Tax Tips for DoorDash and Uber Eats Drivers

Dealing with taxes as a gig worker can feel overwhelming, especially if you’re new to delivery driving with platforms like DoorDash or Uber Eats. As an independent contractor, it’s crucial to understand your tax obligations to avoid costly surprises. This guide will break down essential tax tips for DoorDash and Uber Eats drivers to help you stay compliant and potentially save money.

Understanding Your Tax Status

When you drive for DoorDash or Uber Eats, you are classified as an independent contractor, not an employee. This classification means you’re responsible for managing your own taxes, including income tax and self-employment tax. The platform doesn’t withhold taxes from your payments, so it’s important to prepare for tax season accordingly.

Key Tax Forms

Two primary forms you’ll encounter are Form 1099-NEC and Form 1099-K. Form 1099-NEC is issued if you receive over $600 in payments directly from the platform, while Form 1099-K reports income processed through third-party payment networks like Stripe if you meet certain thresholds. Even if you don’t receive these forms, you are still required to report all income earned during the year.

Tracking and Reporting Income

Accurate record-keeping is essential. Keep track of all your earnings, including tips, incentives, and bonuses. Both DoorDash and Uber Eats provide earnings summaries in their apps, but it’s wise to maintain a personal log or use a financial app to track your income daily. If you receive cash tips, be sure to document these as well since they count as taxable income.

For example, if you drove consistently throughout the year and earned $20,000 from DoorDash, including $2,000 in cash tips, you’ll need to report the full amount, even if you don’t receive a 1099 form. Failure to report all income can result in penalties and interest.

Deductible Business Expenses

As an independent contractor, you’re eligible to deduct certain business expenses that can significantly reduce your taxable income. Understanding what expenses qualify is key to maximizing your deductions.

Mileage Deduction

The mileage deduction is often the most substantial tax break available. In 2025, the IRS standard mileage rate is 70 cents per mile, but this rate can change annually. Keeping a detailed log of your business miles is crucial. For instance, if you drove 10,000 miles delivering food, your mileage deduction could be approximately $7,000.

Alternatively, you can deduct actual vehicle expenses such as gas, oil changes, insurance, and depreciation. It’s essential to compare both methods annually to see which provides a greater deduction.

Other Deductible Expenses

Beyond mileage, other common deductions include a portion of your cell phone and data plan, as these are necessary tools for accepting and managing orders. For example, if you pay $100 monthly for your phone plan and use it 50% of the time for work, you can deduct $600 for the year.

Expenses for equipment like phone mounts and tolls are also deductible. For instance, if you spend $50 on a high-quality phone mount setup, this amount is deductible as a business expense. Parking fees incurred while picking up or delivering orders can be deducted as well.

Self-Employment Taxes and Estimated Payments

In addition to regular income tax, independent contractors must pay self-employment tax, which covers Social Security and Medicare. The self-employment tax rate is 15.3% on net earnings. It’s essential to set aside money throughout the year to cover these taxes, especially if you expect to owe more than $1,000 in taxes.

Quarterly Estimated Tax Payments

The IRS expects gig workers to make quarterly estimated tax payments to avoid underpayment penalties. These payments are typically due in April, June, September, and January of the following year. For example, if you anticipate owing $4,000 in taxes, you should pay $1,000 each quarter. Failing to make these payments can lead to penalties and interest, adding to your overall tax burden. Using IRS Form 1040-ES can help you calculate and submit these payments timely.

Understanding Write-Off Limits and Red Flags

While claiming deductions can lower your taxable income, it’s important to avoid overestimating expenses, which can raise red flags with the IRS. The IRS may scrutinize returns that show unusually high mileage deductions or disproportionate expenses relative to income.

Mileage Log Accuracy

Maintaining a meticulous mileage log is your best defense. Use apps like MileIQ or Gridwise to automatically track your miles. For instance, recording the date, purpose, and distance of each trip ensures accuracy if the IRS questions your claims.

State and Local Tax Considerations

State income tax rules vary widely. Some states require quarterly estimated tax payments, while others have no income tax. Additionally, some cities may require a local business license or impose specific taxes on gig workers.

For example, California requires drivers to pay state income tax, and you may need a local business license depending on the city you operate in. Staying informed about your state and local obligations is crucial to avoid fines or penalties.

Filing Taxes as a Gig Worker

When tax season arrives, report your income and expenses on Schedule C (Form 1040). This form allows you to calculate your net profit or loss, which is then transferred to your individual tax return. Accurately completing Schedule C can significantly impact your tax liability.

Tax Software and Professional Help

Consider using tax software designed for self-employed individuals, which can help you maximize deductions and accurately report income. Alternatively, hiring a tax professional with experience in gig economy taxes can provide personalized advice and peace of mind.