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Everything You Need To Know About Doordash Taxes
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Everything You Need To Know About Doordash Taxes
Working as a delivery driver is a gig that has a lot of perks. You can set your hours and schedule based on when it's convenient for you. But, it also means the IRS considers you a self-employed person, responsible for paying your taxes. So it's up to you to understand everything tax-related.
Doordash driver taxes can be confusing. But rest assured, with the right information about Doordash taxes, you can avoid any tax penalties and save the most possible on your taxes.
Table of contents
How do taxes work with Doordash?...Read more
How much do you make working for Doordash?...Read more
Can you choose when Doordash pays you?...Read more
Does Doordash withhold taxes?...Read more
How much do Doordash drivers pay in taxes?...Read more
Does Doordash report to the IRS?...Read more
Doordash tax forms...Read more
How to get a Form 1099 from Doordash?...Read more
Deductions for delivery drivers...Read more
How do taxes work with Doordash?
Doordash considers delivery drivers to be independent contractors. According to the IRS, independent contractors need to report and file their own taxes. Doordash does not provide drivers with a report of total earnings, tips, raises or bonuses. You’ll be responsible for paying both income taxes and self-employment tax.
How much do you make working for Doordash?
Doordash says delivery drivers typically make $25 per hour, including 100% of customer tips. But the rate depends on the time of day, location and the number of completed deliveries.
Doordash offers a base pay for all deliveries, calculated by the distance, estimated time and demand for the order. You also get to keep 100% of customer tips. Doordash also offers incentives in the form of challenges. PeakPay helps you earn more per delivery during peak hours.
Can you choose when Doordash pays you?
Instead of a typical paycheck, most drivers get paid weekly using direct deposit. But if you need your earnings sooner, you can choose the Fastpay option and get paid once a day for a small fee. You can receive instant deposits with no fee if you have DasherDirect. Plus, for this option you don’t need a bank account.
Does Doordash withhold taxes?
When you’re on an employer’s payroll, your taxes are typically withheld from your paycheck. But Doordash considers its drivers to be independent contractors, so they don't withhold taxes. That means it’s up to you to report and pay your estimated taxes.This goes for any other delivery gig, like Amazon Flex or Postmates.
How much do Doordash drivers pay in taxes?
There are two types of taxes you need to pay to the IRS when filing taxes as an independent contractor.
Income tax
Self-employment taxes
Does Doordash report to the IRS?
Answering the question, Does Doordash report to the IRS? is pretty simple. Doordash does report any income earned by employees or drivers to the IRS. You might receive a Form 1099-NEC from Doordash, which indicates that Doordash reported your income to the IRS.
Doordash tax forms
When it comes to Doordash and taxes, there are some important forms you’ll need for filing your taxes.
Schedule C
Used to figure out how much profit or loss you made as a sole proprietor.You’ll also subtract any deductions from this amount.
Schedule SE
Used to calculate how much self-employment tax you’ll owe.
Form 1040
Used to file a normal tax return. Attach Schedule C and Schedule SE to this form.
1099-NEC
Used by businesses to report $600 or more in nonemployee compensation paid to freelancers, independent contractors and anyone self-employed. It replaces Form 1099-MISC.
How to get a Form 1099 from Doordash?
You have two options for receiving your 1099 from Doordash: electronic copy by email or paper copy by mail.
If you choose the email option, you’ll need to create an account through Doordash’s third-party platform, Stripe. Next, you’ll receive an email from Stripe with the title ‘Confirm your tax information with Doordash’. Once you create an account, you’ll need to give consent to receive an electronic copy of the form.
Although email is the fastest mode of delivery, you can still receive a paper copy of Form 1099-NEC in the mail from Stripe. But, you must choose one delivery option. Opting for an electronic copy means you won’t be receiving a paper copy in the mail.
Deductions for delivery drivers
Whether you work for Uber or Lyft, Postmates, Instacart, Grubhub or Doordash, you can score tax deductions as a delivery driver to help lower your tax bill.
Since you use your car as part of your Doordash business, you can claim the miles as Doordash tax deductions. You might also be able to claim the car depreciation tax for the wear and tear of your car. You have two options when it comes to claiming mileage deductions:
- Standard deduction: Multiply the fixed rate by the total miles driven to arrive at your deduction amount. The Doordash mileage deduction 2022 rate is 62.5 cents per mile starting from July 1. The rate from January 1 to June 30, 2022 is 58.5 cents per mile. With the standard deduction option, you can deduct tolls and parking fees, but you can't deduct any other vehicle-related expenses.
- Actual expenses deduction: Keep track of your mileage and other car-related expenses such as car maintenance, vehicle registration, gas and vehicle depreciation to deduct the actual cost.
Before you start working for Doordash, you might need to buy a certain uniform and get a background check. You can claim the uniform and any background check fees as Doordash tax write-offs on your tax return.
Other Doordash tax deductions include any commission or fees Doordash charges and a cell phone. There’s no question that a Doordash delivery driver needs a cell phone for their job. The good news is that you can claim your cell phone as a tax deduction, including your monthly phone bill, the cost of buying the cell phone and any phone accessories.
But you can only claim the portion of your cell phone that you use for business. For example, if you use your cell phone for Doordash 50% of the time, you can only claim a 50% deduction.
Hot bags, coolers, courier backpacks or any other accessories you need to keep the food hot or cold count as Doordash tax deductions.
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