DoorDash Dasher Tax Guide

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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 NameDoorDash, Inc.
EIN/Tax Identification Number46-2852392
Business Address901 Market
Suite 600
San Francisco, CA 94103
Business Activity Code812900

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)

Related: Best Under the Table Jobs

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 app or keep a manual mileage log from your car’s odometer.

Standard Mileage Deduction Rate

  • 2022 (Miles for July through December): 62.5 cents per mile
  • 2022 (Miles for January through June): 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 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:

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 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 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 Needed2022 Tax Year2023 Tax Year
First Quarter Estimated Tax Payment DueApril 18, 2022April 18, 2023
Second Quarter Estimated Tax Payment DueJune 15, 2022June 15, 2023
Third Quarter Estimated Tax Payment DueSeptember 15, 2022September 15, 2023
Fourth Quarter Estimated Tax Payment DueJanuary 17, 2023*January 16, 2024*
Receive Your 1099No later than January 31, 2023No later than January 31, 2024
File Your Tax ReturnTuesday April 18, 2023 (15th is a Saturday; Monday is Washington, D.C., Emancipation Day)April 15, 2024
Extended Filing DeadlineMonday October 16, 2023 (15th is a Sunday)October 15, 2024
*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. You can view free tax filing options here.

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.

What are the best times to DoorDash?

The key to maximizing your DoorDash income is figuring out the best time of day to DoorDash.

The best DoorDash hours are usually evenings and weekends around major sporting events. Some areas have a lot of lunchtime orders if you Dash near businesses or where people are working from home.

You should also check your app for DoorDash peak hours. Peak hours bring peak pay and other bonuses.

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.

Thanks for reading.

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