How Does DoorDash Tax Work for Drivers?
Simplify DoorDash taxes. Get clear insights on managing your independent contractor earnings, deductions, and payment obligations.
DoorDash drivers operate as independent contractors, not employees, which means they are responsible for their own tax obligations. This distinction carries significant implications for how income is reported, expenses are deducted, and taxes are paid throughout the year. Understanding these responsibilities is essential for managing finances and complying with tax laws.
Understanding Your DoorDash Income
As an independent contractor for DoorDash, your income is reported to you and the Internal Revenue Service (IRS) on Form 1099-NEC, or Nonemployee Compensation. This form is issued if you earn $600 or more through the platform within a calendar year. The 1099-NEC details your gross earnings, encompassing base pay, tips, and any pay boosts or incentives received.
Even if your earnings fall below the $600 threshold and you do not receive a 1099-NEC, you are still obligated to report all income earned from DoorDash. Keep a record of all your earnings for accurate tax preparation. The gross income shown on the 1099-NEC represents the total amount earned before any business expenses are considered.
Identifying Deductible Expenses
Independent contractors can reduce their taxable income by deducting ordinary and necessary business expenses. These are costs directly related to operating your DoorDash business. Accurate record-keeping, including receipts and mileage logs, is important to substantiate these deductions.
Vehicle expenses often constitute a substantial deduction for DoorDash drivers. You can choose between the standard mileage rate or deducting 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 accounts for fuel, maintenance, and depreciation.
Alternatively, the actual expense method allows you to deduct specific costs such as gas, oil, repairs, insurance, and vehicle depreciation. If you use the standard mileage rate, you can still deduct tolls and parking fees separately.
Other common deductible expenses include the business portion of your car insurance premiums and phone expenses. Supplies like hot bags and insulated delivery bags are also deductible. Fees paid to DoorDash, such as commissions or referral fees, are also considered business expenses.
Calculating Self-Employment Taxes
As an independent contractor, you are responsible for self-employment (SE) tax, which covers your contributions to Social Security and Medicare. This is distinct from income tax and applies if your net earnings from self-employment are $400 or more. The self-employment tax rate for 2024 is 15.3%, comprising 12.4% for Social Security and 2.9% for Medicare.
This tax is calculated on 92.35% of your net earnings from self-employment, which is your gross DoorDash income minus your deductible business expenses. For 2024, the Social Security portion of the tax applies only to the first $168,600 of your net earnings, while the Medicare portion applies to all net earnings. One-half of your self-employment tax can be deducted as an adjustment to your income, reducing your overall income tax liability.
Paying Estimated Quarterly Taxes
Since no employer withholds taxes from an independent contractor’s earnings, you are required to pay estimated taxes throughout the year. These payments ensure you meet your tax obligations for income tax and self-employment tax as income is earned. You are required to make estimated payments if you expect to owe at least $1,000 in taxes for the year.
Estimated tax payments are due quarterly. For income earned in 2025, the deadlines are April 15, June 16, September 15, and January 15 of the following year (January 15, 2026, for 2025 income). If a due date falls on a weekend or holiday, the deadline shifts to the next business day. You can make these payments through various methods, including IRS Direct Pay on the IRS website, the Electronic Federal Tax Payment System (EFTPS), or by mail using Form 1040-ES payment vouchers. Underpaying your estimated taxes can result in penalties, so estimate your income and expenses accurately and adjust payments if your income fluctuates.
Annual Tax Filing Requirements
At the end of the tax year, DoorDash drivers must file an annual income tax return using Form 1040, the U.S. Individual Income Tax Return. This form consolidates all your income and deductions. Schedule C, Profit or Loss from Business, is important for self-employed individuals. On Schedule C, you report your gross DoorDash income and list all your deductible business expenses, calculating your net profit or loss from your DoorDash activities.
The net profit from Schedule C is then used to calculate your self-employment tax on Schedule SE, Self-Employment Tax. Schedule SE determines the amount of Social Security and Medicare taxes you owe as a self-employed individual. You may also be eligible for the Qualified Business Income (QBI) deduction, reported on Form 8995, which allows self-employed individuals to deduct up to 20% of their qualified business income. The QBI deduction is applied after determining your net earnings and is subject to income limitations. Using tax software or consulting a tax professional can help ensure accurate form completion and claiming all eligible deductions.