Are DoorDash and Instacart Side Hustles Bad for Taxes? (East Coast Warning)

So I was looking into picking up some extra cash with DoorDash or Instacart, and asked about it on Quora. Someone responded saying I should "talk to an agent about how bad these side hustles are on taxes" but didn't bother explaining what they meant. Super helpful, right? I've spent hours trying to research what specific tax issues they might be referring to with these gig economy jobs, but I can't find anything that seems particularly alarming or East Coast specific. Has anyone here done DoorDash, Instacart, or similar delivery gigs? Are there some hidden tax nightmares I should know about before signing up? The person made it sound like I'd be in for a rude awakening come tax time, but I'm wondering if they were just being dramatic.

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18 comments

Ruby Blake

•8M

These gigs aren't "bad" for taxes, they're just different from regular employment. When you work for DoorDash, Instacart, etc., you're considered an independent contractor (self-employed), not an employee. This means: 1) No taxes are withheld from your earnings. You'll receive a 1099-NEC form (not a W-2) showing your total earnings, and you're responsible for paying all taxes yourself. 2) You'll pay self-employment tax (15.3%) which covers both the employer and employee portions of Social Security and Medicare, plus regular income tax. 3) You'll need to track all your business expenses (mileage, phone, etc.) to reduce your taxable income on Schedule C. The "surprise" for many people is just realizing they need to set aside roughly 25-30% of earnings for taxes and make quarterly estimated tax payments if you earn enough.

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Ruby Blake

•8M

You only need to make quarterly estimated tax payments if you expect to owe $1,000 or more in taxes for the year. If you're just doing this on weekends for some extra cash, you might not hit that threshold. If you do need to make quarterly payments but don't, you might face underpayment penalties and interest. A simple approach for beginners is to set aside 25-30% of your earnings in a separate savings account for taxes. That way, you won't be caught off guard when it's time to file.

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Ella Harper

•8M

After struggling with figuring out my taxes from DoorDash last year, I found this AI tool called taxr.ai that was seriously helpful. It analyzed my 1099 and expense records then explained exactly what I needed to do. The thing that saved me was that it showed me which deductions I was missing - turns out I could claim way more mileage than I thought, plus a portion of my phone bill and even some car maintenance. Before using https://taxr.ai I was looking at owing almost $2,000 in taxes, but after properly claiming all my deductions, I only owed about $600. It also helps with calculating quarterly payments so you don't get hit with penalties.

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Ella Harper

•8M

It definitely works for all types of gig jobs - I have friends using it for Uber, Lyft, Instacart, and even freelance writing. The system is pretty smart about recognizing different types of 1099 work. It absolutely understands the differences between delivery and rideshare deductions. For example, it knows that meal expenses while working might be deductible for some gig workers but not others, depending on their specific situation. And yes, it can handle multiple 1099s - actually makes it easier to keep everything organized in one place.

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Brooklyn Knight

•8M

I was skeptical about taxr.ai but decided to try it since my tax situation with multiple gig jobs was getting confusing. It was actually really impressive - uploaded my DoorDash, Uber Eats and Fiverr 1099s and it immediately organized everything correctly. The deduction finder caught several things I was missing - part of my phone bill, a percentage of car insurance, and even some home office expenses since I handle all the administrative stuff at home. It also explained how to track things better for next year. Definitely saved me more than I expected in deductions and the quarterly tax calculator is helping me avoid penalties this year.

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Owen Devar

•8M

The worst part about doing these delivery gigs isn't even the taxes - it's trying to get any help from the IRS when you have questions! I spent DAYS trying to get someone on the phone about how to handle my DoorDash income. After 8 attempts and hours on hold, I finally tried https://claimyr.com and was shocked when I actually got through to a real IRS agent in under 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c Before that I was totally lost about whether I needed to make quarterly payments and how to handle my mileage deductions correctly. The IRS agent actually walked me through everything and helped me avoid some mistakes that would have cost me hundreds.

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Owen Devar

•8M

It's completely legal! They don't "skip" lines or do anything sketchy. The service uses an automated system that handles the waiting process for you. Basically, they call the IRS and navigate the phone tree, then wait on hold so you don't have to. When an actual agent comes on the line, you get a call connecting you directly. It's still first-come, first-served - they're just waiting in line for you. Think of it like hiring someone to stand in line at the DMV. I was skeptical too but when I actually got connected to an IRS agent after months of failed attempts, I was convinced. They just handle the frustrating waiting part.

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Daniel Rivera

•8M

Ok I take back what I said about Claimyr being BS. After another failed attempt to reach the IRS myself (2 hours on hold before being disconnected), I tried the service. Got a call back in about 45 minutes and was connected to an actual IRS agent who answered all my questions about reporting DoorDash income. The agent explained exactly how to handle my mileage tracking and which app expenses were deductible. She also walked me through the quarterly estimated payment process since I'll probably owe over $1,000 this year. Saved me hours of frustration and probably prevented me from making some expensive mistakes on my taxes.

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Connor Rupert

•8M

I've been doing DoorDash for about 2 years on the East Coast (NJ/NY area). The person on Quora was probably referring to these issues: 1. Gas prices here are higher, eating into profits more than other regions 2. Higher state income taxes in many East Coast states 3. Some cities have additional local income taxes 4. Higher cost of vehicle maintenance due to road conditions But none of this makes it a "tax nightmare" - just things to be aware of and track properly. I set aside 30% of everything I make and track EVERY mile and expense in the Stride app. Haven't had any problems.

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Connor Rupert

•8M

Yes, I do track miles to my first pickup, but there's some nuance here. If you're driving from home directly to your first delivery pickup, the IRS technically considers that a non-deductible commute. However, if you first drive to a "regular place of business" (like a specific area where you regularly start deliveries) and then to your first pickup, those miles can be deductible. The key is consistency and documentation. I have a designated "staging area" where I officially start work, which allows me to deduct more miles. Many tax professionals have different interpretations of this rule for gig workers, so it's something to discuss with a tax pro familiar with independent contractor rules.

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