There are advantages to working as a self-employed delivery driver. You never know where you’ll end up, and no one is watching you. And if you know all of the DoorDash tricks and tips, you may make a lot of money.
Of course, being an independent contractor can be stressful, especially during tax season. From expense monitoring to quarterly anticipated payments, calculating your DoorDash 1099 taxes can be a daunting task. Failing to report Doordash taxes under 600, means you will owe both the tax for that income and the liability for forgetting to report and pay the tax.
Don’t worry, we’ve got you covered. We’ll go over everything you’ll need to know to submit your taxes in this article.
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What DoorDash taxes must you pay?
Tax season may be a nightmare for self-employed persons like dashers. For starters, there is a lack of withholding. Because you are an independent contractor rather than an employee, DoorDash will not withhold any taxable income for you, resulting in a larger tax burden from the IRS.
Dashers’ income taxes
Your tax burden does not end with FICA. Independent contractors, such as dashers, must also pay federal and state income taxes.
The precise percentages depend on your income level, tax bracket, and state. Schedule SE can help you figure out how much you’ll owe. However, this form can become somewhat difficult. Fortunately, you can estimate your tax due using our income tax calculator.
Which DoorDash tax forms will you be required to file?
Once you’ve determined how much you’ll owe, there’s one more step you must complete before filing: obtaining your tax forms.
This stage of the process is rather straightforward for dashers. All you need is your Form 1099-NEC, which reflects your app’s “Nonemployee Compensation.”
How to file Doordash taxes without 1099 ? Your 1099-NEC will display your overall earnings via the app, including base salary, tips, pay boosts, and milestones. It is only available if you make more than $600 with DoorDash. If you earn less than $600 you don’t need to file taxes with 1099.
How to Locate Your 1099-NEC
Stripe is where DoorDash sends their 1099s. Expect an email in early January encouraging you to create a Stripe Express Account.
Keep an eye out for this email and make sure it doesn’t go to spam – to receive your 1099, you’ll need a Stripe Express Account.
Stripe allows you to receive your 1099 by re-delivery or snail mail. E-delivery is the quickest alternative, as it allows you to view your 1099 online by January 31.
You must be thinking, do I require you to pay taxes if I made less than 600 with Doordash? Yes. You are required to register and pay taxes on any income you acquire. The $600 threshold is not linked to whether you have to pay taxes or not.
If you pick snail mail, your form will also be mailed on January 31. However, it could take up to ten business days to arrive. Making changes to the information on your 1099-NEC. On rare occasions, you may receive a 1099-NEC with incorrect information. Stripe Express, fortunately, makes these simple to fix. If you log into your account, you can report any problems and receive a replacement 1099 document within 24 hours.
Keep in mind that the earnings shown on your 1099-NEC may not always correspond to the full earnings history shown on your Stripe Express account.
Because if you have a DasherDirect debit card, Stripe Express will not reflect the earnings that are transferred directly into that account. However, your DasherDirect revenues will be included in your 1099.
How to report Doordash income without 1099? The IRS does not require a copy of your 1099 document or payor information. Simply add your gross Doordash profits on Schedule C’s line 1 (gross receipts).
What tax breaks are available to dashers?
You’re one step closer to being able to file now that you know how to obtain your 1099. Now, let’s talk about how you might reduce your tax payment by deducting company expenses.
It’s critical to maintain track of your write-offs, whether you’re a full-time dasher or a side hustler. Some people in the DoorDash delivery game achieve this by having distinct business and personal accounts: one for everything they spend on work and one for everything they spend on costs.
DoorDash car-related write-offs
You’re probably spending a lot of money on your automobile as a dasher.
Costs like these can be deducted using either the regular mileage rate or the actual expense method:
- Care and upkeep
- Auto insurance
- Interest on a car loan
- Depreciation of vehicles
- Parking charges
Other DoorDash write-offs
Car expenses will most likely account for a sizable portion of the write-offs available to you. However, they are not the only company expenses to be aware of.
Other common write-offs for dashers include:
1. Your cellphone and its accessories
2. Bookkeeping and mileage tracking apps
3. Bags for insulation
4. Commission fees for DoorDash
Remember that if you use some of these purchases for personal reasons, they will only be partially tax-deductible.
Keep in mind: If you use some of these purchases for personal reasons, they will be only partially tax-deductible. You can only deduct the portion of these expenses that you utilize for your job as a delivery driver.
What if I made less than 600 with Doordash?
If a Doordash driver earns less than $600, the company is not required to report that total revenue to the IRS, and they will not receive a 1099 form.
How to Claim Your DoorDash Deductions
Once you’ve determined what you can deduct, you’ll need to complete Form Schedule C: Profit and Loss from Business.
Remember, you don’t need an LLC to take advantage of these tax breaks. Even if you don’t have a corporate legal entity in place, the IRS will automatically identify you as a single proprietor – someone who runs their firm. You must fill out Schedule C to get write-offs regardless of your business structure.
When must you file DoorDash taxes?
You may be wondering when your taxes are due now that you know everything you need to know about your 1099 tax deductions.
W-2 employees enjoy the advantage of just having to file their taxes once a year, on April 15. However, for self-employed individuals such as dashers, Tax Day isn’t always a one-and-done event. Instead, you will most likely be required to file taxes four times a year, or quarterly.
This isn’t always true. If you’re just dashing for fun, you might only have to pay taxes once a year. As a general rule, if you anticipate owing the IRS $1,000 or more in taxes, you should file estimated quarterly taxes.
These quarterly taxes are payable on the dates listed below:
- April 15th,
- June 15th,
- September 15th,
- and January 15th.
If you fail to pay your quarterly taxes on time, you risk incurring late fees and IRS penalties.
To avoid penalties, make sure you’re well-prepared to submit your quarterly tax payments. You do not have to enter the process blindly. Use your quarterly tax payment calculator to figure out how much you owe each quarter.