The Ultimate Guide to Taxes for DoorDash Drivers in 2025

If you’re a DoorDash driver, navigating the world of taxes can be challenging. As an independent contractor, you’re responsible for managing your own tax obligations, which differ significantly from those of traditional employees. This comprehensive guide will provide you with everything you need to know to handle your taxes effectively for the 2024 tax year.

Understanding Your Tax Status

As a DoorDash driver, you’re classified as an independent contractor. This means:

• Taxes are not automatically withheld from your earnings.

• You’re responsible for calculating and paying both income tax and self-employment tax.

• Your income is reported on Schedule C (Profit or Loss from Business) as part of your federal tax return.
  

Reporting Your Income

1. Income Sources

• Form 1099-NEC: If you earn $600 or more through DoorDash, you’ll receive a Form 1099-NEC.

• Form 1099-K: If you use third-party payment platforms like PayPal or Venmo and earn more than $600, you’ll also receive Form 1099-K.

• Unreported Income: Even if you don’t receive a 1099 form, all income earned through DoorDash must be reported.
  

2. Tracking Earnings

Use the DoorDash app to monitor your weekly payouts and maintain a personal log of your earnings. Accurate recordkeeping is essential, especially for income that isn’t reported on tax forms.

Self-Employment Tax Responsibilities

1. What Is Self-Employment Tax?

Self-employment tax includes:

• Social Security (12.4%)

• Medicare (2.9%)

For 2024, the self-employment tax applies to net earnings exceeding $400. High earners may also owe an additional 0.9% Medicare tax on earnings above $200,000 ($250,000 for married filing jointly).

2. Calculating Self-Employment Tax

Use Schedule SE to calculate your self-employment tax. This amount is in addition to your federal and state income taxes.

3. Quarterly Estimated Taxes

You must make quarterly estimated payments if you expect to owe $1,000 or more in taxes for the year. Payments are due on the following dates:

• April 15, 2024

• June 15, 2024

• September 15, 2024

• January 15, 2025

Missing these deadlines can result in penalties and interest. To avoid this, calculate your estimated taxes using Form 1040-ES.

Maximizing Deductions

One of the benefits of being a self-employed DoorDash driver is the ability to deduct business-related expenses. These deductions can significantly lower your taxable income.

1. Vehicle Expenses

• Standard Mileage Deduction: In 2024, you can deduct 65.5 cents per mile driven for business purposes.

• Actual Expenses: Alternatively, deduct actual costs, including gas, maintenance, insurance, and depreciation.

2. Phone and Internet

• Deduct the portion of your phone and internet expenses used for DoorDash.

• Keep a log of how much time you spend using your phone for work.

3. Supplies

• Expenses for hot bags, phone mounts, and other tools used for deliveries are deductible.

4. Health Insurance

• If you’re not eligible for an employer-sponsored plan, you can deduct health insurance premiums.

5. Home Office Deduction

• If you have a dedicated space for managing your DoorDash work, you may be eligible for the home office deduction. Calculate the percentage of your home’s square footage used exclusively for business.

6. Other Common Deductions

• Tolls and parking fees

• Snacks and drinks provided to customers (if applicable)

• Advertising or marketing costs

• Professional services, such as tax preparation

Key Updates for 2024

1. Lower 1099-K Threshold

• Payment processors must issue Form 1099-K for payments exceeding $600. This means you’re more likely to receive this form, so ensure your records align with reported amounts.

2. Increased Social Security Wage Base

• The wage base for Social Security tax increased to $176,100 for 2024.

3. Expanded Energy and Vehicle Tax Credits

• If you’re considering purchasing a clean vehicle for DoorDash, you may qualify for up to $7,500 in clean vehicle tax credits.

How to Stay Organized

1. Use Tracking Tools

• Consider apps like MileIQ or Everlance to track mileage automatically.

• Use spreadsheets or accounting software to log income and expenses.

2. Save for Taxes

• Set aside 25-30% of your income for taxes to cover federal, state, and self-employment taxes.

3. Maintain Records

• Keep all receipts, bank statements, and invoices for at least three years.

Filing Your Taxes

1. Schedule C:

   • Report your income and expenses.

2. Schedule SE:

   • Calculate your self-employment tax.

3. Form 1040:

   • File your individual tax return, including the schedules above.

Consider hiring a tax professional to ensure accuracy and maximize deductions.

Common Mistakes to Avoid

• Not Reporting All Income: Even unreported earnings are taxable.

• Missing Quarterly Payments: Failing to pay estimated taxes can result in penalties.

• Poor Recordkeeping: Inadequate documentation can lead to missed deductions and IRS scrutiny.

• Misclassifying Expenses: Ensure expenses are directly related to your DoorDash work.

Disclaimer

Every DoorDash driver’s tax situation is unique. This guide provides general information but may not address your specific circumstances. For personalized advice, contact Arc & Ledger Accounting LLC. We’re here to help you navigate your taxes with confidence.