Becoming a DoorDash driver has proven to be a smart financial decision for many individuals. If you work as a DoorDash driver, you probably have collected substantial earnings that can supplement or serve as your primary income, which is great.
However, you may now be wondering what the process is for filing DoorDash taxes in 2022, to ensure you cover any tax liability.
Since DoorDash earnings are treated essentially the same way as any other independent contracting work, the good news is that there is a clear process for filing DoorDash taxes and ensuring you are tax compliant. Let’s explore the steps you need to take to file your DoorDash taxes in 2022 accurately and quickly.
Does Doordash Take Out Taxes?
Since DoorDash workers are essentially treated as freelancers or independent contractors, not direct employees of DoorDash, the answer is no. DoorDash does not automatically withhold taxes on earnings. However, the good news for DoorDashers is that this means you can deduct expenses for a number of things related to your work when filing your own taxes.
So how do you know what your tax liability is? DoorDash will issue a tax form 1099-NEC (often referred to as a 1099) that calculates your total income working for the platform. A 1099 form is different from a standard W-2 form, which you’d receive as a direct employee for a company.
You should receive this form just before tax time for every year you work for the DoorDash platform. Companies like DoorDash are only required to issue this form if a contractor earned more than $600 in a given year. However, most companies reliant on non-employee contractors like DoorDash usually issue a 1099 even if delivering food was a side job that did not generate more than a few hundred dollars over a given year.
Filing Doordash Taxes
So what are the different methods you can take to file your DoorDash taxes, once you’ve received your 1099? You have a few options:
Work with a tax preparer
The first option for properly filing your DoorDash taxes in 2022 is to work with a certified professional tax preparer. These individuals can, for a fee, help you navigate the appropriate way to file taxes on 1099 earnings to cover your liability.
More importantly, a certified tax preparer can also help you identify all of the work-related expense deductions you are entitled to write off, which can help you significantly reduce your tax burden by deducting expenses related to your DoorDash work in a variety of ways.
While this option does involve paying a fee, it can often result in the biggest tax savings by ensuring you don’t pay a cent that you could have written off legitimately as a work-related cost.
Use tax software
Many popular tax software programs, such as TurboTax, now have built in automated processes specifically geared toward independent contractors such as DoorDash workers.
Given the rise of popularity in these types of jobs, the major tax software programs have now created workflows specifically meant to make filing your DoorDash taxes easier.
Different tax software programs have different costs (some may be free), so you will want to do your homework on what the software offers for different fees or subscription levels to find the most helpful and affordable option for your needs.
File taxes on your own
If you want to avoid paying any fee to maximize your income, you can also choose to file your DoorDash taxes on your own. There are a variety of self-help resources available to DoorDash workers and other independent contractors that can explain the filing process in detail. However, while you will save any fees you would have given to a tax professional or tax software company, be aware that there is a risk in filing your own taxes.
If you don’t file correctly, you may end up having to pay more taxes later because of an incorrect filing, or potentially miss possible deductions you don’t know about which would have reduced your tax liability. So you will need to calculate whether the benefit of avoiding a servicing fee is worth potential tax headaches down the road.
What Doordash Tax Forms Will You Need to File?
You will simply need your 1099-NEC form, which as stated earlier DoorDash will usually automatically send to you well in advance of tax filing time.
DoorDash currently sends their 1099 forms through Stripe (a payment processing company), so you will want to keep an eye out for an email inviting you to sign up for a Stripe Express account in order to access this form (you should keep an eye out for an email subject line stating “Confirm your tax information with DoorDash”). If you haven’t received this email or your form as tax season approaches, make sure to check your Spam folder to ensure it wasn’t sent there by mistake by your email platform.
It is worth knowing that you might get a 1099-NEC with incorrect information on it, which you will need to correct through Stripe Express. If you log into your account, you can identify any errors and receive a corrected 1099 form within 24 hours. Importantly, the earnings you see on your 1099-NEC may not always reflect your full earnings history visible on your Stripe Express account.
If you use a DasherDirect debit card, Stripe Express won’t display the earnings you receive through direct deposit into that account. However, your 1099 will include your DasherDirect earnings.
What Write-Offs Can You Deduct as a Dasher?
One thing many Dashers may not realize is the variety of expenses related to your job that can be deducted from your tax liability, since they are directly related to the work you performed to earn your income.
