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.
Is DoorDash considered self-employment?
Most Dashers sign an independent contractor agreement. You get a 1099-NEC tax form at the end of the year. A 1099 means you get taxed as a business owner and are self-employed.
So, yes, DoorDash counts as self-employed.
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 Name||DoorDash, Inc.|
|EIN/Tax Identification Number||46-2852392|
|Business Address||901 Market|
San Francisco, CA 94103
|Business Activity Code||812900|
What business type is DoorDash?
DoorDash doesn’t really fit into any of the IRS business activity codes. Those codes were made long before services like DoorDash or Amazon Flex existed.
You can use the other services code.
Don’t worry about this code too much. It’s mainly for IRS statistics and doesn’t affect what you owe.
Does DoorDash send you a W2?
DoorDash does not send you a W2 since you’re an independent contractor rather than an employee.
Is DoorDash considered 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.
Do you have to pay DoorDash taxes under $600?
You still have to pay taxes if you made under $600 and didn’t receive a 1099.
The main exception is if you made under $400 in total-self employment income from all sources, you generally don’t have to file a tax return unless there’s another reason you don’t have to file.
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 non-commuting business mileage while you are doing DoorDash deliveries or working through multiple apps. This includes when you have an order in your car and when you’re picking up the next order.
DoorDash doesn’t track mileage for you. You can either download a separate mileage tracking app or keep a manual mileage log from your car’s odometer.
Standard Mileage Deduction Rate
- 2023: 65.5 cents per mile
- 2022 July through December: 62.5 cents per mile
- 2022 January through June: 58.5 cents per mile
- 2021: 56 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:
- DMV fees
You can also choose to use the actual expense method and track all of these expenses separately. You then 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 by taking the standard mileage rate instead of actual car expenses.
You can use this AAA guide to help figure out if your car costs more or less to own than the standard mileage rate.
DoorDash Driver Checklist of Tax Deductions
The following items are also generally allowed tax write-offs. See this post for more in-depth info on tax deductions for delivery drivers.
- 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:
|Single and Married Filing Separately||$170,050||$182,100|
|Married Filing Jointly and Qualifying Widower||$340,100||$364,200|
|Head of Household||$170,050||$182,100|
Can you deduct health insurance?
You’re generally eligible for the self-employed health insurance deduction if you’re not eligible to buy health insurance through an employer or your spouse’s employer.
This deduction does not go on your Schedule C. Your tax filing software asks you about health insurance separately.
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.
Does door dash take taxes out?
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 Return||Based on Prior Year Tax Return|
|AGI up to $150,000 ($75,000 if married filing separate)||90% of current year taxes||100% of prior year taxes|
|AGI over $150,000 ($75,000 if married filing separate)||100% of current year taxes||110% of prior year taxes|
DoorDash Tax Calendar
|Action Needed||2022 Tax Year||2023 Tax Year|
|First Quarter Estimated Tax Payment Due||April 18, 2022||April 18, 2023|
|Second Quarter Estimated Tax Payment Due||June 15, 2022||June 15, 2023|
|Third Quarter Estimated Tax Payment Due||September 15, 2022||September 15, 2023|
|Fourth Quarter Estimated Tax Payment Due||January 17, 2023*||January 16, 2024*|
|Receive Your 1099||No later than January 31, 2023||No later than January 31, 2024|
|File Your Tax Return||Tuesday April 18, 2023 (15th is a Saturday; Monday is Washington, D.C., Emancipation Day)||April 15, 2024|
|Extended Filing Deadline||Monday October 16, 2023 (15th is a Sunday)||October 15, 2024|
What tax software should you use?
Almost any tax software that supports self-employment income will give you what you need.
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.