“Is DoorDash worth it after taxes?” Many gig workers grapple with this burning question. After all, seeing your hard-earned money dwindle after tax deductions can be frustrating. We’ve rolled up our sleeves, diving deep into the numbers to give you a clear picture.
This article breaks down the true cost and lays out whether DoorDash really stacks up financially post-taxes. Stay informed, and make the best choice for your wallet!
What’s to come:
- What Is Doordash?
- How Does Doordash Work?
- Is Doordash Worth It After Taxes For Drivers
- Is Doordashing Worth It With Gas Prices?
- How Much Should I Set Aside For Doordash Taxes?
- How Much Does The Average Dasher Pay In Taxes?
- How To Pay Doordash Tax
What Is Doordash?
According to Bloomberg’s Second Measure, Doordash has a 59% market share and is the most popular meal delivery service in the US.
Additionally, as of Q1 2022, it had the highest average quarterly sales per customer, with an average spending amount of $323 for each customer during this time. Simply put, customers spend more money with Doordash than any other food delivery company.
How Does Doordash Work?
Local drivers who don’t work for a single restaurant are connected by this on-demand food delivery service. In order to deliver orders to customers on behalf of nearby hotels, the drivers decide their availability in their specific areas.
There are two ways to find work with DoorDash.
One way is to use the “Dash Now” button on the app. This button shows you if there is any work nearby that you can do right away.
The downside of this button is that it can be disabled if there are too many drivers in your area. It stops other drivers from taking more jobs.
Another way is to plan ahead of time. You can schedule your work hours in advance on the app. This way, you have a better chance of getting work hours.
Earnings And Expenses- Is Being A Doordash Driver Worth It?
You can make money with DoorDash in three ways.
First, you get paid for each delivery. How much you get depends on things like how far you go, how long you work, and when you work.
Second, you keep all the tips from the customers. This means more money for you.
Third, you can earn extra money by doing challenges and bonuses. These are when you deliver during busy times or reach certain goals.
How much you make with DoorDash can change a lot. It depends on things like how many hours you work, how many deliveries you do, and where you go. DoorDash tries to have just enough drivers in each area.
Potential Earnings As A Doordash Driver
DoorDash says drivers make $15-$25 an hour. While others report that dashers can make slightly less than $15 per hour on average. Drivers get a base pay for each delivery. It’s at least 2 dollars and up to 10 dollars.
DoorDash doesn’t take tips from drivers. They get all the extra money from customers.
Drivers also get more money from challenges and peak pay.
How much drivers earn depends on many things. For example, where they work, when they work, how often people order, and how happy customers are.
Driving for DoorDash can be a good job, but it has some costs and risks.
Expenses To Consider, Such As Fuel, Car Maintenance, And Taxes
An average dasher should keep in mind,
- Gas prices
Is Doordash Worth It After Taxes For Drivers
Some questions might have come into your mind like, “is doordash worth it after taxes?” Let’s guess you are a driver sitting idle or no trips ahead. Then you are your own boss, and it’s definitely worth it dashing.
But, are you thinking of switching to full-time door dashing while being a driver? Then you might have to consider some factors.
Like if you already own a car without any kind of loan, it is definitely worth it. But, if you do not have a car, and considering taking a loan, be careful, be very careful.
Because of the loan installments, you will have to pay a huge portion of your income periodically. Furthermore, the cost of gas may increase at any time.
And being a driver, there are other jobs available for you that may offer more security and permanence. But at the same time, they will require full-time work shifts and overtime.
So, It’s boiled down to your preference as a driver. If you want to work independently, Doordash could be your favorite choice.
Ride-sharing could also be done simultaneously to earn some extra as a driver.
Tax Implications For Doordash Drivers
When you work for DoorDash, you are not an employee but a self-employed person. You have to pay taxes for social security and Medicare. These are called FICA taxes.
They are 6.2% and 1.45% of your income.
You have to pay for them yourself. DoorDash does not take them out of your pay. You also have to pay regular federal taxes. You may have to pay sales tax, too, depending on where you live.
You can lower your taxes by deducting some costs, like showing your car repair slip or other expenses.
Deductions, Such As Vehicle Expenses
As a Doordash driver, you will get tax deductions for expenses, such as:
- Miles you drive
- Phone and phone accessories
- Health insurance
- Bags and backpacks for food delivery
- Roadside assistance
Tips For Managing Taxes As A Doordash Driver
Keeping track of all your expenses will help you get a deduction in tax. Every time you set for dashing, keep track of how much distance you are covering. And make sure you keep documents of all your purchases.
Is Doordashing Worth It With Gas Prices?
Gas expenses are the responsibility of DoorDash drivers.
The amount of gas consumed will vary depending on the distance traveled between the restaurant and the customer’s location, as well as the volume of traffic on the road.
According to a study conducted by Gridwise, the average DoorDash driver spends approximately 20% of their profits on gas.
