Do You Pay Taxes for Working for DoorDash?

When working for DoorDash, understanding your tax obligations is important because your classification as an independent contractor changes how you handle your finances with the IRS. Unlike traditional employees, DoorDash does not withhold taxes from your earnings. This means you are directly responsible for calculating and paying your own income and self-employment taxes, which involves specific record-keeping and payment procedures.

Understanding Your Tax Status

As a DoorDash driver, you operate as an independent contractor, also known as a gig worker, rather than an employee. This distinction is important for tax purposes. The IRS generally defines an independent contractor as someone who controls how and when their work is performed, with the payer only controlling the result of the work. For example, DoorDash dictates the outcome (delivery of food) but not the specific route you take or the hours you work. As a self-employed individual, you manage your own tax responsibilities. You will typically receive a Form 1099-NEC (Nonemployee Compensation) from DoorDash if you earn $600 or more in a calendar year, which reports your gross earnings to both you and the IRS.

Types of Taxes You Owe

As a DoorDash driver, you generally owe two main types of federal taxes: self-employment tax and income tax. Self-employment tax covers your contributions to Social Security and Medicare, which are typically split between an employer and employee in a traditional job setting. The self-employment tax rate is 15.3% on your net earnings, consisting of 12.4% for Social Security and 2.9% for Medicare. For 2024, the Social Security portion applies to net earnings up to $168,600, while the Medicare portion has no income limit. You can deduct one-half of your self-employment taxes as an adjustment to income when calculating your taxable income.

Your net earnings from DoorDash are also subject to federal income tax. The amount of income tax you owe depends on your total taxable income, filing status, and applicable deductions or credits. Federal income tax rates are progressive, meaning different portions of your income are taxed at increasing rates, ranging from 10% to 37%. Depending on where you reside, state and local income taxes may also apply to your DoorDash earnings.

Tracking Your Income and Expenses

Meticulous record-keeping is fundamental for DoorDash drivers to accurately determine tax liability and identify potential deductions. DoorDash typically issues Form 1099-NEC to report earnings of $600 or more, but track all income received regardless of whether a form is issued. Maintaining detailed records ensures all earnings are accounted for and can be reconciled. Tracking business expenses is equally important, as these can significantly reduce your taxable income.

Vehicle expenses are often the largest deduction for DoorDash drivers. You can choose to deduct actual vehicle expenses, which include gas, oil, repairs, insurance, and depreciation or lease payments, or use the standard mileage rate. For 2024, the standard mileage rate for business use is 67 cents per mile driven. Regardless of the method chosen, maintaining a precise mileage log is necessary to substantiate your deduction.

Other Deductible Expenses

Other common deductible expenses include:
A portion of your phone bill and internet costs attributable to business use, as your smartphone is essential for accepting and completing orders.
Supplies like insulated bags, blankets, and sanitizers used for deliveries.
Any tolls paid during deliveries and parking fees, provided DoorDash does not reimburse them.
Fees for tax preparation software, expense tracking apps, or even a qualified home office deduction, though the latter has strict IRS requirements.

Paying Estimated Taxes

Independent contractors are typically required to pay estimated taxes throughout the year. This helps ensure you meet your tax obligations as income is earned and avoids potential underpayment penalties. Estimated taxes cover both your income tax and self-employment tax liabilities. The tax year is divided into four payment periods, each with a specific due date.

Generally, these deadlines are April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or holiday, the deadline shifts to the next business day. You calculate your estimated tax payments based on your projected annual net income, considering all anticipated income and deductible expenses. The IRS provides worksheets to assist with this calculation, and it is generally advisable to overpay slightly to avoid penalties.

The IRS offers several convenient methods for making estimated tax payments. You can pay online through IRS Direct Pay or via the Electronic Federal Tax Payment System (EFTPS), which allows you to schedule payments in advance. Payments can also be made by mail using Form 1040-ES payment vouchers.

Filing Your Annual Tax Return

At the end of the tax year, DoorDash drivers must file an annual tax return to report their income and expenses. The primary form for individual income tax returns is Form 1040. When self-employed, you will also need to attach specific schedules to your Form 1040.

Schedule C, Profit or Loss from Business, is the main form used to report your DoorDash income and all eligible business expenses. On this form, you will calculate your net profit or loss from your independent contracting activity. This net figure is then carried over to your Form 1040.

Additionally, you will need to complete Schedule SE, Self-Employment Tax. This form is used to calculate the self-employment tax owed based on your net earnings reported on Schedule C. The self-employment tax is then reported on Schedule 2. Many taxpayers utilize commercial tax software, free file options for eligible individuals, or the services of a qualified tax professional to prepare and submit their annual tax returns. The standard deadline for filing is April 15 of the following year.