How Much Are DoorDash Taxes?

DoorDash drivers, classified as independent contractors, are responsible for their taxes. Understanding how much you owe in taxes can help you plan your finances efficiently and avoid surprises during tax season. 

Understanding DoorDash Taxes

As an independent contractor, DoorDash does not withhold taxes from your earnings. This means you are responsible for paying federal and state income taxes, as well as self-employment taxes.

Self-employment taxes cover Social Security and Medicare, which are typically withheld from a W-2 employee’s paycheck. For 2023, the self-employment tax rate is 15.3%, covering both the employer and employee portions of these contributions.

DoorDash earnings also contribute to your total taxable income, which may affect eligibility for certain credits and deductions. Keeping detailed financial records can help you optimize your tax return.

Federal and State Income Taxes

Federal income tax is calculated based on your total taxable income, including earnings from DoorDash and other sources. The rate varies depending on your tax bracket, ranging from 10% to 37%.

State income tax varies depending on where you live. Some states have no income tax, while others have rates that range from 1% to over 10%. You should check your state’s tax laws to estimate your total tax liability.

If you work as a DoorDash driver in multiple states, you may have tax obligations in each state, depending on local tax laws. Be sure to review state-specific requirements to avoid unexpected liabilities.

Self-Employment Tax Calculation

The self-employment tax consists of:

• 12.4% for Social Security
• 2.9% for Medicare

If your net earnings exceed $200,000 as a single filer ($250,000 for married couples), you may owe an additional 0.9% Medicare surtax. To calculate your self-employment tax, multiply your net earnings by 15.3%.

A portion of your self-employment tax is deductible. You can deduct 50% of it when calculating your adjusted gross income, reducing your taxable income.

Estimated Quarterly Tax Payments

Since taxes are not withheld from your DoorDash earnings, you may need to make estimated quarterly tax payments. These payments prevent underpayment penalties and ensure you stay on track with your tax obligations.

Quarterly tax payments are due in April, June, September, and January. The IRS provides Form 1040-ES to help estimate your payments based on your expected income.

Failing to make estimated payments can result in penalties and interest. Using tax software or consulting a tax professional can help determine the correct amounts to pay.

Deductible Expenses for DoorDash Drivers

DoorDash drivers can reduce their taxable income by deducting business-related expenses, such as:

• Mileage driven for deliveries
• Vehicle maintenance and gas
• Phone and data costs
• Tolls and parking fees
• Hot bags and other delivery equipment

Tracking these expenses can lower your overall tax bill. Use apps or a mileage log to keep accurate records.

Additionally, drivers working from home may qualify for the home office deduction, reducing taxable income further. Keeping receipts and records of expenses is essential for claiming deductions accurately.

Filing Taxes as a DoorDash Driver

When filing taxes, you will use Form 1099-NEC, which DoorDash provides if you earn more than $600 in a year. You will report your earnings on Schedule C and calculate self-employment taxes using Schedule SE.

Tax software can simplify this process, or you can hire a tax professional for assistance. Keeping organized records throughout the year makes filing easier.

Some tax software programs offer features specifically for gig workers, providing automatic expense tracking and tax estimation to help simplify the process.

Avoiding Common Tax Mistakes

To prevent tax issues, consider these steps:

• Set aside 25–30% of your earnings for taxes
• Track all expenses and mileage
• Pay estimated taxes on time
• Keep tax records for at least three years

Failing to follow these steps could result in IRS penalties or unexpected tax bills.

Additionally, misreporting income or failing to report all 1099s can lead to audits. Be diligent about recording and verifying income received from DoorDash.

Final Thought

DoorDash drivers must account for federal, state, and self-employment taxes. Keeping track of earnings, expenses, and quarterly payments can help manage your tax responsibilities effectively. Using tax deductions and proper planning ensures you only pay what is necessary. By staying organized and planning ahead, you can reduce your tax burden and avoid financial stress during tax season.