If you are reading this guide you have probably already signed up for DoorDash and you started your new side hustle. As a delivery driver it is really important to understand how to make extra money on each delivery and how taxes work. Indeed you are considered self employed, which means you are a small business owner.
You have to pay self-employed taxes that are in addition to your regular income taxes. However, one of the benefits of being an independent contractor and delivering with online food delivery apps is that you can take advantage of tax deduction and write off many business expenses. The amount of your income that’s actually taxable can be reduced by claiming tax deductions.
Whether you are a Dasher, a Postmate, an Instacart Shopper , a GrubHub driver or a delivery driver for Uber Eats , reading this complete guide to Doordash driver taxes will help you avoid tax-time nightmares and save money in your next tax payment.
While driving and delivering with DoorDash you can choose to work part time or full time, you set your own work hours and work when is more convenient to you. However, in all the cases, you will use your own vehicle and spend money for gas, maintenance… In addition you will use your phone for the Dasher app and other resources necessary to do your job.
Whether you are in the US or in Canada , these expenses in the portion related to your business can be deducted. You can reduce your tax liability by chasing deductions and tweaking your filing strategy. The question is what expenses can I deduct as a 1099 contractor and in particular as a DoorDash driver?
Keep in mind that whether you work as a Doordash or as an employee, if you want to write off your car expenses, such as amounts you paid for tolls, you must keep a written record of those expenses. To make sure that you’re claiming all the deductions you’re eligible to claim, we made a review of the most common self-employed taxes and especially Doordash tax deductions.
Working for Doordash is more about driving, so one of the biggest deductions is the mileage. It is very important to keep a mileage log in which you can record the business purpose of each delivery. When you will file the taxes for Doordash, the IRS will require you a mileage log. There are tons of tracking mileage apps. Some of them require you a subscription that you can deduct from the taxes. At Bestreferraldriver we like to share our experience and help you save money.
If you work for more than a delivery app, you can track your miles in a paper or you can use a mileage tracker app that will allow you to keep a record of your business related miles for free. Your mileage log should include:
Keep in mind that Doordash provides now an estimated mileage based on the past dashes. To have access to this estimated follow this easy steps:
There are some rules that state what you can deduct. The miles that qualify for write-offs are:
There are two ways to claim the doordash mileage for taxes deduction:
Each method has its advantages and disadvantages, however, we suggest you to use the first method because actual car expenses are difficult to track if you do not have professional tax help.
The standard mileage method does not require you to track individual purchases and save receipts. Instead, you simply keep track of your mileage for the tax year.
Once you have determined your business mileage for the year, you have to multiply that figure by the Standard Mileage Rate .
For tax year 2020, the Standard Mileage rate is 57.5 cents /mile. For example: 5,000 business miles x $0.575 standard rate = $2,875 Standard Mileage deduction.
The Doordash independent contractor agreement is pretty clear. Finding parking especially in downtown areas, can be a challenge. However, Doordash will not reimburse any toll. As a food delivery driver, you can typically write off any toll fees that you pay while working.
Sometimes you have to pay for parking in the city while working. The parking costs are fully deductible.
It is one of the requirements to become a Doordash driver. You need a smartphone with a data plan and other accessories like a phone mount that are “ordinary and necessary” for your delivery job .
You can legitimately deduct your phone bill and the portion of these expenses that is attributable to work!
Here is a list of deductible operating expenses phone related:
Whether you use your car for the deliveries or you are a Doordash biker, Doordash requires you to use an insulated bag to keep the customer’s food nice, neat and fresh.
Remember that Doordash customers can rate your performance. Do not take the risk to make your customer angry by delivering a cold pizza.
The insulated bag is “ordinary and necessary” for your job and qualifies as a tax-deductible expense. Take a look at our guide to Doordash gear.
If you are a full-time independent contractor working for delivery and rideshare companies, you can deduct health insurance policy on Schedule C if it meets the following IRS requirements:
Food delivery companies do not require vehicle inspections . However if you are an Uber and Lyft driver you have to schedule it every year. The inspection is not free. Uber for example charges the drivers for the cost of the inspections even if you go to a Greenlight hub.
Doordash does not apply commission & fees to Dashers. However, if you work for a delivery app service that charges commission, write it off.
The independent contractor agreement outlines the relationship between Dashers and Doordash. Nothing in this agreement says that you are required to wear the shirt while working for the food delivery app. Consequently, you cannot deduct from your taxes any kind of uniform or merchandise
Finally, as a Dasher you are not eligible for the home office deduction that allows some self-employed to deduct the cost of any workspace that they use regularly and exclusively for your business.
So, how to pay Doordash taxes? Whether you get help from a tax professional or prepare your taxes on your own,use the tax checklist below to find the documents and forms you'll need to file your taxes.
Once your federal return has been accepted, you'll be able to start tracking your refund at the IRS Where's My Refund? site.
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When you're a driver for Doordash, the most important thing to understand is that delivery drivers are independent contractors, not employees. Doordash doesn't withhold taxes from your earnings. That's also why you'll file taxes as an independent business owner when tax season rolls around.
This is an important point to understand because you need to set aside money to pay your taxes 1099 throughout the year. Unfortunately you cannot find a Doordash tax calculator in the Dasher app. Basically the taxable income is the amount of money you earned minus any deductions and varies depending on your tax rate and filing status (single, married filing jointly, married filing separately, head of household, and qualifying widower with dependent child(s)). The general rule is that the total amount you should set aside to cover both federal and state taxes should be 30-40% of what you earn.
You need to pay your estimated tax payments four times per year and if you forget one of your quarterly payments you’re risking consequences. Here are some important deadlines and filing dates for federal quarterly estimated tax payments:
In the United States, all Dashers that earn $600 or more within a calendar year will receive a 1099-MISC doordash tax form that reports to the IRS exactly how much a Doordash has paid you in the last tax year as a non-employee. You will receive the 1099 income before January 31 Doordash. You can access your tax documents through the Payable portal. The 1009 form will be delivered to you by the method of your choice. You can choose between:
Dashers in Canada will not receive a form to file their taxes. For more information on how to complete your required tax form, visit the CRA website.
You can change the delivery preference any time up to one week before the due-date by using the payable app or from any browser. Follow our step by step tutorial:
If you do not find what are you looking for in your Payable account feel free to contact DoorDash for questions: by sending an email at [email protected]
Yes, you would enter the bike as an asset and either depreciate or expense it depending on the cost.
If you will use the actual expenses method, additional auto-related expenses are deductible, such as,
Yes, you are supposed to report your tips and pay taxes (Social security and medicare tax) on tips income. So, Keep track of cash tips.
Now you know everything you need to know about Doordash and taxes and how to keep track of all the deductions to save money from your tax year payment and grow your profits. However nor Doordash, neither Bestreferraldriver.com provide tax advice. If you need help for your tax preparation, you have a tax law question or you want to get the maximum tax refund you should take a look at some dedicated software like Turbotax.
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