DoorDash Tax Deductions, Maximize Take Home Income
This article the ultimate guide for DoorDash tax deductions. Read on to learn about DoorDash driver tax deductions.
Please note: at the bottom of this article we cover additional taxes a self-employed DoorDash driver must pay.
DoorDash Tax Deductions Back Story
DoorDash drivers are self-employed.
This has potential tax advantages.
One advantage is DoorDash 1099 tax write-offs.
For example, tax deductions offered to self-employed and deductions specific to the use of a car or vehicle for work.
With that said, DoorDash driver self-employment means it’s important to understand the proper way to account for unique delivery driver tax deduction opportunities. This empowers DoorDash drivers to maximize their take-home income.
Other DoorDash driver advantages include autonomy over work schedule and personal life.
This means as a DoorDash driver you don’t report to an office every day where you sit at a desk with your eyes glued to a computer. Instead, you’re a small business. Further, as a DoorDash driver, you need to make sure there’s enough incoming business (i.e. deliveries) and you have to manage unique business expenses.
There are many new, often unfamiliar, tax deductions a DoorDash driver can deduct from their gross income. Many of these tax deduction opportunities are for expenses related to the car or vehicle used for deliveries. For example, the cost and expense of the operation and use of the delivery car or delivery vehicle. Therefore, there are certain deductible expenses whether it’s your car or a car provided by an employer or car rental company.
Lastly, we recommend checking out this article if you’re a delivery driver in need of a way to conveniently organize your vehicle expenses: Simplified Ways to Track and Organize Vehicle Expenses.
What expenses can I write off?
As a DoorDash driver, you’re self-employed.
This means you can deduct non-commuting business mileage. This includes the miles you drive with your car for your delivery drivers, including delivery pickup. It also includes your drive back home when you are finished working for the day.
Most DoorDash drivers use a mileage tracker app that automatically tracks their mileage in the background so they never miss a mile.
The IRS provides two ways to write off mileage, which are explained below. The most common way for delivery drivers to write off mileage is with the Standard Mileage Method. Of the two methods, for DoorDash delivery drivers this is the best method to maximize your take-home income.
Mileage write-offs with the Standard Mileage Method are calculated using a per-mile rate provided and updated by the IRS each year. Basically, you multiple each mile you drive for work by this rate and you have your mileage write-off amount.
All tolls you pay for while driving for work are tax write-offs. Unless they are being reimbursed to you, write them off.
Any parking fees you pay while working are also tax-deductible. So save those receipts.
Phone and Service
Self-employed on-demand workers need phones, phone services, and phone accessories to do their job. The proportion used for work of the expenses for these items is a tax deduction.
You can calculate the proportion of the expense for these items and services by using the same formula that is used to calculate roadside assistance expense proportions.
Vehicle inspections or background checks that are required as part of your delivery job are tax write-offs. For example, if DoorDash insists your vehicle is inspected before you start working you can write off the cost of this inspection and any inspections in the future.
Roadside assistance programs, such as AAA fees, are tax-deductible.
Make sure that you only deduct the percentage of your fees that is for work.
How to calculate roadside assistance write off amount
A simple way to calculate your roadside assistance tax deduction is to take the total number of all miles you drove for the year and determine what percentage of those miles were for work.
You can quickly determine the total number of miles that you drove for work if you use a mileage tracker app like Falcon Expenses.
This calculation would look something like this:
Total miles driven = 10,000
Total miles driven for work = 6,000
% Miles driven for work = (6,000/10,000) x 100 = 60%
Total roadside expenses for the year = $1,000 x 0.60 (i.e. 60%) = $400
Total roadside assistance tax deduction = $400
The IRS allows you to write off your health insurance premium if you’re self-employed.
Courier Bags, Hot Bags, and Blankets
Many delivery drivers purchase insulated blankets and bags to keep food warm. The expense of purchasing these items falls under an ‘ordinary and necessary business expense.
Therefore, it is tax-deductible.
Some cities require business licenses for you to be able to be a delivery driver or courier. Business license fees are tax-deductible.
Car Loan Interest
There are a lot of caveats to this DoorDash driver write-off, this is why we have written the ultimate guide for you about how to write off car loan payments. So you must check it out, you can find it here, How to Deduct Car Payments from Taxes as a Business Expense.
