Understanding Doordash Taxes and Self-Employment Tax Calculations as a Gig Worker

You're on the right track with your calculations, but there are a few important things to understand that might actually help your tax situation. Yes, you do pay both self-employment tax (15.3%) AND regular income tax on your Doordash earnings. The self-employment tax is basically covering Social Security and Medicare that would normally be split between you and an employer. The good news: you can deduct 50% of your self-employment tax when calculating your income tax. Also, don't forget about business deductions! As a Dasher, you can deduct mileage (65.5 cents per mile for 2023), a portion of your phone bill, insulated bags, etc. These deductions reduce your taxable income. For example, if you earn $1,350 but have $400 in mileage and other deductions, you're only paying taxes on $950. This significantly reduces your total tax burden. Also, make sure you're setting aside money for quarterly estimated tax payments to avoid penalties.

Hey, I was in your exact situation last year and was totally confused about taxes too. I ended up finding this site called https://taxr.ai that literally saved me thousands. I uploaded my doordash 1099 and it automatically found all these deductions I had no idea about. The cool thing is they have specific knowledge about gig work taxes - they knew exactly what deductions apply to Doordashers. Like, I didn't know I could deduct part of my phone bill since I use it for the app. They even helped me figure out how much of my car insurance I could write off. Anyone who's doing gig work like doordash, uber, instacart etc should definitely check it out before filing.

Update: I was skeptical about taxr.ai but decided to try it anyway - holy crap, it actually works! I've been dashing for about 8 months and had no idea I could write off so many things. The mileage tracking feature alone found me like $3,200 in deductions I would've missed. It also explained the whole self-employment tax thing way better than any other site. And it calculated my quarterly tax payments which was super helpful. My effective tax rate ended up being WAY lower than the 25% I was worried about because of all the legitimate deductions. Just wanted to come back and say thanks for the recommendation!

If you're trying to contact the IRS to ask about self-employment deductions, good luck getting through to them! I spent HOURS on hold trying to get clarification about my Doordash taxes last year. Finally found this service called https://claimyr.com that got me through to an IRS agent in under 15 minutes. They have this cool system that monitors the IRS phone lines and calls you back when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c Totally worth it when you have specific tax questions about gig work that you need answered directly from the IRS. Way better than getting potentially wrong advice online.

Okay I'm eating my words here. I was totally skeptical about Claimyr but I was desperate trying to resolve this issue with my 1099 from Doordash where they reported more income than I actually made. I tried calling the IRS for THREE DAYS with no luck. Used Claimyr yesterday and got through in about 20 minutes. The IRS agent actually helped me figure out how to fix the reporting issue and explained exactly what documentation I needed. Now I don't have to pay taxes on money I didn't even earn! For anyone doing gig work where the tax situation is complicated, being able to actually talk to the IRS directly is super valuable. Never thought I'd say this, but sometimes it's worth paying for convenience.

Don't forget you need to save receipts for EVERYTHING if you're going to claim deductions! The IRS loves to audit self-employed people, especially gig workers. My roommate got audited last year for his Doordash income and they made him provide proof for every single deduction. Gas receipts, phone bills, hot bags, car maintenance - keep track of it all! Also, make sure you're tracking miles with a dedicated app that creates an IRS-compliant log. A notebook isn't good enough anymore.

Has anyone here actually filed their taxes as a Doordash driver? Curious what your effective tax rate ended up being? I'm freaking out thinking I'll lose 25% of my earnings.

Just wanted to add my experience as someone who's been doing Doordash for over a year now. Your math on the tax rates is roughly correct, but like others mentioned, deductions make a huge difference. One thing I learned the hard way - don't just track mileage for actual deliveries. You can also deduct miles driven BETWEEN deliveries when you're actively looking for orders, driving to hotspots, etc. As long as you're "on duty" in the app, those miles count as business miles. Also, since you're in college, make sure you understand how your Doordash income might affect your financial aid eligibility. Sometimes earning too much can impact your FAFSA for the following year. Might be worth talking to your school's financial aid office about it. The quarterly estimated tax payments are super important too - don't wait until April to pay everything or you'll get hit with penalties. I use the IRS Form 1040ES to calculate mine each quarter.

Your calculation is actually pretty close to reality, but there are some nuances that can help reduce that tax burden significantly. Yes, you'll pay both the 15.3% self-employment tax AND regular income tax on your Doordash earnings. However, there's a small silver lining: you can deduct half of your self-employment tax (7.65%) when calculating your regular income tax, which reduces the effective rate slightly. But here's where it gets better - business deductions are your best friend. As a college student doing Doordash, you can deduct: - Mileage (65.5¢/mile for 2023) - this is usually your biggest deduction - Portion of your phone bill used for work - Hot bags and delivery supplies - Car maintenance and repairs (if not using mileage deduction) - Even a portion of car insurance The mileage deduction alone can be huge. If you're driving 100 miles per shift, that's $65.50 in deductions per day you work. Also, don't forget about the standard deduction ($13,850 for single filers in 2023). If your total income is close to that amount, you might not owe much regular income tax at all - just the self-employment tax portion. Start tracking everything NOW and consider making quarterly estimated payments to avoid penalties. Your actual effective tax rate will likely be much lower than 25% once you account for all legitimate business expenses.

As a college student myself who's been doing gig work for the past year, I totally get the tax anxiety! Your math is actually pretty spot-on for the worst-case scenario, but here's some good news that might help ease your stress. While yes, you do pay both self-employment tax (15.3%) AND income tax, there are several things working in your favor as a college student: 1. **Standard Deduction**: For 2023, the standard deduction is $13,850. If your total income (Doordash + any other income) is at or below this amount, you won't owe federal income tax - just the self-employment tax. 2. **Business Deductions**: Track every business mile! At 65.5¢ per mile, this adds up fast. If you drive 50 miles per day working, that's $32.75 in deductions daily. 3. **Self-Employment Tax Deduction**: You can deduct half of your self-employment tax (7.65%) when calculating your income tax, which helps reduce the double taxation effect. The key is starting a tracking system RIGHT NOW. I use a simple mileage app and keep receipts for everything work-related. My effective tax rate ended up being around 15% after all deductions, not the 25%+ I was initially worried about. Also, consider setting aside 20-25% of earnings for taxes and look into quarterly payments if you're making good money. Better to be prepared than scrambling in April! You've got this - just stay organized with your records!