The idea behind deductions is that since you were forced to spend your own money on these elements critical to actually doing your DoorDash work, you should be compensated in the form of reduced tax burden for those expenses. These deductible expenses include:
Since you need your car to actually complete deliveries and earn money through DoorDash, car-related expenses are one of the biggest sources of deductions. You should keep records of state licensing fees (such as registration payments), toll fees, parking expenses, and especially mileage driven to receive these deductions during tax time.
That’s why it’s critical for DoorDash employees to track the mileage accumulated on your car (done easily by using a mileage tracker app) for both delivery miles and delivery-related miles (such as needing to go to the store to pick up a new insulated bag). Once you have determined your business mileage for the year, you have to multiply that figure by the Standard Mileage Rate.
For tax year 2022, the Standard Mileage rate is 58.5 cents /mile. So, for example, if you total 5,000 business miles x $0.585 standard rate, you can receive a $2,925 Standard Mileage deduction.
Other write-offs for DoorDash
In addition to car expenses, you can also deduct phone-related expenses (since you will be using your data plan to manage orders on the app and customer inquiries). This can include the business-related parts of your phone plan, cost of a new phone, and related phone accessories such as a car charger or holder.
You can also write off materials like hot bags or courier backpacks used to deliver food successfully, as well as health insurance payments under Schedule C as long as you are not taking part in employer-provided health insurance, and the program is under your name.
How much of your business expenses should you deduct?
There is no downside to deducting all related business expenses. The more qualified and related expenses you deduct, the more you reduce any tax burden on your income down to zero and minimize any payments you may need to make to the IRS.
How do you process your DoorDash write-offs?
When you file taxes, there is a specific part of the form for reporting business-related deductions that can reduce your tax liability. Your tax professional or chosen tax software program will automatically collect this information from you (by collecting receipts and documentation of all related expenses) and calculate your deductions for you.
When Do You Have to File Doordash Taxes?
While the traditional tax deadline is always April 15th, the IRS expects independent contractors to pay estimated taxes quarterly. This is a substitute for the tax withholdings that employers automatically deduct out of their employee paychecks every two weeks, and essentially ensures the IRS receives money throughout a fiscal year, as opposed to waiting for all tax revenue in a single annual period. Here are some important deadlines and filing dates for federal quarterly estimated tax payments:
April 15 is the due date for first-quarter taxes. You need to pay taxes for income earned in January, February, and March by April 15.
Second-quarter taxes are required to be paid by June 17. Your payment should cover income from April and May.
Estimated tax payments covering income from June, July, and August.
Estimated tax payment covering income from September, October, November, and December.
Dashers and IRS Tax Audits
It is important to know that Schedule C filers (self-employed tax filers) are often targeted by the IRS for tax audits, since the IRS is often suspicious of inaccurate reporting in these filings and wants to ensure it receives the appropriate tax revenue.
This means that even if you think the amount of income you are reporting is insignificant when compared to other tax filers, inaccurately reporting your taxes can leave you susceptible to significant penalties if an audit occurs down the line.
While the best way to avoid this is to accurately file your taxes using the steps above, it’s also a good idea to file for TaxShark’s tax audit defense insurance. This can shield you from exorbitant tax penalties down the road, if you do happen to file incorrectly.
Questions about filing Dasher taxes? We have the answers.
Yes, since you received income through the platform you must file taxes to report your income and pay any potential tax liability.
Since you are filing as self-employed, you are liable for a 15.3% rate. This means if you made $5000 during 2021 for DoorDash, your tax burden before deductions would be $765.
The IRS will require a 1099 form to certify your reported income. You should access your Stripe Express account to download or request yours. If you are having issues with this, you should contact DoorDash directly to ensure you receive your form promptly.
Yes, all income is considered taxable by the IRS. The $600 threshold is only for mandating a company send a 1099 form to an individual.
DoorDash drivers can only write off expenses such as gasoline if they take actual expenses as a deduction. The standard mileage reimbursement includes the cost of gas, along with maintenance and other transportation costs. This means an independent contractor can’t deduct mileage and gasoline at the same time.
There is no paystub or employment verification from Doordash, since Dashers are considered independent contractors and not employees.
Yes, cash and non-cash tips are both taxed by the IRS. Federal income taxes always apply to Doordash tips unless their total amounts are below $20.
No, since you are treated as a self-employed contractor using the DoorDash platform and not an employee, no deductions are removed from your earnings by DoorDash.