How do taxes work for Doordash as a side income with a full-time job?

Thanks for explaining! Quick question - for the mileage deduction, do I track from my house to the restaurant and then to the delivery address? Or just from restaurant to delivery? And do I need some kind of special app to track this or is a notebook in my car good enough?

For the mileage deduction, you can deduct all miles driven for business purposes. This includes miles from your house to your first pickup, between deliveries, and back home after your last delivery (assuming you're starting/ending at home). The only miles you can't deduct are personal detours (like stopping for groceries during your shift). A notebook works fine as long as you record the date, starting/ending odometer readings, and the business purpose. That said, there are several free apps that make tracking easier and can generate reports come tax time. Just make sure to start tracking from day one - reconstructing mileage later is really difficult if you get audited!

Does it actually handle the quarterly payments situation? That's what I'm most worried about. I don't want to end up owing a huge bill at the end of the year.

How reliable is it though? I tried using another tax service last year and they missed a bunch of deductions I was eligible for. My brother-in-law is an accountant and found all kinds of mistakes when he looked at my return.

Yes, it handles the quarterly payment situation really well. It calculates how much you should set aside from each payment and sends reminders before the quarterly due dates. It even generates the vouchers you need for making the payments. Totally removed the guesswork for me. For reliability, I was skeptical too after using TurboTax last year and feeling like I missed things. What impressed me was that taxr.ai found legitimate deductions specific to delivery drivers that generic tax software missed - like partial cell phone expenses, insulated delivery bags, and even a percentage of car insurance. My refund was about $430 higher than what I initially calculated myself.

Wait, you're saying there's a service that waits on hold with the IRS for you? How does that even work? Sounds too good to be true.

Seems like a waste of money when you can just call right when they open. I've never waited more than 20 minutes getting through to the IRS. Plus how do you know the info they give you is even correct? IRS agents give wrong info all the time.

It works by using their system to dial in and navigate the IRS phone tree for you. When they detect that an agent is about to pick up, they call your number and connect you. It's actually pretty simple technology but saves a ton of time. Sure, calling at opening time can work sometimes, but that's not an option for everyone with day jobs. I called at three different "recommended" times last tax season and still waited over an hour each time. As for the accuracy of information - that's actually why getting through to an agent is important. You can ask for their ID number and notes to be added to your account, which helps if there's ever a dispute about what advice you received.

Yikes, that's a lot more than I expected! Is there a good rule of thumb for how much to set aside from each Doordash payment? Would 30% be enough?

For most people, setting aside 30% is a good starting point, but it depends on your total income from both jobs combined. If your regular job already puts you in a higher tax bracket, you might want to save 35% or even 40% from Doordash earnings to be safe. I use a separate savings account just for taxes so I'm not tempted to spend it. Better to have a little extra saved than not enough when tax time comes around. You can always use any excess as a head start on the next year's taxes or put it toward your truck fund once you've filed!

Actually the standard mileage rate is 65.5 cents per mile for 2023 reporting (filed in 2024) and 67 cents for 2024 (which you'll file in 2025). And you can't just deduct every mile from when the app is on - you need to be actively working (driving to pickup, to delivery, or to a hotspot). Just having the app on while you're parked at home doesn't count.

This is really helpful advice! I'm also considering doing gig work while keeping my day job. The separate bank account idea is genius - I never would have thought of that but it makes total sense for keeping everything organized. Quick question about the W-4 adjustment - how do you figure out how much extra to have withheld? Is there a calculator or formula, or do you just estimate based on how much you expect to make from Doordash?

Great question! For the W-4 adjustment, the IRS has a withholding calculator on their website (irs.gov/W4App) that's pretty helpful. You input your regular job info plus your estimated gig income and it tells you how much extra to withhold. But honestly, I just do a rough calculation: if I expect to make $10,000 from Doordash and I want to withhold about 25-30% for taxes, that's $2,500-3,000 extra I need withheld for the year. Divide by number of paychecks (26 if you're paid biweekly) and that's about $100-115 extra per paycheck. The nice thing about this approach is you don't have to stress about quarterly payments, and if you overestimate your gig income, you just get a bigger refund. Much simpler than trying to calculate quarterly payments perfectly, especially when gig income can be so variable month to month.

