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DoorDash driver here for 3 years. The tax situation isn't as scary as people make it sound if you're organized. My advice: 1. Get a mileage tracking app RIGHT NOW (I use Stride) 2. Save 25-30% of everything you make 3. Take pictures of all receipts for hot bags, phone mounts, etc 4. Pay quarterly taxes if you make more than a few thousand Also, your car maintenance costs more than you think! That depreciation hits hard after a year or two of delivery driving.
Does the 25-30% include state taxes too or just federal? I'm trying to figure out exactly how much to set aside each week.
That percentage includes both federal and state taxes for most situations. If you're in a high-tax state like California or New York, you might want to bump it up to 30-35%. I'm in a medium-tax state and 28% has covered me completely. The exact amount depends on your overall income level and tax bracket when combined with any other jobs you have.
Do any of you guys use TurboTax for your delivery gig taxes? Or is there a better option for self-employed people? This will be my first year doing DoorDash and I'm worried about messing it up.
I've used both TurboTax Self-Employed and FreeTaxUSA for my delivery gig taxes. TurboTax is more user-friendly and asks specific questions about delivery driving, but it's expensive (around $120-150 for federal and state with self-employment). FreeTaxUSA handles 1099 income well too and costs way less (about $15 for state, federal is free), but you need to know which forms to fill out yourself.
Whatever you do, DON'T ignore this. I made that mistake and ended up owing way more in penalties and interest. Face it head-on, even if it's scary.
Thanks for the advice. Yeah, I'm definitely trying to tackle this now before it gets even worse.
Quick tip: If you're having trouble reaching the IRS, try calling right when they open in the morning. I got through in like 10 minutes doing that!
OP, whatever you do, DO NOT ignore any IRS letters or deadlines. I made that mistake and ended up with a huge penalty. Stay on top of it!
Oh no, that sounds awful! Thanks for the warning. I'll make sure to respond to everything promptly.
Quick question - does anyone know if setting up a payment plan affects your credit score? I'm trying to buy a house soon and I'm worried this might mess that up.
yall ever notice how the irs can find that $50 you forgot to report from 5 years ago, but jeff bezos pays like $0 in taxes? make it make sense š¤”
Facts šÆ The system is rigged against the little guy
Eat the rich! š½ļøš°
Evelyn Martinez
Has anyone used the IRS Free File program with both W-2 and 1099 income? Or is it better to just pay for TurboTax or something? My income is under the limit but idk if it works well with self-employment stuff.
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Benjamin Carter
ā¢I used IRS Free File with FreeTaxUSA last year with both W-2 and 1099 income. It worked pretty well and handled my Schedule C without issues. The federal filing was completely free, and I only paid like $15 for state filing. Way cheaper than TurboTax which wanted to charge me $120+ for self-employment income.
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Maya Lewis
With your income mix, don't forget that you should have been making quarterly estimated tax payments on that 1099 income! I made this mistake my first year freelancing and got hit with underpayment penalties. If you haven't been making quarterly payments, you'll likely have an additional penalty on top of what you owe.
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Nick Kravitz
ā¢Oh no, I definitely haven't made any quarterly payments. I had no idea I needed to do that. How bad are these penalties usually? Is there any way to avoid them at this point?
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Maya Lewis
ā¢Unfortunately, there's no way to completely avoid the penalties now for 2023 since those quarterly payments should have been made throughout last year (typically due in April, June, September, and January). The penalty is basically interest on the amount you should have paid. For perspective, the penalty rate is currently around 8% annually, so if you should have been paying roughly $3,000 each quarter ($12,000 total for the year), the penalty might be around $500-800 depending on how late each payment was. Not catastrophic, but definitely an unnecessary expense.
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