Guide to 1099 tax forms for DoorDash Dashers and Merchants : Stripe: Help & Support

Non-refundable credits can only be applied to your income tax bill, not your self-employment tax bill. You cannot get a refund if non-refundable tax credits exceed your income tax bill. All those additional miles create wear and tear, greater maintenance and repair costs, and lower vehicle value (depreciation). Sometimes you have to pay for parking in the city while working. Every on-demand worker needs a great phone, accessories, and data to get through the day.

• When you work as an independent contractor, freelancer, or gig worker, the money you earn is considered self-employment income.
• Self-employed people are sole proprietors by default, including DoorDash drivers.
• Failing to pay quarterly taxes can result in penalties and interest charges from the IRS.
• Phone accessories like a car holder, car charger, and any others that are “ordinary and necessary” for your delivery job are also deductible.
• A Dasher’s income tax brackets (or percentages) vary widely based on several factors.

To avoid getting hit with a penalty, make sure you’re well-prepared to make your quarterly tax payments. Use your quarterly tax payment calculator to estimate how much you’re on the hook for every quarter. Now that you have everything you need to know about your 1099 tax deductions, you may be wondering when your taxes are due. You’re only allowed to deduct only the portion of these expenses you use for your job as a delivery driver. For one thing, you probably use some of the same purchases for both business and personal purposes, like your car or your phone.

The IRS requires a business to issue a 1099-NEC if they paid you $600 or more in a calendar year for services—not goods. You’ll automatically get paid every week with a direct deposit to your bank account. At Giggle Finance, you can apply for fast and flexible funding with no credit requirement, no paperwork, and no waiting around.

Once you have determined your business mileage for the year, you have to multiply that figure by the Standard Mileage Rate. DoorDash drivers who don’t pay their taxes will receive a notice from the state and/or federal government that taxes haven’t been paid. If you ignore the notice and still don’t pay, you may be subject to fines and interest. So you can take the biggest write-off, you can track all of your expenses and calculate what you’d be able to write off that way versus the standard mileage method. That is a standard deduction meant to cover any of the expenses you’d take as a DoorDash driver, which is why you can’t take it and deduct actual expenses. Before we go any further, if you’re a DoorDash driver who has never worked as an independent contractor, let’s make sure you understand what 1099-NEC forms are.

Report All Your Income (Even the Small Stuff)

Select the “Get Started” option in the Stripe invite email you receive and set up your Stripe account. If your earnings hit the eligibility mark, look out for an email inviting you to create a Stripe Express account starting around mid-January 2024. To determine whether DoorDash is still worth pursuing, you need to figure out if you could make more money after taxes through other (potentially more tax-efficient) avenues.

DoorDash payment policy

The answer is no — Doordash does not withhold taxes from when they pay you. As an independent contractor, you are responsible for your taxes. This means you have to set aside money for both federal and state income taxes, as well as self-employment taxes, which include Social Security and Medicare contributions. Learn about Doordash tax percentage, estimated tax payments and more in this guide. The key benefit of being an independent contractor is that you’re allowed to deduct lots of business expenses (like mileage, hot bags, etc.).

But the key is knowing what counts and keeping good records all year long. Doordash is considered self-employment, which means you’ll pay taxes using 1099 forms. It also means you’re able to write off business expenses that could help you save on your tax bill. If you earn $600 or more as a DoorDash driver in a given year, you’re responsible for filing and paying DoorDash taxes. This easy guide will explain everything delivery drivers need to know about taxes, including your DoorDash 1099, how much to save, what kinds of expenses you can write off, and more.

Once you’ve completed your tax return, you must file it by April 15 to avoid penalties. If you file an extension, your due date to file becomes October 15, but you still have to pay all the taxes you owe by April 15. However, because you probably don’t use your vehicle exclusively for business, you probably can’t deduct the entire amounts. Only the business-related portion of your vehicle costs are tax-deductible. A “tax deduction,” also referred to as a “write-off” or “business expense,” is a cost you incur in the normal course of business.

Each week, I deduct the standard mileage rate from my earnings. Hurdlr has a tax calculator function that considers your filing status and other income. They look at your income, business expenses, and miles and use that to estimate what you should set aside. The government sees tax credits as a payment against your tax bill. That’s very different from tax deductions in that deductions only reduce your taxable income.

What If You Owe Back Taxes from Previous DoorDash Earnings?

All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free. The exact percentages vary depending on your income level, state, and tax bracket.

• Recipients should expect to receive their 1099 forms by January 31st to ensure they have enough time to prepare their tax return.
• If you’re eligible and haven’t received the email by the designated time, contact DoorDash support.
• A common mistake is to think you can’t claim expenses unless you itemize your personal deductions.

Step 5: File Online or Mail Your Forms

Keeping accurate records of your income and expenses is crucial for filing your returns correctly. If you earn over $600 with Doordash in a year, you will receive a 1099-NEC form from Doordash, which you can also access through your Stripe Express account. Here’s everything you need to save on taxes and avoid penalties. When it comes to figuring out income tax, you add your profits to other income, including W2 wages, interest, investment, retirement, and other income. Then you throw in all sorts of other factors such as tax credits, itemized or standard deductions, filing status, dependents, and many others. As a business owner, you subtract the cost of doing business from your gross income to get your profit.

By early February, drivers should have their 1099-NEC form in hand to begin tax preparation. Before the January deadline, DoorDash compiles and verifies earnings data, including delivery fees, tips, and bonuses, to ensure accuracy. Drivers should review their earnings statements during this time to identify and resolve any discrepancies. For employees, the above figures apply because employers cover half of the estimated tax payments for their W-2 employees (amounting to 7.65%). But as an independent contractor, you’re responsible for covering the entire tax bill.

Self-employed people are sole proprietors by default, including DoorDash drivers. That’s probably what you’ll file your taxes as since you must pay hundreds of dollars and do a lot of paperwork to become something else. ❌ IRS penalties and interest charges.❌ Potential tax audits if your income is underreported.❌ Loss of deductions that could lower your tax bill. If you expect to owe at least $1,000 in self-employment taxes, you’ll have to pay estimated quarterly taxes. Now that you know how to get your 1099, you’re one step closer to being able to file. Now, let’s talk about how you can get your lowest possible tax bill by writing off business expenses.

As a Doordash driver, it’s important to understand how taxes work, as you’re considered an independent contractor rather than an employee. As a result, Doordash doesn’t automatically withhold taxes from your earnings, and you’re responsible for reporting your income and paying your taxes to the IRS. The standard mileage deduction (67 cents per mile in 2024) is calculated by the IRS to include the average costs of gas, car payments, maintenance, car insurance, and depreciation.

Phone and Service

Think of it like a bulk deduction for all of the costs you incur from using your car. When you file taxes, there is a specific part of the form for reporting business-related deductions that can reduce your tax liability. 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.

DoorDash Tax Deductibles and Write-Offs to Take Advantage Of

The important thing here is that you can claim Doordash business expenses regardless of which personal tax deduction method you choose. However, take note of how much of this expense is being used for work. You could use your business mileage does doordash send you a 1099 log to figure the business/non-business mileage ratio for your car and apply that ratio to find the deductible portion of your AAA membership. In cases where neither a physical nor digital form is obtainable, drivers can estimate their income using available records, such as bank deposits or weekly earnings summaries. Form 4852, a substitute for Form 1099, can be used in this scenario. However, this should only be a last resort, as it may increase the chance of an IRS audit.