Great question! The IRS actually has a withholding calculator on their website (irs.gov/W4App) that can help you figure this out. You'll input your expected income from both jobs and it'll tell you how to adjust your W-4. But here's a rough way to estimate: Let's say you expect to make $6,000 from Doordash this year. You'll owe about 15.3% in self-employment tax ($918) plus your regular income tax rate on that amount. If you're in the 22% bracket, that's another $1,320, for a total of about $2,238 in extra taxes. Divide that by the number of paychecks you get from your main job (26 if you're paid bi-weekly) and you'd want to withhold an extra $86 per paycheck. You can specify this exact amount in box 4c of your W-4. The nice thing about this approach is you don't have to worry about quarterly payments - it all gets handled through your regular job's payroll system. Just make sure to recalculate if your Doordash income ends up being much different than expected!

Great question about the W-4 adjustment! The IRS actually has a withholding calculator on their website (irs.gov/individuals/tax-withholding-estimator) that can help you figure this out. You'll need your most recent paystubs from your regular job and an estimate of what you expect to make from Doordash. Basically, you estimate your total tax liability for the year (including both jobs) and subtract what's already being withheld from your W-2 job. The difference is what you either need to pay quarterly or have extra withheld. For example, if you think you'll owe an extra $2,000 in taxes from Doordash income, you could have an extra $77 per paycheck withheld (assuming you're paid biweekly - $2,000 ÷ 26 pay periods). This way you don't have to worry about quarterly payments at all. I personally prefer the extra withholding method because it's automatic and I don't have to remember payment dates. Plus, if I overestimate my Doordash earnings, I just get a bigger refund instead of having to make adjustments to quarterly payments.

Great question! The IRS actually has a withholding calculator on their website (irs.gov/W4App) that can help you figure this out. You input your expected income from both jobs and it tells you how to adjust your W-4. As a rough estimate though, if you expect to make $5,000 from Doordash in a year, you'd probably want an extra $1,500-2,000 withheld from your regular paycheck (that's about $125-165 per month if you're paid monthly). The exact amount depends on your total income and tax bracket. I personally prefer this method over quarterly payments because it's automatic - one less thing to remember! Plus if you overestimate your gig income, you just get a bigger refund instead of owing money.

Great question about the W-4 adjustment! The IRS actually has a withholding calculator on their website (irs.gov/W4App) that's pretty helpful. You input your expected income from both jobs and it tells you how much extra to withhold. But honestly, I just do a rough estimate. If I think I'll make about $6,000 from Doordash this year, I know I'll owe roughly 30% in taxes on that ($1,800). So I divide $1,800 by the number of paychecks I get from my regular job (26 for bi-weekly) and have an extra $70 withheld each paycheck. The nice thing about extra withholding is that it's automatic - no quarterly payments to remember, and you might even get a refund if you overwithhold. Just make sure to update your W-4 again if your gig income changes significantly!

Great question! The IRS actually has a withholding calculator on their website (irs.gov/individuals/tax-withholding-estimator) that's pretty helpful. You plug in your regular job info and estimated gig income, and it tells you how much extra to withhold. But here's a simpler approach that works well: estimate your annual Doordash earnings, multiply by your tax rate (probably around 25-30% if you include self-employment tax), then divide by the number of paychecks you get per year. For example, if you think you'll make $6,000 from Doordash and get paid bi-weekly (26 paychecks), you'd withhold an extra $70-85 per paycheck ($6,000 × 30% ÷ 26). The nice thing about this method is you don't have to worry about quarterly payments, and if you overestimate your Doordash earnings, you just get a bigger refund. I've been doing it this way for two years and it's much less stressful than trying to make quarterly payments!

Great question! For the W-4 adjustment, the IRS has a withholding calculator on their website (irs.gov/W4App) that's really helpful. You input your regular job info plus your estimated gig income and it tells you exactly what to put on your W-4. As a rough estimate though, if you think you'll make $5,000 from Doordash this year, you'd want an extra $1,500-2,000 withheld from your regular paychecks (that's the 30-40% tax rate mentioned earlier). You can spread that across your remaining paychecks - so if you have 20 paychecks left in the year, you'd add about $75-100 extra withholding per paycheck. The nice thing about adjusting your W-4 is you can change it anytime during the year if your gig income ends up being higher or lower than expected. Much easier than trying to catch up with quarterly payments mid-year!