Considering gas prices and other expenses, you still possess a decent amount of money at the end of the week. But you have to put some effort first. Payments vary on different deliveries and tips offered. So you still have a chance to make a good amount of money.
How Much Should I Set Aside For Doordash Taxes?
At first, taxes may seem mind-numbing, but with repetition and practice, they become manageable.
You must keep track of your business expenses in order to claim deductions since you will be filing as an independent contractor. By doing this, you can minimize your tax liability and increase your profit.
In a nutshell, you must pay approximately 15.3% in FICA (Federal Insurance Contributions Act) tax to contribute to Social Security and Medicare if your annual income is less than $11,000. Income tax is not imposed.
How Much Does The Average Dasher Pay In Taxes?
The estimated total pay for a full-time Doordash delivery driver is $39,063, so as the average earning of a Doordash driver is more than $11,000, This puts you in the 12% federal tax bracket.
How To Pay Doordash Tax
You need to get and complete a Form 1099-NEC from DoorDash if you earned more than $600 last year.
You also need to complete a Schedule C form to show your income and expenses and a Schedule SE form to figure out how much tax you have to pay on your earnings.
Then you need to complete Form 1040 to report your income tax and attach the Schedule C, and Schedule SE forms to it.
When Will I Get Paid By Doordash?
If you are a Dasher, you have different options to receive your earnings from DoorDash. Here is a summary of how DoorDash pays you:
- Weekly: You can get paid every week with a direct deposit to your bank account. This is the default option, and it does not cost you anything extra. You will receive your earnings on Monday for the previous week’s deliveries.
- Daily: You can also get paid once per day with Fast Pay. This option allows you to transfer your earnings to your debit card instantly, but it has a small fee of $1.99 per transfer. You can use Fast Pay once every 24 hours.
- Instantly: You can also get paid instantly with DasherDirect. This is a prepaid Visa card that you can use to access your earnings anytime, anywhere. There is no fee for using DasherDirect, and you can also get 2% cash back on gas purchases at participating stations.*
What Happens If You Don’t Pay Doordash Taxes
Since they are independent contractors rather than employees, Doordash drivers are liable for their own taxes on the money they earn from the service.
If you don’t pay your Doordash taxes, you could face penalties, interest, audits, liens, levies, or even criminal charges from IRS and state tax authorities.
Where can I find Doordash Tax Calculator?
You can estimate your payable taxes using different tax calculators online.
Do I Have To File Taxes For Doordash If I Made Less Than $600?
Yes, you must file taxes for Doordash even if your earnings are less than $600 unless your total self-employment income from all sources is less than $400. Despite not receiving a 1099 form for income under $600, drivers are still required to report their earnings on their tax returns.
How Much Should I Save For Doordash Taxes
Although it depends on how much you have earned, typically you may need to set aside 25% of your income for all the federal and state taxes.
What Happens if I Receive No Deliveries?
You will earn and pay taxes according to your income. To get more jobs, In your Dasher app, look for Hotspots to find deliveries that are nearby. These are the regions on your map that are highlighted in red.
Is Doordash Earn by Time Worth it?
It depends on your financial goals. Dashing full-time or as a side hustle can provide you with a decent living.
What Do I Need to Start as a Doordasher?
To start with DoorDash, you need the following:
- A domestic driver’s license
- A clean driving record
- Valid insurance
- Your own vehicle (car, motorbike, bicycle, e-bike, or scooter, depending on your area)
- A smartphone
- The DoorDash app
Is Doordash Worth It After Taxes Reddit?
Reading the comments on Reddit, it seems to be like that the earnings of Doordash is largely dependant on locations. For instance, this driver shares his experience that sometimes he earns $10 per hour only and writes,
“I have a total of like 3 weeks worth of driving in so far. I’ll usually average anywhere from like $11 – $17 an hour, depending. I doordash in the Detroit area.
To all you seasoned veterans, do you think it’s worth it in the long run? I’m slowly increasing my average payout per hour as I learn which orders to accept or not, but sometimes I’m discouraged when I only get $10 for an entire hour of driving my car around.”
Another reddit user shares his experience and said he earns $20-$30 per hour
“So I’ve only been doing Doordash for about 4 weeks. I’ve made about $1000 through Doordash and $400 through mileage deductions. I read a comment somewhere recently that said us gig drivers have to pay a boatload in taxes, so our $20-30 an hour comes out to be much much less.”
So, yeah, if you earn in doordash more than the average wage, it is definitely worth it after taxes. However, if you don’t earn above average wage on Doordash, it may not be the right choice for you.
If you are looking for a gig job that pays well and offers flexibility, DoorDash might be a good option for you. As a DoorDash Dasher, you can set your own schedule and earn money by delivering food orders to customers.
However, you also have to consider the tax implications of working as an independent contractor. Taxes can be complicated and confusing, but with some planning and preparation, you can handle them effectively.