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A Complete Guide to Doordash Driver Taxes: Forms and Write-offs

A Complete Guide to Doordash Driver Taxes: Forms and Write-offs
Ines Zemelman, EA
04 January 2022

Taxes are a hassle no matter how much effort you put in. Adding more to trouble is the abundance of incorrect advice doling out on the Internet. The information often becomes either difficult to digest or may not suit your case. 

There is a plethora of information when it comes to the question“How do taxes work with Doordash?” on the Internet that might seem an unsolved mystery. However, Doordash taxes are not unsolved mysteries. The fundamentals are easier to grasp than you might expect.

It is critical to get the fundamentals right from the get-go when it comes to Doordash driver taxes. The details are hard to come by until you have figured out the basics of it all. That’s where TFX would like to add a bit of extra value. The specifics are not as intimidating if you know how everything works. As a result, we would like to provide you with additional information.

Doordash Driver: Employee or Independent Contractor?

A Dasher is an independent contractor because it is part-time work or a side business. Doordash does not take taxes from your salary. As a result, you’ll need to be aware of the amount of money you have earned from your Doordash business and how to file Doordash taxes.

The most significant advantage of working as a Dasher is to deduct a large number of business expenses (such as mileage, hot bags, and other similar charges) that you incur as a way of accomplishing your task. The greater the number of tax deductions you claim, the lesser the money you will owe in taxes. You might wonder, “How do taxes work with Doordash?”. Here is where we begin. 

1099 NEC: Here Is What You Need to Know

Every year, the start of tax season is marked by the arrival of tax forms, including all of the relevant data from the previous year. A 1099 NEC would be issued to you if you earned $600 or more from dashing during the last year. Form 1099-NEC is actually a money report of the money earned straight from Doordash.

If you were working for Doordash and received the form1099-NEC, that’s how the company will let you know how much money you made. You should expect to receive your 1099 tax form by the end of January 2022, at the latest.  Box 7 is worth paying attention to. It appears below the “Nonemployee Compensation”. This summarizes your last year’s DoorDash earnings.

How and When Will You Receive Your 1099?

Doordash driver taxes have become easy because DoorDash will send you an email inviting you to sign up for a Stripe Express account with the subject line "Confirm your tax details with DoorDash." Please contact customer service if you've made more than $600 and have not received an email invitation.

To receive your 1099 form, you must join up for Stripe Express as a Dasher. This can be done via the app or website. There, you will be able to choose how you want your 1099 forms to be sent to you. There are two options, you can either select e-delivery or opt for paper mail.

If you are wondering as to how to file Doordash taxes in case you have not received Form 1099 NEC, the answer is simple. If you have not received Form 1099 NEC, you need to remember that Doordash will send the form only to those who have made either $600 or more.

Tax Deductions

As a delivery driver for a company, you may pay for all of your own business expenses. When you file your taxes at the end of the year, you may be able to write off some of these expenses because they impact your income.

In general, independent contractors are small business owners and report their profits and losses on Schedule C.

As of 2021, if you make $400 or more as an independent contractor after expenses, you will likely have to pay a self-employment tax. This includes Social Security and Medicare taxes, which are usually taken out of the paychecks of people who are not self-employed by their employers. This is not the case for independent contractors, who have to figure out and pay these taxes on their own.

Special tax deductions are available for self-employed contractors. When it comes to Doordash driver taxes, there are two methods to claim deductions, provided you use your own vehicle for driving.  

  • Standard Mileage Rate Method
  • Actual Expense Method

Standard Mileage Rate Method

As an alternative to calculating actual expenses, you can subtract the fixed sum of ($0.575) for every mile driven.  In most cases, the conventional mileage approach still allows removing parking fees and other parking charges, interest on your motor credit, and property taxes. If you neither own nor lease the car, you must report vehicle expenses using the actual expense approach.

Actual Expense Method

You can deduct the actual costs of driving the car using this method. These expenses include:

  • Registration Fee
  • Lease Payment
  • Depreciation
  • Insurance Costs
  • Fuel
  • Garage Rent
  • Tires
  • Parking Fees and Tolls

You need to keep track of mileage driven for each purpose if your car is used for both work and personal reasons.

Mileage

Tax deductions may be available if you are using your vehicle to deliver goods. When filing Doordash driver taxes, both the mileage method and the actual expenses technique can be used to deduct automobile costs. You need to keep track of both your personal and business mileage.

Here’s What Happens If You Go by Mileage Method:

  • In 2021, the IRS mileage rate is 56 cents per mile, so you can deduct the number of business miles you drive multiplied by that rate.
  • For the mileage method to work, you'll need to have used it for the first year you had your car in service.
  • You are free to switch between mileage and actual expenses after the first year if you so desire.
  • If you didn't use the mileage method the first year, you'd be limited to using the actual expenses method in subsequent years.

If you choose the actual expenses method, you'll need to keep track of both your mileage and the actual cost of driving your car. These costs could include:

  • Gas
  • Insurance
  • Maintenance costs
  • Interest paid on a car loan
  • Registration fees
  • Depreciation

After you've totaled up all of your car-related expenses for the year, you'll want to multiply the total by the percentage of your vehicle's business use for the year, which is the number of business miles driven divided by the total number of miles driven.

Important Questions Concerning Doordash Dasher Taxes:

Do Dashers Get W2?

No, Dashers are basically independent contractors and do not get a W2. Even though you will not be getting a W2, your income tax filing process will be similar to those working in a traditional job. Doordash will provide you with a 1099 NEC, which lists the total amount of money you earned from doing deliveries.

An important thing to note is that every source of income you receive must be reported to the IRS and taxed accordingly.  If you earned less than $600, Doordash would not be issuing you a 1099 form.

Does Doordash Report to the IRS?

DoorDash does not automatically withhold federal or state income taxes from people who work for them. If you owe money to the IRS, you will figure out how much you owe and pay the money yourself.

Conclusion

Filing taxes is troublesome and the plethora of information on the internet as to how to do it further complicates it. However,  filing Doordash taxes is not that scary once you know the process. Once you grasp the fundamentals and become familiar with the process, taxes prove no longer to be a hassle. When it comes to Doordash driver taxes to help dashers with Doordash tax-paying procedures, it is vital to establish sound fundamentals early on. The details are few until you have mastered the fundamentals.

Ines Zemelman, EA
Founder of TFX