Don’t Miss Dasher Tax Secrets: How to File Your DoorDash Taxes and 1099 Form to Keep More of Your Earnings
As a DoorDash driver, also known as a “Dasher,” you’re considered an independent contractor rather than an employee. This means your tax situation is different than that of a traditional employee.
Understanding how to record your charges accurately, maximizing your derivations, and remaining compliant with charge laws can spare you cash and maintain a strategic distance from punishments.
In this 2023 direct, we’ll walk you through everything you require to know, almost recording charges as a DoorDash driver utilizing Form 1099.
Table of Contents
Introduction
As the 2023 tax season approaches, DoorDash drivers must get their charge commitments. Whether you’re a full-time Dasher or somebody who drives part-time, your wage from DoorDash is assessable, and it’s pivotal to record your charges accurately. This direct will break down the steps to assist you in exploring your charge recording with ease and certainty.
What is the 1099 Tax Form?
As a self-employed contractor, DoorDash reports your earnings to the IRS using one or both of the 1099 tax forms: the 1099-NEC and the 1099-K.
1099-NEC: This form reports the income you earn directly from DoorDash for delivering orders. You’ll receive this if you earned $600 or more through DoorDash in 2023.
1099-K: This form reports your total earnings from the platform, including tips, through payment processors (e.g., DoorDash’s app). You may receive this if you meet certain transaction thresholds. Starting in 2023, you may also get this form if you received over $600 in gross earnings through third-party payment processors.
You should keep both forms to report your income accurately when filing your taxes.
How DoorDash Drivers Are Taxed
As an independent contractor, you are responsible for income and self-employment taxes.
Income tax: This tax is based on your total income for the year. As a DoorDash driver, your income includes:
- All payments you receive from DoorDash.
- Tips from customers.
- Any other sources of income you earn from driving.
Self-employment tax: Since you’re not an employee, you are also responsible for self-employment taxes. This tax covers Social Security and Medicare contributions, typically split between employers and employees in traditional jobs. However, as an independent contractor, you pay the employer and employee portions, totaling 15.3%.
These taxes can add up, so keeping track of all your earnings and deductions is essential to reduce your tax burden.
Key Tax Deductions for DoorDash Drivers
You can deduct certain commerce costs to lower your assessable wage as a self-employed person. Here are a few standard findings accessible to DoorDash drivers:
Mileage and vehicle-related expenses: You can deduct the miles you drive for DoorDash deliveries. In 2023, the IRS standard mileage rate is 65.5 cents per mile. Alternatively, you can deduct actual vehicle expenses, such as gas, repairs, and insurance, but you can’t claim both methods — you must select the one that benefits you most.
Phone and apps: Since you use your phone for navigation and communication with customers, a portion of your phone bill is deductible. You can also deduct any costs related to the DoorDash app or other delivery apps (e.g., mapping services).
Supplies: You can deduct expenses for insulated bags, parking fees, or meals if they qualify.
Tracking Your Earnings and Expenses
Following your profit and costs throughout the year is fundamental to making the assessment season more available. Here are a few tips for remaining organized:
- Use an app or spreadsheet: A few apps designed for gig laborers, like Walk Assess, QuickBooks Self-Employed, or MileIQ, can help you track your mileage, costs, and salary.
- Save your receipts: Make sure to save your receipts for any expenses related to your business (e.g., car repairs, gas, or phone bills).
- Review your 1099 forms: At the end of the year, double-check your 1099-NEC and 1099-K forms to ensure they accurately reflect your earnings. If you find any discrepancies, reach out to DoorDash for clarification.
How to File Your Taxes as a DoorDash Driver
Filing taxes as a DoorDash driver involves several steps. Here’s a basic rundown of the forms you’ll need and how to complete your tax return:
Form 1040 is the standard individual income tax form used to report your income.
Schedule C (Profit or Loss from Business): This form reports income and expenses related to your DoorDash work. On this form, you’ll list your earnings from DoorDash and any deductible expenses, such as mileage, supplies, and phone expenses.
Schedule SE (Self-Employment Tax): This form calculates your self-employment tax, which covers Social Security and Medicare.
If you need help completing these forms, consider using tax software like TurboTax or H&R Block, which can guide you through the process.
Common Tax Mistakes DoorDash Drivers Make
Tax filing can be complicated, and mistakes can lead to penalties. Here are some common mistakes to avoid:
Failing to report all income: Even if you still need to receive a 1099 form, you must report all your income, including cash tips or payments made outside the DoorDash app.
Only claiming some eligible deductions: Many DoorDash drivers miss out on deductions that could lower their tax liability, such as mileage or phone bills. Be sure to review all possible deductions before filing.
Not making estimated tax payments: If you expect to owe more than $1,000 in taxes, you’ll likely need to make quarterly payments. Failing to do so can result in penalties.
Estimated Quarterly Taxes: What You Need to Know
As a self-employed individual, you may need to pay estimated quarterly taxes to avoid underpayment penalties. The IRS expects self-employed individuals to pay yearly taxes rather than in one lump sum during tax season.
Here’s how to calculate and pay your estimated taxes:
Estimate your income for the year.
Calculate your self-employment tax (usually 15.3% of your net earnings).
Submit quarterly payments (typically April 15, June 15, September 15, and January 15 for the previous year).
You can use IRS Form 1040-ES to calculate and submit these payments.
What to Do If You Receive Multiple 1099 Forms
It’s common for DoorDash drivers to receive both a 1099-NEC and a 1099-K. If you receive both forms, you’ll need to report the income from both on your tax return.
1099-NEC: Report this income on Schedule C (Profit or Loss from Business).
1099-K: Report the income from this form as part of your total earnings. It will show up as “gross receipts” in your business income on Schedule C.
If you receive multiple forms, you must ensure that your reported earnings match those shown on all the forms.
Hiring a Tax Professional vs. Filing on Your Own
Whereas an assessment computer program can offer assistance in recording your charges, there are benefits to enlisting a tax professional if you need more clarification about recording yourself. An assessment master specializing in gig economy work can guarantee you take advantage of each finding and remain compliant with IRS regulations.
However, recording is superbly doable if you’re comfortable utilizing a computer program and keeping organized records.
Important Tax Changes for DoorDash Drivers in 2023
In 2023, a few noteworthy changes may influence how DoorDash drivers record their taxes:
The $600 edge for 1099-K: Beginning in 2023, if you win $600 or more through third-party installment processors (such as DoorDash), you’ll get a 1099-K shape. This is a vital modification from the past $20,000 threshold.
New mileage rate: The IRS standard mileage rate in 2023 is 65.5 cents per mile, up from 58.5 cents in 2022. This change suggests that you can deduct more per mile driven for your DoorDash conveyances.
Tax Tips for DoorDash Drivers in 2023
To minimize your tax risk and guarantee you’re in excellent standing with the IRS, here are a few fundamental tax tips:
- Maximize findings: Deduct as numerous commerce costs as conceivable, from mileage to phone bills.
- Track everything: Use apps to track mileage and costs to dodge lost deductions.
- Keep all receipts and records organized, and audit your 1099 shapes carefully.
- Make quarterly installments: Don’t wait until April to pay charges—maintain a strategic distance from punishments by paying evaluated quarterly charges.
Conclusion
Recording tax as a DoorDash driver can appear overwhelming, but remaining organized and understanding your assessment commitments can make the preparation much more straightforward.
Remember to track your earnings and expenses, take advantage of available deductions, and file your taxes on time to avoid penalties. If you’re unsure, consulting a tax professional can provide peace of mind and ensure you file correctly. Start preparing early, and you’ll be ready for tax season!
