How Much Are DoorDash Taxes & How to Calculate Them

Working as a DoorDash driver offers flexibility and the opportunity to earn income on your own schedule. Unlike traditional employment where taxes are automatically withheld, earning income through DoorDash comes with distinct tax responsibilities. Understanding these obligations is crucial for managing your finances and ensuring tax compliance. This article covers the tax aspects of being a DoorDash driver, from classification to calculating and paying obligations.

Your Tax Classification as a DoorDash Driver

As a DoorDash driver, you are classified as an independent contractor, not an employee. DoorDash does not withhold income taxes, Social Security, or Medicare taxes from your earnings. You are responsible for calculating and paying these taxes yourself.

This independent contractor status affects how you report income. If your earnings reach $600 or more in a calendar year, DoorDash will issue Form 1099-NEC (Nonemployee Compensation).

Even if your DoorDash earnings are less than the $600 threshold and you do not receive a 1099-NEC, you must still report all income earned from your delivery activities. The IRS considers all income taxable, regardless of the amount or whether a reporting form is issued. This classification also means you are subject to self-employment taxes, which cover your contributions to Social Security and Medicare.

Types of Taxes Applicable to DoorDash Earnings

As an independent contractor, your DoorDash earnings are subject to several types of taxes. The primary tax you will encounter is self-employment tax, which funds Social Security and Medicare. This tax is equivalent to the combined employer and employee portions of these payroll taxes.

For the 2024 tax year, the self-employment tax rate is 15.3%. This rate comprises 12.4% for Social Security and 2.9% for Medicare. The Social Security portion applies to net earnings up to $168,600 for 2024, while the Medicare portion applies to all net earnings with no income limit.

Beyond self-employment tax, your DoorDash earnings are also subject to federal income tax. The amount of federal income tax you owe depends on your total income from all sources, your filing status, and any deductions or credits you are eligible to claim. These earnings are simply added to your other taxable income when determining your overall tax liability.

In addition to federal taxes, you may also be subject to state and possibly local income taxes. Tax laws vary significantly by location, so it is important to understand the specific requirements in your state and any local jurisdictions where you operate. Checking with your state’s revenue department or a local tax professional can provide clarity on these additional tax obligations.

Identifying Allowable Business Deductions

Understanding and claiming allowable business deductions reduces your taxable income, thereby lowering your overall tax obligation. Deductions are expenses directly related to your DoorDash business that you can subtract from your gross earnings. Maintaining meticulous records, such as receipts and mileage logs, is important to substantiate these deductions.

Vehicle expenses represent the largest deduction for DoorDash drivers. You have two methods for calculating this: the standard mileage rate or the actual expense method. For the 2024 tax year, the standard mileage rate is 67 cents per business mile driven. This rate covers the costs of gas, oil, maintenance, repairs, and depreciation, making it a simpler option for many drivers. If you choose the actual expense method, you would need to track all specific costs like gas, oil changes, tires, insurance, and vehicle depreciation.

Other common deductions include a portion of your cell phone and data plan expenses, provided you use your phone for business-related activities like accepting orders and navigating deliveries. Only the percentage of use directly attributable to DoorDash activities can be deducted. Supplies, such as insulated hot bags, phone mounts, and car chargers, are also deductible business expenses.

Fees paid to DoorDash, including commissions or service fees, are deductible business expenses. Any tolls or parking fees incurred while actively making deliveries are also deductible. If you use a dedicated home space exclusively for administrative tasks related to your DoorDash business, you might qualify for the home office deduction, often calculated using a simplified method. Fees paid for tax preparation services specifically related to your DoorDash income are also deductible.

Calculating Your Tax Obligation

Determining your tax obligation involves a series of calculations that start with your gross earnings and account for your business expenses. The initial step is to identify your total gross income from DoorDash, which is the sum of all payments received before any deductions. This amount is reported on Form 1099-NEC if your earnings meet the annual threshold, or you can track it through your DoorDash earnings statements.

You then subtract all allowable business deductions from your gross income. This yields your “net earnings from self-employment,” which is the taxable income from your DoorDash activities. For example, if you earned $10,000 and had $3,000 in qualified deductions, your net earnings would be $7,000. This net figure is the basis for calculating your self-employment tax.

To compute your self-employment tax, you first multiply your net earnings from self-employment by 92.35%. This adjusted amount is then subject to the 15.3% self-employment tax rate. For instance, $7,000 multiplied by 0.9235 equals $6,464.50, and 15.3% of that is approximately $989.95 in self-employment tax. You can also deduct one-half of your self-employment tax when calculating your adjusted gross income (AGI) for federal income tax purposes.

After accounting for the self-employment tax deduction, your net earnings from self-employment are added to any other income to determine your total AGI. Your federal income tax is then calculated based on your AGI, filing status, applicable tax brackets, and any standard or itemized deductions and tax credits. You would then apply any relevant state and local income tax rates to your net earnings from DoorDash, as these taxes are calculated separately based on your location’s specific rules.

Meeting Your Tax Payment Responsibilities

As an independent contractor, you are required to pay estimated taxes throughout the year to cover your income and self-employment tax obligations. The U.S. tax system operates on a pay-as-you-go basis, and since DoorDash does not withhold taxes, you must make these payments yourself to avoid potential penalties for underpayment. These estimated tax payments are due quarterly.

The four estimated tax payment due dates for a given tax year are April 15, June 15, September 15, and January 15 of the following year. If any of these dates fall on a weekend or a 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 mailing a check with Form 1040-ES payment vouchers.

Even if you make estimated tax payments throughout the year, you are still required to file an annual tax return. This involves filing Form 1040, U.S. Individual Income Tax Return, by April 15 of the following year. As a self-employed individual, you will also need to attach Schedule C, Profit or Loss from Business, to report your DoorDash income and expenses, and Schedule SE, Self-Employment Tax, to calculate your self-employment tax.

Accurate and organized record-keeping is important for meeting your tax responsibilities. Maintaining detailed records of all your DoorDash income, business expenses, and mileage throughout the year will simplify the process of calculating your quarterly estimated taxes and preparing your annual tax return. These records serve as documentation if your tax return is ever reviewed.