Do I Have to Put DoorDash on My Taxes?

Earning income through DoorDash means navigating tax obligations as an independent contractor. Unlike traditional employees who have taxes withheld from their paychecks, DoorDash drivers are considered self-employed. This places responsibility for managing income and self-employment taxes directly on the individual, requiring careful attention to reporting earnings and claiming deductions. Understanding these requirements helps ensure compliance and optimize a driver’s financial outcome.

Taxable Nature of DoorDash Earnings

Income from DoorDash is taxable by the Internal Revenue Service (IRS) because drivers operate as independent contractors, not employees. All earnings, including delivery fees and tips, are subject to taxation.

Unlike traditional employment, DoorDash does not withhold income taxes, Social Security, or Medicare taxes from earnings. This includes self-employment tax, which covers Social Security and Medicare contributions for self-employed individuals. The self-employment tax rate is generally 15.3% on net earnings, comprising a 12.4% Social Security tax and a 2.9% Medicare tax. This tax obligation arises once net earnings from self-employment reach $400 or more.

Identifying and Documenting Your Income

To accurately report earnings, DoorDash drivers primarily rely on Form 1099-NEC, or Nonemployee Compensation. DoorDash issues this form to drivers who receive $600 or more in non-employee compensation during the calendar year. It is typically sent out by January 31st of the following year.

It is crucial to understand that even if a driver earns less than $600 and does not receive a Form 1099-NEC, all income earned must still be reported to the IRS. Drivers can access detailed earnings summaries directly from the DoorDash platform, which provides a comprehensive record of income throughout the year. These summaries are essential for reconciling reported amounts and ensuring all taxable income is accounted for, even if a formal tax form is not issued.

Allowable Business Deductions

Independent contractors can reduce their taxable income by claiming business deductions. The IRS permits deductions for “ordinary and necessary” expenses, which are common and helpful for the business activity. These deductions reduce the net earnings, thereby lowering both income tax and self-employment tax liabilities.

Vehicle expenses typically represent the largest deduction for DoorDash drivers. There are two primary methods for calculating this: the standard mileage rate or actual expenses. For 2024, the standard mileage rate for business use is 67 cents per mile, increasing to 70 cents per mile for 2025. This rate covers gas, oil, maintenance, repairs, and depreciation.

Alternatively, drivers can deduct actual expenses, which involves tracking all costs like gas, oil changes, tires, insurance premiums, vehicle registration fees, and a portion of the vehicle’s depreciation or lease payments. When using the actual expense method, it is essential to prorate expenses based on the percentage of mileage driven for business versus personal use.

Cell phone expenses are also deductible, as a mobile phone is indispensable for DoorDash operations. Drivers can deduct the portion of their monthly phone bill and a percentage of the phone’s cost that is attributable to business use.

The cost of insulated bags, blankets, and other supplies purchased specifically for DoorDash deliveries qualifies as a deductible business expense. Any tolls incurred while on an active delivery or parking fees paid during business operations are also deductible. Furthermore, independent contractors can deduct one-half of their self-employment tax from their gross income, which helps to equalize the tax burden between self-employed individuals and traditional employees.

Calculating and Paying Your Taxes

Self-employed individuals, including DoorDash drivers, report their business income and expenses on Schedule C, Profit or Loss from Business (Sole Proprietorship), which is filed with their Form 1040. On this form, gross income from DoorDash activities is reported, and all allowable business deductions are subtracted to arrive at the net profit or loss from the business. This net profit figure then flows to the individual’s personal tax return, Form 1040.

In addition to income tax, self-employed individuals must pay self-employment tax, which funds Social Security and Medicare. This tax is calculated on net earnings from self-employment, typically 92.35% of the net profit reported on Schedule C. The combined Social Security and Medicare tax rate is 15.3%, consisting of 12.4% for Social Security up to an annual earnings limit ($168,600 for 2024, $176,100 for 2025) and 2.9% for Medicare on all net earnings. This calculation is done on Schedule SE, Self-Employment Tax.

Because taxes are not withheld from DoorDash earnings, self-employed individuals are generally required to pay estimated taxes quarterly if they expect to owe at least $1,000 in tax for the year. These payments help ensure that tax obligations are met throughout the year, rather than as a single lump sum at tax filing time. The general due dates for estimated tax payments are April 15, June 15, September 15, and January 15 of the following year, with adjustments for weekends or holidays. Payments can be made electronically through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or via mail with Form 1040-ES.

Maintaining Accurate Records

Thorough record-keeping is crucial for DoorDash drivers to manage tax obligations. Maintaining detailed records for both income and expenses is essential for preparing accurate tax returns and for substantiating deductions in the event of an IRS inquiry or audit. Without proper documentation, claimed deductions may be disallowed, leading to additional tax, penalties, and interest.

Key records to retain include mileage logs, which should document business miles driven, dates, destinations, and the purpose of each trip. Receipts for all business expenses, such as gas, vehicle maintenance, cell phone bills, and insulated bags, are also crucial. Digital copies or physical receipts should be kept in an organized manner. Additionally, DoorDash earnings summaries and bank statements should be retained to verify income.

It is advisable to keep tax records for a minimum of three years from the date the tax return was filed, though some records, particularly those related to assets or significant underreported income, may need to be kept longer. Consistent record maintenance throughout the year simplifies the tax preparation process and provides a clear financial picture of business operations.