Working in the gig economy means you’re working for yourself.
That’s one of the things DoorDash 1099 contract drivers love most about the food delivery service, but working for yourself will change how you file your taxes.
Ridester will help untangle any tax-time confusion for DoorDashers and prospective delivery drivers in the gig economy.
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DoorDash 1099 Tax Basics
DoorDash, like other delivery services such as GrubHub, Postmates, and Instacart and ride-share services such as Lyft in the gig economy, employs delivery drivers as independent contractors.
No state or federal taxes are removed from payments from DoorDash to drivers, and, as independent contractors, drivers are responsible for paying these taxes each year.
As independent contractors, DoorDash dashers are treated more like business owners than employees.
As such, they must pay into Social Security and the Federal Insurance Care Act, or FICA.
After paying FICA taxes, also known as self-employment tax, DoorDash drivers pay federal and state income taxes.
The exact percentages vary depending on your income level, tax bracket, and state.
DoorDash dashers will receive form 1099-NEC forms annually that will note their incomes during the previous tax year.
While paying taxes can be painful, there are plenty of deductions that DoorDash delivery drivers can take to make the tax bill easier to bear.
Ways to File Your Taxes
Filing your taxes is a life skill that you’ll need to master to make the most of your finances and your DoorDash food delivery business.
Here are the ways you can file your taxes and how well these methods will work for DoorDash drivers.
This old-school way of filing your taxes is an option, and it is undoubtedly a tried-and-true way of filing taxes each year.
Tax forms such as Schedule C are available at government offices and public spaces such as libraries, or you can get them from the IRS website.
While filing taxes this way will only cost you postage, it is the slowest way to file your taxes and receive any refunds.
Not only that but filing taxes the old-fashioned way feels like more work than it is.
Electronically filing your taxes might cost you more but filing your taxes electronically using a website such as TurboTax is far easier than filing taxes on paper.
Answering a few questions online will have you well on your way toward filing your taxes.
You’ll have to pay extra for filing a Schedule C form for your part-time gig work as a DoorDash driver.
DoorDash’s recommendation – and ours – for the best way to file your taxes as an independent contractor for DoorDash is to go to a certified public accountant.
A CPA can give you tax advice and file your taxes for you.
Having a tax professional file your taxes will ensure you get every deduction you deserve.
If you’re a part-time DoorDash driver and have a full-time job, having a CPA file your taxes would make dealing with a W-2 and a 1099-NEC, plus the deductions from your part-time DoorDash gig, easier.
Another reason to use a CPA if you are a DoorDash driver is that if you do face an audit, your CPA will defend you and may be able to help you avoid audits.
DoorDash Tax Forms
DoorDash dashers will need a few tax forms to complete their taxes.
Here is a roundup of the forms required.
DoorDash dashers who earned more than $600 in the previous calendar year will receive a 1099-NEC form through their partner, Strip.
The IRS required DoorDash to send form 1099-NEC instead of 1099-MISC beginning in the 2020 tax year.
The Federal Tax ID Number or Employer Identification Number (EIN) for DoorDash is 46-2852392.
You will need this for filing your taxes as an independent contractor.
Other Tax Forms You May Receive
Independent contractors will have completed a W-9 form with the IRS upon starting their gig.
Other documents needed may include proof of deductions such as insurance, mileage, phone bills, and more.
DoorDash Tax Deductions
For DoorDash delivery drivers, income taxes come from profits made after expenses are deducted and not their income from DoorDash.
Dashers can ease their tax burden by taking deductions on those business expenses.
Be careful when claiming business expenses as tax deductions, though.
The IRS won’t accept personal expenses as business deductions.
You will have to claim some of these deductions partially if you use them personally instead of only for business.
Here are a few significant deductions for delivery drivers that can lessen a dasher’s tax burden.
DoorDash drivers can deduct their mileage by either claiming the federal reimbursement for mileage (56 cents per mile in 2021) or by claiming actual expenses.
This would include costs of gas and oil, maintenance, repairs, tires, registration, taxes, vehicle loan interest or lease payments and more.
