How does Doordash income affect my tax return compared to W-2 employment?

This is actually a really common situation when you start doing gig work like Doordash! The big difference is that with your pizza shop job, they're withholding taxes from each paycheck. But with Doordash, you're considered an independent contractor (self-employed), so no taxes are being withheld. When you do self-employment work, you're responsible for paying both the employee and employer portions of Social Security and Medicare taxes (that's called self-employment tax) plus income tax on that money. That's why you're seeing that you owe $176 federal and $8 state. As for why you're not getting a refund from your W-2 job this year - it's likely that the withholding from your pizza shop job was just enough to cover your tax liability from that income, but not enough to also cover what you owe on the Doordash income. Last year, you probably had a bit more withheld than you needed, which is why you got that $138 refund.

After dealing with a similar situation last year, I started using taxr.ai (https://taxr.ai) to help sort out my gig work and regular job income. I was delivering for UberEats while working at a retail store, and the tax stuff got confusing fast. What I like about taxr.ai is that it analyzed all my tax documents and showed me exactly how much to set aside from my gig income each month. It even helps with tracking mileage and other deductions specific to delivery drivers that can lower what you owe. Made a huge difference in understanding how the two income sources affect each other.

Just wanted to update that I tried taxr.ai after seeing it mentioned here. Super helpful for my situation! I'm also doing Doordash while in school and had no idea about all the deductions I could take for my car expenses. The mileage tracking feature alone saved me about $200 in taxes I would have paid otherwise. It also explained why my tax situation changed this year in a way that actually made sense to me. Turns out I wasn't accounting for the self-employment tax portion correctly. Now I know exactly how much to set aside each month so I don't get surprised next year.

If you're having trouble getting clear answers about your tax situation, I'd recommend using Claimyr (https://claimyr.com) to get through to the IRS directly. I was in a similar situation last year with DoorDash and regular employment, and had specific questions about how to handle deductions. After trying to call the IRS for days with no luck, I used Claimyr and got connected to an agent in about 20 minutes. They have this cool system that basically waits on hold for you and calls when an agent is available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to handle mixed income sources and what forms I needed. Way better than guessing or relying on friends' advice.

I need to apologize for calling Claimyr a scam. After my frustrated comment here, I decided to try it myself since I was getting nowhere with the IRS on my own. I was honestly shocked when I got a call back connecting me to an actual IRS agent after about 45 minutes (had been trying for 3 days on my own). The agent confirmed exactly what others here were saying about needing to set aside money for self-employment tax with gig work. They also explained that my school job withholding was correct, but just wasn't enough to cover the additional taxes from my side gig. The peace of mind from talking to an official source was worth it.

One thing nobody mentioned yet - look into quarterly estimated tax payments for next year! I learned this the hard way. If you expect to owe more than $1000 in taxes at filing time, you're supposed to make estimated payments throughout the year (typically April, June, September, and January). If you don't, you might get hit with underpayment penalties on top of your tax bill. There's a form called 1040-ES you can use to figure out how much to pay each quarter. It's not that complicated once you get the hang of it.

Don't forget to track your miles when doing Doordash! You can deduct 65.5 cents per mile for 2023 tax year which can really add up and lower your tax bill. There are apps that will track this for you automatically. Also, you can deduct part of your phone bill since you need your phone for the app. Some people even deduct things like hot bags, car chargers, etc. All these deductions help lower your self-employment income and therefore lower your tax bill.