Top tax deductions for DoorDash, Grubhub, and Uber Eats drivers

Key takeaways

• Delivery drivers are independent contractors rather than employees. That means companies do not withhold tax, and you’ll receive 1099-NEC and/or Form 1099-K instead of a W-2.
• DoorDash drivers are taxed as independent contractors.
• DoorDash drivers will need Form 1099-NEC (Nonemployee Compensation), Form 1040 (U.S. Individual Income Tax Return), Schedule C (Profit or Loss from Business), and Form 1040-ES (Estimated Tax Payments) to file, as well as any mileage and expense tracking forms and receipts.
• Calculate your DoorDash tax using our Self-Employment Tax Calculator.
• Delivery drivers can deduct many different business expenses to reduce their taxable income, if they are both necessary and ordinary.
• You can deduct maintenance and repairs for vehicle upkeep.
• You can deduct the cost of snacks and drinks for your customers.
• You can deduct the cost of work supplies and equipment you need to do your job.
• You may be eligible to deduct premiums that you pay for medical, dental, and qualifying long-term care insurance coverage for yourself, your spouse, and your dependents.
• You may be able to deduct qualified unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income (AGI).

As more and more people work in this part of the “gig economy,” you may have questions about whether you’re an employee or a contractor. We’ll dive into the broad strokes of what it means to fit into these different categories, but you can always discuss the details of your employment with a Tax Pro. We’ll also cover deductions related to your car, gas, and other important write-offs, as well as estimated tax payments to reduce any tax you owe at the end of the year.

Employee status vs. contractor status

• Employees generally receive regular paychecks with income, Social Security, and Medicare taxes withheld from their wages. At year-end, they typically receive a Form W-2 with information on the income earned for the year and total tax withheld.
• Independent contractors are typically considered self-employed. The companies that hire them don't withhold income or payroll taxes from their payments. You should receive Form 1099-NEC and/or Form 1099-K from whatever food delivery company you’re working for or a credit card processor.

As a self-employed person, you will also need to include Schedule C with your tax return. You may need other forms, such as Schedule 1 or 2, Schedule SE, Form 4562, and others.

Whether you are due to receive a Form W-2, Form 1099, or both, you should receive your tax forms with your total earnings for the year by the first week of February. If you haven’t received them by, reach out to the company or companies for whom you’ve been delivering food to see if you can download forms online, or if they can send the documents to you as soon as possible.

It’s important to note that even if you haven’t received the forms, you are still obligated to report any income earned throughout the year. Keep an independent record of all your earnings and make sure to compare what you receive and what you made.

If you’re not sure which documents do or do not apply to you, Jackson Hewitt’s Tax Pros can help you with how to proceed.

DoorDash Tax

Does DoorDash take out taxes? No. As a delivery driver, you are an independent contractor, and DoorDash will not withhold tax from your pay. That means you will be required to pay your taxes by making estimated quarterly tax payments, usually on April 15, June 15, Sept. 15, and Jan. 15 each year. You’ll also get a Form 1099 from DoorDash, instead of a Form W-2.

DoorDash Tax Form

As a DoorDash driver, you will file as a self-employed person. Here’s a breakdown of the tax forms you’ll need:

• Form 1099-NEC (Nonemployee Compensation): DoorDash will send you Form 1099-NEC if you earned $600 or more. This form reports the total you’ve earned from DoorDash, which you’ll need when you file your tax return.
• Form 1040 (U.S. Individual Income Tax Return): Form 1040 is where you’ll report your annual income and expenses from DoorDash and the main tax form that all taxpayers are required to file.
• Schedule C (Profit or Loss from Business): Deduct business expenses relating to driving for DoorDash, like gas mileage, gas, or your phone plan, using Schedule C.
• Form 1040-ES (Estimated Tax Payments): You’ll need to use Form 1040-ES to estimate your quarterly tax payments.
• Mileage and expense tracking forms and receipts: You won’t need to file your mileage and expense tracking forms, but they can help you keep accurate track of your expenses and may be necessary if you are audited.

