dashers open a retirement account to lower their tax bill?

Your net profit counts as earned income. This allows you to contribute to a Traditional or Roth IRA even if you don’t have other income (e.g., students or retirees). As a Schedule C 1099 filer, you may also open a SEP IRA or Solo 401(k). These small business retirement plans allow you to contribute up to 20% of your profits on a tax-deductible basis.

SEP IRAs are usually the easiest to open and have the lowest (or no) fees. The advantage to a Solo 401(k) is being able to make up to $20,500 in employee contributions if you don’t have a 401(k) from a different job or if your main 401(k) has poor investment options.

How much do Dashers pay in taxes?

Expect to pay at least a 25% tax rate on your DoorDash income. This includes 15.3% in self-employment taxes for Social Security and Medicare. It also includes your income tax rate depending on your tax bracket.

If you live in a state with income taxes, you’ll also need to file a state tax return.

How do Dashers pay taxes?

DoorDash does not take out withholding tax for you. Dashers should make estimated tax payments each quarter. If Dashing is a small portion of your income, you may be able to increase your income tax withholding at your day job instead of paying quarterly taxes.

If you wait until April to pay, you could have to pay a penalty if you owe more than $1,000. To avoid penalties, save enough to make pay at least

Based on Current Year Tax ReturnBased on Prior Year Tax Return
AGI up to $150,000 ($75,000 if married filing separate)90% of current year taxes100% of prior year taxes
AGI over $150,000 ($75,000 if married filing separate)100% of current year taxes110% of prior year taxes
To avoid the estimated tax penalty, you must pay one of the above percentages through a combination of estimated tax payments and withholding. Typically, you need to make four equal payments. If you have uneven income, you can use the annualized income installment method.

DoorDash Tax Calendar

Action Needed2021 Tax Year2022 Tax Year
First Quarter Estimated Tax Payment DueApril 15, 2021April 15, 2022
Second Quarter Estimated Tax Payment DueJune 15, 2021June 15, 2022
Third Quarter Estimated Tax Payment DueSeptember 15, 2021September 15, 2022
Fourth Quarter Estimated Tax Payment DueJanuary 15, 2022*January 15, 2023*
Receive Your 1099No later than January 31, 2022No later than January 31, 2023
File Your Tax ReturnApril 18, 2022 (due to Good Friday and Passover on the 15th)April 15, 2023
*You can skip the final estimated tax payment if you file your tax return and pay your full balance due by February 1st.

What tax software should you use?

Almost any tax software that supports self-employment income will give you what you need. Cash App Taxes is one of the few options that lets you file for free. Most other tax software providers don’t include Schedule C in their free tier.

Keep in mind that you’re filing a single tax return with all of your other income, credits, and deductions. This might include work you do for Instacart, an hourly job, or child tax credits. Before you choose which software to use, make sure it can handle everything you need in addition to doing your DoorDash taxes.

Conclusion

It’s easy to file DoorDash taxes if you understand the basics. If you have any doubts, you can hire a tax professional to help you the first year you file.