Taxes As A DoorDash Employee–

Working as a DoorDash driver is considered to be self-employment. The employees are personally responsible for filing their taxes according to their earnings. Both cash and non-cash tips are included in this. In order to pay the taxes, the Dashers need to keep aside income throughout the year to pay their 1099. The Dasher app does not include a tax calculator. The taxable income is determined by subtracting any deductions from the money earned. It also depends on their filing status, which may be single, married filing jointly, married filing separately, head of household, etc. Generally, 30-40 percent of the income needs to be set aside to cover both state and federal taxes.

Why is the 1099 form important?

DoorDash is providing a 1099-NEC form to the Dasher once they start working together. This is the most efficient way to calculate the taxable amount.

In 2018, DoorDash’s total earnings came from non-employee compensation. This is the most important box on their income statement, as it represents the majority of their profits. ..

If the Dasher is working with an accountant or CPA, they need to provide them with a copy of their 1099 and information on any tax deductions they are eligible for.

If they are using tax software, the individual’s total earnings and any deductions they wish to make are entered into the software, and it calculates the taxes.

If an employee wants to calculate their own taxes, they are supposed to use their Non-Employee Compensation Number, given on Schedule C, to report Gross Earnings. They also have to note which expenses they want to state as deductions. Next, the total business profit is entered in Schedule SE, which determines the amount of taxes payable on an employee’s independent income.

Tax Deductions for DoorDash–

The IRS offers a deduction for costs incurred by independent contractors. This deduction can be used to reduce your taxes.

Mileage– 

The IRS has announced that independent contractors can deduct their non-commuting business mileage. This includes the distance covered during their drive to the first delivery pickup, between deliveries, and the drive back home at the end of the day. Mileage and gas cannot be deducted at the same time.

Phone Service– 

The deduction for work-related expenses can include the cost of devices, accessories, and data. Only the percentage of the device or data being used for work can be included in the deduction process. ..

Hot Bags, blankets, courier bags – 

The items in this list are deductible as business expenses. They are not supposed to be used for personal purposes, and if they are, the cost amount is not deductible.

Tolls and Parking– 

If you incur any tolls or parking fees while working, those costs can be deducted from your income tax return if you have not already been reimbursed. Paid parking is considered tax-deductible. Parking tickets, traffic violations, and speeding tickets are not deductible. ..

Inspections–

The expenses associated with vehicle inspections and background checks for work are deductible.

Roadside assistance- 

The AAA roadside assistance program is eligible for a tax deduction. The expenses that are being used for work must be kept track.

Health Insurance– 

Self-employed individuals can deduct their health insurance premiums from their income taxes, provided they meet certain requirements. ..

Filing DoorDash taxes- 

DoorDash issues 1099s to its delivery drivers, which state the amount of income received by deliveries. Since most Dashers operate as sole proprietors, they still have to file a personal tax return. In case the payable tax amount is not deposited on time, the employee can be held accountable and penalized. Quarterly estimated tax payments can also directly be made to the IRS. This rules out the possibility of surprise tax bills. It is important to have a clear idea of deductible amounts to make tax filing easier and more efficient. ..

Conclusion- 

DoorDash employees are required to file their taxes, on time, by using 1099. They are also eligible for certain tax deductions in accordance with the services that they require to work.

There are a few expenses that can be claimed without a receipt, such as mileage and parking. ..

Some expenses that are often claimed without receipts include travel, clothing, and union fees. Additionally, car expenses and phone calls can also be expensive without documentation. ..

Yes, tips are taxable.