Great question about the W-4 adjustment! The IRS actually has a withholding calculator on their website (irs.gov/w4app) that can help you figure out the right amount. You'll need your most recent paystub and an estimate of your expected gig income for the year. Basically, you estimate your total Doordash earnings for the year, multiply by your tax rate (including self-employment tax), then divide by the number of pay periods left at your day job. So if you expect to make $5,000 from Doordash and you're in the 22% bracket, that's about $1,100 in regular income tax plus $765 in self-employment tax (15.3% of $5,000), so roughly $1,865 total. If you get paid biweekly and have 20 pay periods left, you'd want an extra $93 withheld per paycheck. The calculator makes it way easier though - just plug in your numbers and it tells you exactly what to put on your W-4!

Great question! The IRS has a withholding calculator on their website (irs.gov/Individuals/Tax-Withholding-Estimator) that's actually pretty helpful for this exact situation. You input your regular job info and estimated gig income, and it tells you how to adjust your W-4. Alternatively, you can do a rough calculation: estimate your annual Doordash earnings, multiply by your marginal tax rate plus 15.3% for self-employment tax, then divide by the number of paychecks you get per year. For example, if you think you'll make $6,000 from Doordash and you're in the 22% bracket, that's about $2,238 in extra taxes ($6,000 × 37.3%). If you get paid bi-weekly (26 times per year), you'd want an extra $86 withheld per paycheck. Just remember to update your W-4 again in January if your gig income changes significantly from what you estimated!

Great question! The IRS actually has a withholding calculator on their website (irs.gov/individuals/tax-withholding-estimator) that's pretty helpful for this situation. You input your regular job info plus your estimated gig income, and it tells you how much extra to withhold. But honestly, a rough formula works too: take your expected annual Doordash earnings, multiply by your marginal tax rate (probably 22% if you're in that bracket) plus the 15.3% self-employment tax, then divide by the number of paychecks you get per year from your day job. So if you expect to make $6000 from Doordash and get paid biweekly (26 paychecks), you'd want about $86 extra withheld per paycheck ($6000 × 37.3% ÷ 26). The nice thing about extra withholding is you don't have to worry about quarterly deadlines, and if you overwithhold, you just get a bigger refund. Way less stressful than scrambling to make quarterly payments!

For the W-4 adjustment, the IRS has a withholding calculator on their website (irs.gov/W4App) that's really helpful! You input your regular job info plus your estimated gig income, and it tells you exactly how much extra to withhold. As a rough estimate though, if you expect to make $5,000 from Doordash in a year, you'd probably want an extra $75-100 per month withheld from your regular paycheck (assuming you're in the 22% bracket plus self-employment tax). The calculator is way more accurate though since it factors in your specific situation. I actually do a combo approach - I have a little extra withheld from my W-2 job to cover most of it, then make small quarterly payments if needed. Takes a lot of the stress out of tax season!

Great question! The IRS actually has a withholding calculator at irs.gov/W4App that can help you figure this out. You input your regular job info plus your expected gig income, and it tells you how much extra to withhold. But here's a simpler approach that works well: estimate your annual Doordash earnings, multiply by 30% (to cover both income tax and self-employment tax), then divide by the number of paychecks you get from your regular job. Have that extra amount withheld from each paycheck. For example, if you think you'll make $6,000 from Doordash this year and get paid twice monthly (24 paychecks), you'd want an extra $75 per paycheck withheld ($6,000 × 0.30 ÷ 24 = $75). This way you're covered and don't have to worry about quarterly payments at all!

Great question! For the W-4 adjustment, the IRS has a withholding calculator at irs.gov/W4App that's pretty helpful. You input your regular job info plus your estimated gig income and it tells you how much extra to withhold. That said, I find it easier to just do a rough calculation: figure out what tax rate your gig income will be taxed at (your marginal rate plus 15.3% for self-employment tax), then divide that annual amount by the number of paychecks you get from your regular job. For example, if you expect to make $5000 from Doordash and your combined tax rate is around 30%, that's $1500 in taxes. If you get paid biweekly (26 paychecks), you'd want about $58 extra withheld per paycheck. The nice thing about extra withholding is it's automatic - you don't have to remember quarterly payments. Just make sure to recalculate if your gig income changes significantly!