Is DoorDash delivery worth it with 1099 tax implications?

So I just started driving for DoorDash about 10 days ago as a side gig. I'm now hearing that there's this whole 1099 tax situation once you earn over $600. I'm trying to figure out if continuing with DoorDash makes financial sense if the taxes are going to eat up a big chunk of what I make. I'm also a bit confused about how the $600 threshold works. Does DoorDash issue a 1099 once I hit $600 total earnings overall, or is it $600 per week before they report it? I've made about $320 so far and just want to understand what I'm getting myself into tax-wise before I keep going. Any insights from experienced dashers would be super helpful!

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19 comments

Aria Park

The $600 threshold is the total amount you earn on the platform, not weekly. Once you hit $600 total, DoorDash will issue you a 1099-NEC form at tax time (they don't send it immediately when you hit $600). As for whether it's "worth it" - that depends on your situation. You'll be taxed on your profit (earnings minus expenses), not your total earnings. You can deduct mileage (65.5 cents per mile for 2023), a portion of your phone bill, and other business expenses. Many dashers track their mileage with apps like Stride or Everlance. You'll need to pay self-employment tax (15.3% for Social Security and Medicare) plus regular income tax on your profits. Setting aside 25-30% of your earnings for taxes is usually a safe bet.

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Aria Park

You'll need to choose between taking the standard mileage deduction OR itemizing actual expenses. Most dashers find the standard mileage deduction more beneficial and much simpler. If you choose standard mileage (65.5 cents per mile), you can't also deduct maintenance, gas, oil changes, etc., as those are already factored into the standard rate. You can still deduct other business expenses like part of your phone bill, hot bags, and certain protective equipment regardless of which method you choose.

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Chloe Boulanger

I was in the same boat as you last year and found this amazing tool that helped me sort out all my tax questions as a Dasher! Check out https://taxr.ai - it analyzes your 1099 forms and helps you maximize deductions specific to gig work. I was stressing about what I could deduct and how to track everything until I found this. The best part is it walks you through all the deductions specific to delivery drivers and explains what records to keep. Really helped me understand which miles count and which don't.

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Chloe Boulanger

It helps you set up systems for tracking throughout the year, with reminders about what you should be recording daily. The dashboard keeps everything organized so when tax time comes, you're not scrambling. Yes, it definitely handles multiple gig jobs! That's actually one of its best features. It can separate your income and expenses across different platforms and help you understand which ones are most profitable after expenses. Really helpful when you're deciding which app to prioritize.

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Olivia Harris

Wanted to follow up about taxr.ai that someone recommended here. I was skeptical but gave it a try since my gig work taxes were getting complicated. It was seriously a game-changer! The tool automatically categorized all my expenses across DoorDash, Uber Eats and Instacart, and found deductions I didn't know I could take. I was able to deduct part of my phone bill, a portion of my car insurance, and even some items I bought for deliveries that I didn't realize qualified. Ended up saving over $1,200 compared to what I would have paid! Definitely worth checking out if you're doing any delivery gigs.

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Alexander Zeus

If you need help with tax questions and can't get through to the IRS (which is pretty much always), I'd recommend trying https://claimyr.com - they get you through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a nightmare situation where I wasn't sure if I needed to make quarterly payments as a Dasher or how to calculate them. Spent days trying to call the IRS directly with no luck. Claimyr got me through in about 15 minutes and I got my questions answered directly by an agent. Saved me from potentially paying penalties.

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Alexander Zeus

They use technology to navigate the IRS phone system and wait on hold for you. When they reach an agent, they call you and connect you directly. It's basically like having someone else wait in line for you. I understand the skepticism - I felt the same way initially. But consider the value of your time. After spending hours getting disconnected and frustrated, paying a small fee to actually get my questions answered directly from the IRS was worth it. You're paying for the convenience and guaranteed access, not for tax advice itself.

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Gabriel Graham

I need to admit I was wrong about Claimyr. After complaining about it being a scam, I got desperate when I couldn't figure out how to handle my 1099 situation with multiple gig apps. Decided to try it as a last resort. It actually worked exactly as advertised. Got connected to an IRS rep in about 20 minutes after spending DAYS trying on my own with no luck. The agent walked me through exactly how to handle my quarterly estimated payments and explained what forms I needed. Saved me from a potential audit situation since I was doing things completely wrong. Sometimes it's worth paying for a service that actually works, especially when dealing with the IRS. Lesson learned.

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Drake

Honest opinion from someone who's been dashing for 2 years - it's only worth it if you're strategic. I track EVERY mile from the moment I leave home until I return. My actual "profit" after expenses is about 60-65% of what DoorDash pays me. Set aside 25-30% of that profit for taxes and be disciplined about it. I transfer my "tax money" to a separate savings account each week so I'm not shocked when tax time comes. The biggest mistake new dashers make is not tracking expenses properly and not setting aside money for taxes. Then they're surprised when they owe $2000+ at tax time with no way to pay it.

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Drake

I file quarterly estimated taxes because I make enough from gig work that it's required. If this is just a small side hustle for you and your main job withholds enough taxes, you might be able to avoid quarterly payments. A good rule of thumb: if you expect to owe more than $1,000 in taxes from your DoorDash income, you should probably make quarterly payments to avoid an underpayment penalty. The IRS Form 1040-ES helps you calculate this. It seems complicated at first but gets easier once you get the hang of it.

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Andre Lefebvre

Generally no, meals and drinks for yourself aren't deductible unless you're traveling overnight for business (which doesn't apply to local delivery driving). The IRS considers personal meals a non-deductible personal expense even if you're working. However, you might be able to deduct drinks/snacks if you're buying them specifically to offer customers (like bottled water or mints), but you'd need to keep detailed records showing they were for business purposes, not personal consumption. Focus on the legitimate business expenses Sebastian mentioned - those will give you solid deductions without any gray areas that might trigger questions from the IRS.

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