Do you need to get approved for a business loan?
Check out this article if you answered yes, How to Get Approved for a Business Loan.
Your Falcon Subscription
The price of your Falcon Expenses mileage tracker and expense tracker app is tax-deductible.
How to Choose a Mileage Expense Deduction Method
For deliveries done by personal car, you need to choose a mileage expense tax deduction method. The IRS offers two ways to deduct mileage expenses.
You must stick to one method for the entire tax year. What this means is you can’t use the Actual Car Expense Method for half the year and the Standard Mileage Rate for the other half of the year.
Actual Expense Method
The Actual Expense Method is a method where the taxpayer deducts each individual car-related expense. For example, the taxpayer deducts depreciation, registration fees, lease payments, etc., separately.
Standard Mileage Method
The Standard Mileage Method is a method of deducting car expenses using a per-miles driven amount. The IRS predetermines this amount each year, it’s known at the Standard Mileage Rate. Think of it as a DoorDash mileage reimbursement rate.
Use this method if you own or lease your delivery vehicle. For the last 5+ years, this amount has been in and around fifty cents per mile. Many DoorDashers prefer to use an auto mileage tracker app when using this method.
Standard Mileage Method Pros
All expenses are included in a single per-mile rate.
Therefore, you don’t spend a lot of time itemizing each expense (as done in the Actual Car Expense method).
Each year the IRS takes into consideration the cost of fuel, maintenance, and the current economic environment to calculate the standard mileage rate.
This method is more straightforward and often easier for many. All you have to do is create an organized mileage report that meets the IRS mileage record-keeping requirements.
Review the following article for detailed information about each of these deduction methods, which one to choose, and how to use them, Actual Car Expense Method vs Standard Mileage Rate.
Standard Mileage Method
Please refer to the following article for the most up-to-date per mile rates if you use the Standard Mileage Method, IRS Standard Mileage Rate.
Self Employment Tax, Is DoorDash Self Employment?
Typically, DoorDash drivers are self-employed.
That means there are self-employed taxes DoorDash drivers should be aware of.
For example, Medicare and Social Security Taxes.
Did you know that self-employed individuals pay their own Medicare and Social Security Taxes?
Don’t worry, we’ll explain.
Check out these articles for all that you need to know on DoorDash driver self-employment tax:
What is Self Employment Tax?
Doing Your Own Taxes?
If you’re doing your own taxes, then you probably want to become familiar with how to fill out a Schedule C.
A Schedule C is where self-employed individuals report income or loss from a business they operated. This is the form you would file to do your self-employment taxes.
What are the top DoorDash Write Offs?
Mileage and vehicle-related expenses are unarguably the top expense deductions for DoorDash drivers.
What are the Commonly Overlooked Expense Deductions for DoorDash Drivers?
It is not uncommon for delivery drivers and couriers to overlook miscellaneous business expenses.
For example, expenses for items and services used specifically for work such as expenses for car maintenance (for those using the actual expense method), the cost of phone supplies such as car mounts, etc.
With that said, most work-related purchases are likely deductible.
They are at least partially deductible if not completely tax-deductible.
Read the following article to ensure you get the maximum self-employment tax deduction, A Definitive List of Self-Employment Write-Offs.
About Falcon Expenses
Falcon Expenses is a top-rated mobile application for self-employed and small businesses to track expenses and tax deductions. Falcon customers record $6,600, on average, in annual tax deductions. Get started today. The longer you wait, the more tax deductions you miss out on.
Automatically track mileage expenses and expenses, keep an odometer log, receipt vault and log billable hours. Quickly organize expenses by time period, project, or client. Easily prepare expense reports to email to anyone in PDF or spreadsheet formats, all from your phone. Use for keeping track of tax deductions, reimbursements, taxes, record keeping, and more. Falcon Expenses is great for self-employed, freelancers, realtors, business travelers, couriers, truckers, and more.
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I used to travel a lot for work. Doing my expenses frustrated me. I would delay submitting them and when I did, I would spend hours taping receipts to paper to scan for my boss. I knew there was a better solution, and I had a background in productivity software, so I created Falcon Expenses. I enjoy creating software that makes people’s lives easier.
In addition, I’m an avid skier and I enjoy hiking, sailing, and cooking.