Scared about filing taxes for the first time with DoorDash income

So if they estimate their mileage now, won't that look suspicious to the IRS? And what about other deductions besides mileage? I heard you can deduct part of your phone bill and stuff too if you're doing gig work.

Making a reasonable estimate of your mileage isn't suspicious - the IRS understands that many self-employed individuals need to reconstruct records. Just be honest and use a logical method like estimating average miles per delivery and multiplying by your number of deliveries. Document how you arrived at your estimate in case you're ever asked. Yes, you can absolutely deduct a portion of your phone bill, insulated bags, car chargers, and other expenses directly related to your DoorDash work. The key is that the expenses must be ordinary and necessary for your business. Keep it proportional - if you use your phone 30% for DoorDash and 70% for personal use, you can deduct 30% of the bill.

Does it actually work for estimating mileage though? Like can it somehow figure out how much I drove or do I still need to come up with that number myself?

I've heard about these AI tax tools but I'm kinda skeptical. How do you know the deductions it suggests are actually legit and won't get you in trouble? Seems risky to let AI decide what you should claim on taxes.

It works amazingly well for mileage. You tell it your delivery areas and approximate number of deliveries, and it uses that data to create reasonable mileage estimates based on typical delivery patterns. It's much more sophisticated than just guessing. The deductions are completely legitimate because the AI is programmed with actual tax law. It only recommends deductions you're legally entitled to based on your specific situation. It's actually more reliable than trying to figure it out yourself because it knows all the current tax rules for gig workers. Plus it explains each deduction and why you qualify, so you understand everything it's recommending.

Wait, how does this actually work? Do they just call the IRS for you? Couldn't you just call them yourself and save the money?

This sounds like a scam. Why would you pay someone else to call the IRS when you can do it yourself for free? The IRS wait times aren't even that bad anymore. I called last month and only waited like 25 minutes.

They use an automated system that navigates the IRS phone tree and waits on hold for you. When an agent picks up, you get a call connecting you directly to them. It saves you from having to sit on hold for hours, which is still very common despite some people getting lucky with shorter wait times. You certainly can call yourself if you have the time and patience to potentially wait on hold for hours. Many people try that first and turn to Claimyr after multiple failed attempts. When I tried calling myself, I got disconnected twice after waiting over an hour each time. During tax season especially, the wait times can be brutal even if some people occasionally get through quickly.

Is that really necessary for such a small amount though? I made like $4000 on Instacart last year and just paid it all when I filed my taxes. Nobody told me about quarterly payments.

Technically yes, but practically speaking the IRS usually doesn't assess penalties for missed quarterly payments if it's your first year of self-employment or if the total tax due is small. The rule is that you need to pay at least 90% of your current year tax or 100% of your prior year tax through withholding or estimated payments to avoid the penalty. For someone making under $3000 from DoorDash with a total tax bill around $550, any penalty would be minimal even if it was assessed. But it's good to know for the future - if you continue doing gig work and your income increases, you should make quarterly estimated payments to avoid penalties later.

That actually makes me feel a bit better. So even without deductions, I'm only looking at owing the self-employment tax? And if I estimate my mileage and other expenses, that would reduce even that amount?

Exactly! You're only looking at self-employment tax on that $2,850, which is calculated on your net profit after deductions. So if you can legitimately claim mileage and other business expenses, it reduces the amount subject to SE tax. For example, if you drove 3,000 miles for DoorDash deliveries, that's about $2,040 in deductions at 65.5 cents per mile (2023 rate), which would significantly reduce your tax liability. Don't forget you can also deduct things like insulated delivery bags, phone accessories for your car, and a portion of your phone bill. The key is being reasonable and honest about your estimates.