Does DoorDash Take Taxes Out in 2024? Here‘s What Drivers Need to Know
Driving for DoorDash has become an incredibly popular way to earn extra income with a flexible schedule. However, as tax season approaches each year, DoorDash drivers have some critical questions around how taxes work.
The #1 question I see is: does DoorDash automatically deduct taxes from my earnings?
As an expert in retail and consumer issues, I‘ll provide a detailed breakdown of how DoorDash approaches taxes so you can maximize deductions and avoid any surprises or penalties.
DoorDash Does Not Withhold Taxes
The most important fact drivers need to know is that DoorDash does NOT automatically take out any taxes from your pay as you earn income.
Why not? Because the IRS classifies DoorDash drivers as self-employed independent contractors.
And according to IRS guidance around independent contractors, companies like DoorDash are not required to withhold taxes from contractor pay. That responsibility falls on your shoulders as a business owner.
You Will Receive a 1099-NEC Form to Report Earnings
While DoorDash won’t take taxes out for you, they will provide the tax documentation you need to accurately report your DoorDash earnings.
Specifically, if you earn over $600 in a year, DoorDash’s payment processor Stripe will issue you a 1099-NEC tax form that reports your annual profit from deliveries.
This 1099-NEC allows you to account for 100% of taxable DoorDash income when you file your personal tax return each year. Stripe emails 1099 forms by January 31st, so watch your inbox!
Aggressively Track Expenses to Lower Your Tax Bill
Here’s my #1 piece of tax advice for DoorDash drivers who want to maximize write-offs:
Rigorously track all driving-related and other delivery expenses!
Why? Because the upside of contractor status is that you can deduct a long list of eligible business expenses that traditional W-2 employees usually can’t.
In fact, the IRS let‘s rideshare drivers deduct 58 cents per mile for 2024 to account for gas, depreciation, repairs and maintenance.
That 58 cent mileage deduction can single-handedly eliminate 30-50% of your taxable income!
To optimize write-offs, log every business mile with an app like Everlance or Stride. And capture expenses like:
| Expense Category | Examples |
|---|---|
| Vehicle Costs | Gas, oil changes, repairs, lease payments |
| Equipment | Hot bags, phone mount, charging cables |
| Phone Service | Cell phone plan, data costs |
| Safety Gear | Flashlights, reflective safety vests |
Pay Quarterly Taxes to Avoid Underpayment Penalties
Many DoorDash drivers don’t realize estimated quarterly tax payments are often required to avoid penalties for underpayment (since no taxes are taken out upfront).
The IRS focuses heavily on gig workers, so staying compliant on quarterly taxes is crucial.
Use Form 1040-ES to calculate what you owe, factoring in business expense deductions. You can pay quarterly taxes online, by phone, mail or mobile app.
Let a Tax Pro Handle the Details (If You Can Afford It)
Personally, I think a dedicated rideshare CPA or tax preparer is worth the money to handle calculating deductions, preparing forms, and filing.
Yes, there’s a fee involved. But having an expert in your corner often leads to much bigger tax refunds and guarantees full compliance with IRS rules. Plus, you can focus your energy on actually driving.
Over my years analyzing retail and consumer issues, I‘ve found most DoorDashers end up saving way more on their tax bill than what tax prep services cost. So run the numbers in your case!
I hope this comprehensive guide clears up how DoorDash approaches taxes in 2024 and beyond. Please reach out with any other questions!