Drivers cannot claim both mileage and actual expenses since the actual costs are already part of the federal mileage reimbursement rate.
Keep in mind that to write off auto lease payments or vehicle loan interest, the car would need to be used solely for business purposes.
If you use a vehicle for personal reasons and business purposes, the deduction would be a portion of the interest or lease payments.
2. Tolls and Parking Fees
A DoorDash driver can deduct driving costs such as tolls and parking expenses as business expenses if they occur while doing business.
3. Gear and Equipment
Those bags that keep DoorDash food deliveries hot are tax-deductible.
Make sure you only use the bags you’re deducting for business.
4. Phone and Service
DoorDash drivers have to use the DoorDash app to accept orders, so a cellphone is a legitimate business expense.
If you also use your cellphone for personal calls, you may only be able to make a partial deduction of your cellphone bill.
Working for Doordash counts as being self-employed, and you can thus qualify for a tax write-off for your health insurance.
You will have to meet a few requirements.
6. Roadside Assistance
The cost of roadside assistance from services such as AAA is tax-deductible for DoorDash drivers, but only the coverage provided during business.
Personal roadside assistance is not tax-deductible.
If a DoorDash driver must pay for vehicle inspections or background checks to do business, those costs can also be tax write-offs.
Importance of Mileage Tracking
Keeping track of your mileage used to mean tediously writing down the miles driven.
You can track mileage a variety of different ways, but we would suggest using the best mileage tracking apps to do so.
This is important since DoorDash does not track your mileage for you.
You’ll need your mileage total for deducting mileage as a business expense and for keeping track of actual driving expenses.
Some mileage trackers are free, while others have a price tag.
Make sure to include the cost of mileage tracking, if any, as a tax-deductible business expense.
Frequently Asked Questions
Those new to DoorDash may have some questions about the best ways to file their taxes as an independent contractor for the popular food delivery service.
Here are a few of the most frequently asked questions.
What If I Didn’t Receive a 1099 from DoorDash?
If you didn’t earn $600 during a tax year by driving for DoorDash, you would not receive a 1099-NEC form.
That doesn’t mean you don’t have to pay your taxes, though.
The DoorDash app has an Earnings tab where you can find your income earned.
Remember that you’ll be taxed not on the earnings figure but on profit once business expenses have been deducted.
Can You Write Off Gas for DoorDash?
DoorDash drivers can write off expenses such as gasoline only if they take actual expenses as a deduction.
Federal mileage reimbursement of 56 cents per mile includes the cost of gas as well as maintenance and other transportation costs.
An independent contractor can’t deduct mileage and gasoline at the same time.
Do I Need to Tell My Insurance If I Drive for DoorDash?
DoorDash drivers should check with their insurance carriers to see if they are insured while dashing, though, according to the New Jersey news website NJ.com.
Some companies will not cover accidents or damage that happens when dashing.
DoorDash offers commercial insurance coverage of up to $1 million for its drivers.
Still, it pays only after a DoorDash driver’s personal auto insurance has been exhausted after an accident in which the driver was at fault, Forbes reports.
It only covers the damage caused by the DoorDash driver and not damage to the driver’s car, making a personal car insurance policy a must.
Can I Report Income without a 1099?
DoorDash drivers can and should report their income even if they do not have a 1099 form from DoorDash.
They can do this by checking the Earnings tab on the DoorDash app.
Does DoorDash Report to the IRS?
Yes, DoorDash does report its dashers’ earnings to the IRS since it provides its drivers with 1099-NEC forms.
Since dashers are treated as business owners and employees, they have taxes payable whether they are full-time dashers or drive for DoorDash on the side.
Whether you are a DoorDash driver for a few hours on the weekends or work as a dasher full-time, filing your taxes correctly is essential.
While DoorDash doesn’t send its drivers W-2 tax forms, it does send them 1099-NEC forms and reports drivers’ income to the IRS.
Because drivers will owe taxes from their profits from dashing, a smart move would be to set aside about 30 percent of earnings in a bank account to prepare for paying taxes.