If you earn $600 or more as a DoorDash driver in a given year, you’re responsible for filing and paying DoorDash taxes. This easy guide will explain everything delivery drivers need to know about taxes, including your DoorDash 1099, how much to save, what kinds of expenses you can write off, and more.
Table of Contents
- About DoorDash Taxes
- What Is a 1099-NEC Form?
- Does Doordash Take Taxes Out?
- How Much Should I Save for Doordash Taxes?
- DoorDash Tax Deductions
- Should I Keep Gas Receipts for Doordash Taxes?
- Is It Better To Write off Gas or Mileage?
- Can I Write off Car Insurance for Doordash?
- The Final Word on DoorDash Taxes
- FAQs
About DoorDash Taxes
Doordash does not take taxes out of driver pay because Dashers are considered independent contractors, and therefore, drivers are responsible for withholding, filing, and paying their own taxes.
Dashers who make over $600 on the platform will be sent a 1099-NEC form via Stripe, which is the payment platform DoorDash partners with. Stripe summarizes your earnings so you can accurately file your taxes for the year, and you’ll use the 1099 form to fill out and file your state and federal taxes as you normally would.
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What Is a 1099-NEC Form?
Before we go any further, if you’re a DoorDash driver who has never worked as an independent contractor, let’s make sure you understand what 1099-NEC forms are. Dashers receive a 1099-NEC form, which is one type of 1099 form (1099-MISC is the other common one, but it’s not what Dashers receive).
The 1099-NEC is a federal tax form that’s used to report earnings for independent contractor payments. The company who’s paid you — DoorDash in this case — files the 1099-NEC form and sends you a copy that you’ll use to file your personal DoorDash taxes.
Want to learn more about DoorDash? Check out: How Much Can You Make on DoorDash in 2024? and Best Times to DoorDash.
Will Doordash Send Me a 1099 Form?
Yes, DoorDash sends Dashers a 1099 form by mid January the following year through Stripe. Stripe will send you an email asking you to take action to receive your tax form, and you’ll then need to create an account with Stripe (if you don’t have one yet) and log into Stripe Express to download your form.
If you made less than $600 from DoorDash the prior year, you will not be sent a 1099 form.
Does Doordash Take Taxes Out?
No, DoorDash does not take taxes out when they pay you. This is true for anyone working as an independent contractor, whether that’s delivering for DoorDash, shopping for Instacart, or even working as a freelancer. It’s your responsibility as a Dasher to withhold money from your payments so you can pay your federal and state DoorDash taxes.
How Much Should I Save for Doordash Taxes?
The general rule of thumb for independent contractors is to set aside approximately 25% to 30% of what you earn to cover both state and federal taxes. That amount covers:
- Self-employment taxes: The self-employment tax rate is 15.3% and consists of two parts: 12.4% for Social Security and 2.9% for Medicare.
- Federal income taxes: This is based on your tax bracket, and your side hustle may push you into a higher bracket, which is why it’s beneficial to set aside so much of your side hustle income.
- State income taxes: This depends entirely on where you live. There are eight states that don’t charge income tax, some that charge a flat rate, and some with progressive rates. If you live in one of the 42 states that charges income tax, it’s anywhere from 0.33% to 13.3%.
Read more in How to Handle Taxes For Your Side Hustle.
What if I Don’t Save Enough Money for My Doordash Taxes?
Depending on what tax bracket you normally fall into, you may find out that you didn’t need to save 25% to 30% to cover your DoorDash taxes. This is especially true if you normally receive a tax refund check. The idea is that you save enough to pay your tax bill if you have one.
If you find that you owe money and haven’t saved enough, still file your tax return on time. The late payment is 0.5% compared to the 5% penalty for not filing on time.
DoorDash Tax Deductions
Your DoorDash taxes come from profits you make after expenses are deducted from your income. You can reduce your tax burden by deducting your business expenses. These are things you’ve used for your business, not personal use only.
For most Dashers, the easiest way to take deductions is to claim the federal standard reimbursement for mileage, which is 62.5 cents per mile in 2022 and 65.5 cents per mile in 2023.
That is a standard deduction meant to cover any of the expenses you’d take as a DoorDash driver, which is why you can’t take it and deduct actual expenses.
If you really want to deduct actual expenses, you can, but again, the standard mileage reimbursement is an easier option for most Dashers. Deducting actual expenses may reduce your tax burden, but it includes accurately tracking:
- Fuel: DoorDash drivers can track the amount they spend on fuel and take it as a deduction.
- Maintenance: If you need new tires, brakes, oil changes, etc. — these may all qualify as deductions for car maintenance.
- Tolls and parking fees: Drivers who incur these expenses while on delivery can deduct them.
- Equipment: If you have to buy any DoorDash hot bags to deliver, you can deduct them at tax time.
- Phone and cell service: Because a phone is required to DoorDash, this is a legitimate deduction. However, because your cell phone is likely for personal use too, you can only deduct a portion of it.
- Insurance: You need car insurance if you’re delivering by car, so a portion is deductible.
- Roadside assistance: Drivers can deduct roadside assistance coverage, like AAA, that’s used for business purposes.
- Inspections: If you must have your vehicle inspected to conduct business, then you can write it off as an expense.
Again, while you may be able to take any of the above deductions, you have to choose actual expenses or the federal mileage deduction on your Doordash taxes.
Should I Keep Gas Receipts for Doordash Taxes?
If you plan on deducting actual expenses, then yes, you should track how much you spend on fuel. However, if you’re going to take the standard mileage deduction, you should track your mileage not fuel.
Is It Better To Write off Gas or Mileage?
It honestly varies from driver to driver. So you can take the biggest write-off, you can track all of your expenses and calculate what you’d be able to write off that way versus the standard mileage method. Then, you can choose which is the best for you.
Can I Write off Car Insurance for Doordash?
Yes, you can write off a portion of your car insurance for DoorDash taxes, only the portion that applies to the time you’ve spent driving for business though. To write off your car insurance, you’d need to take the actual expenses deduction instead of standard mileage.
The Final Word on DoorDash Taxes
The bottom line on DoorDash taxes is that Dashers who make over $600 with DoorDash over the course of the year will receive a 1099-NEC from DoorDash’s payment partner, Stripe. You’ll then use your 1099 to file federal and state taxes. It’s possible to write off deductions when filing, and Dashers will need to choose between the standard mileage deduction or deduct actual expenses.
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FAQs
You will not receive a 1099-NEC form from DoorDash because they aren’t required to report your earnings at that point. You still need to file taxes and report all income you received as an independent contractor though.
Yes, DoorDash reports payments made to independent contractors to the IRS as income, and that’s why you receive a 1099 form. For Dashers who’ve made under $600, DoorDash does not report that as income, but the independent contractor is still responsible for reporting and filing.
Dashers can write off fuel, maintenance, repairs, parking and tolls, insurance, phone and service, roadside assistance, equipment, and inspections. Basically, anything you need to complete deliveries can be written off. And you’ll write them off as actual expenses or take the standard mileage deduction on your DoorDash taxes.
DoorDash drivers who don’t pay their taxes will receive a notice from the state and/or federal government that taxes haven’t been paid. If you ignore the notice and still don’t pay, you may be subject to fines and interest.