DoorDash Tax Calculator

Calculate your DoorDash tax using our Self-Employment Tax Calculator. Using the latest information from the IRS, including any annual tax law changes, this helpful tool can provide you with an accurate estimate of your self-employment tax.

Don’t forget, as an independent contractor, you’re entitled to many tax benefits and deductions that can help to lower your tax and could even result in a bigger tax refund. File your tax return with a Tax Pro to ensure that you get every credit, deduction, and dollar you deserve.

Deductions for delivery drivers

According to the IRS, deductible business expenses for taxes must be both necessary and ordinary. That means the expense must be:

• Common and accepted in your business or trade.
• Necessary for your business or trade.

Deductible business expenses may include the cost of goods sold, capital expenses, and other expenses. Keep the following potential business expenses for taxes in mind and save your receipts and records throughout the year to maximize your self-employment deductions.

Deducting miles for delivery drivers

If you use your vehicle for food delivery work, you can deduct maintenance and repairs for vehicle upkeep. This may include expenses, such as car payments, gas costs, oil changes, registration fees, insurance, parking fees, tolls, and depreciation (if you own the car or truck), new tires, or leasing costs.

You may choose the actual expense method or use the standard mileage rate. If you choose the actual expense method, you must also keep track of your vehicle-related expenses for the year. Vehicle-related expenses include gas, oil, insurance, repairs, cleaning, and registration.

Whichever method you choose, you must keep track of the mileage on your car from the first day of the year through the end of the year. Keeping a log of your miles in a planner, on a calendar or even in a spreadsheet will help to support your claim.

Meals and snacks deductions

Most of the time, you won’t be able to deduct your meals and snacks on the go. You can deduct the cost of snacks and drinks, and the ice to keep them cold, you keep for your customers. You may also be able to deduct a meal with another delivery driver if the two of you are talking about the job and giving each other tips on the work, and so on. Always check with your Tax Pro about anything you want to claim and make sure that you’re accounting for things properly.

Deducting equipment and supplies expenses

You may also need to think of different supplies you’ll need to run your business and keep track of everything. Most businesses have two types of supplies. There are office supplies such as pens, pencils, notepads, calendars, etc. and work supplies that are specific to a job.

Keep track of your expenses for each job and for your office supplies. This will help you lower your income and self-employment taxes when it comes time to do your tax return.

Deducting health insurance premiums

As a self-employed filer, you may be eligible to deduct premiums that you pay for medical, dental, and qualifying long-term care insurance coverage for yourself, your spouse, and your dependents.

• This health insurance write-off is entered on Part II of Schedule 1 as an adjustment to income.
• Unlike an itemized deduction, this deduction treatment is beneficial because it lowers your adjusted gross income (AGI).
• Having a lower AGI can reduce the odds that you’ll be affected by unfavorable phase-out rules that can cut back or eliminate various tax breaks.

Eligibility is determined month-by-month. You can only claim the health insurance premiums write-off for months when you, or your spouse, were not eligible to participate in an employer-sponsored program.

Unreimbursed medical expense deductions for delivery drivers

If you’re itemizing deductions, the IRS allows taxpayers to deduct the qualified unreimbursed medical care expenses that exceed 7.5% of their AGI.

If you have an AGI of $50,000 and $10,000 in total deductible medical expenses, 7.5% of $50,000 is $3,750, and not deductible. You can deduct the remaining $6,250 of medical expenses as part of your itemized deductions.

The total itemized deductions (medical, taxes, interest, etc.) need to exceed the annual standard deduction for the taxpayer’s filing status. The standard deduction amounts for each filing status are adjusted for inflation annually.

There are many more possible deductions to explore. If you’re working in America’s rapidly expanding gig economy as a delivery driver, knowing the tax deductions you might qualify for can help you prepare for tax season and encourage you to keep track of your job-related spending throughout the year.

Stay informed and stay on top of your taxes by finding an office near you. Our Tax Pros are happy to answer any questions you may have on self-employment tax deductions.

About the Author

Mark Steber is Senior Vice President and Chief Tax Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

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