Do Dashers have to file taxes?

Do Dashers have to file taxes?

Yes, as a Dasher, you are considered self-employed, which means you are responsible for reporting and paying taxes on your earnings. Unlike traditional employment, where taxes are automatically withheld from your paycheck, as a self-employed individual, you are required to file an annual tax return and make estimated tax payments throughout the year.

When you work as a Dasher, you will receive a 1099-MISC form at the end of the year, which reports your total earnings from the platform. It’s important to keep track of all your income and expenses related to your Dasher activities, as you can deduct certain expenses from your taxable income, reducing your overall tax liability.

To accurately report your earnings and expenses, you will need to fill out Schedule C (Profit or Loss from Business) and attach it to your individual tax return. This form will allow you to deduct expenses such as mileage, car maintenance, phone bills, and any other business-related costs associated with your Dasher activities.

It’s important to note that tax laws and requirements may vary depending on your jurisdiction, so it’s always a good idea to consult with a tax professional or use a reputable tax software to ensure you are meeting all your tax obligations as a Dasher.

FAQs about Dasher taxes:

1. Can I deduct the mileage I drive as a Dasher?

Yes, you can deduct the mileage you drive while on active delivery as a Dasher. The IRS allows a standard mileage rate deduction, which for 2021 is 56 cents per mile. It’s important to keep accurate records of your mileage, including the purpose and date of each trip, to support your deduction in case of an audit.

2. Can I deduct car maintenance and repairs?

Yes, you can deduct expenses related to car maintenance and repairs as long as they are directly associated with your Dasher activities. This can include costs for oil changes, tire replacements, repairs, and other necessary maintenance to keep your vehicle in good working condition for deliveries.

3. Do I need to pay self-employment tax as a Dasher?

Yes, as a self-employed individual, you are responsible for paying self-employment tax, which covers the Social Security and Medicare taxes that would typically be withheld from a traditional employee’s paycheck. The self-employment tax rate for 2021 is 15.3% of your net earnings from self-employment.

4. Can I deduct my phone bill?

Yes, you can deduct a portion of your phone bill that is used for business purposes, such as communicating with customers, using the Dasher app, or navigating to delivery locations. If you have a separate phone used exclusively for business purposes, you can deduct the entire phone bill.

5. How do I make estimated tax payments?

As a self-employed individual, you are required to make quarterly estimated tax payments to cover your income tax and self-employment tax liabilities. You can make these payments online through the Electronic Federal Tax Payment System (EFTPS) or submit Form 1040-ES, Estimated Tax for Individuals, along with your payment via mail.

6. Can I deduct food and drinks I purchase while dashing?

Unfortunately, you cannot deduct the cost of food and drinks you purchase for yourself while dashing. The IRS considers these personal expenses and does not allow them as deductions.

7. Do I need to keep receipts for all my expenses?

While it’s not necessary to keep physical receipts for every expense, it’s highly recommended to maintain accurate records of your expenses. This can include keeping electronic receipts, documenting expenses in a spreadsheet, or using expense tracking apps.

8. Can I deduct the cost of my Dasher bag and other equipment?

Yes, you can deduct the cost of your Dasher bag and any other equipment that is necessary for your delivery activities. Keep track of the purchase date and cost of these items to support your deduction.

9. What should I do if I receive a notice from the IRS regarding my Dasher taxes?

If you receive a notice from the IRS regarding your Dasher taxes, it’s essential to take it seriously and respond promptly. Consult with a tax professional or seek guidance from a qualified advisor to help you navigate the situation and address any issues raised by the IRS.

10. Can I deduct my Dasher activation and background check fees?

Yes, you can deduct the fees you paid for Dasher activation and background checks as a business expense. Keep track of these fees and include them as deductions on your Schedule C.

11. Should I set aside a portion of my earnings for taxes?

Yes, it’s a good practice to set aside a portion of your earnings for taxes. Since taxes are not automatically withheld from a Dasher’s earnings, setting aside a percentage of your income throughout the year will help ensure you have enough funds to meet your tax obligations when tax season arrives.

12. Can I hire an accountant to help with my Dasher taxes?

Certainly! Hiring an accountant who specializes in self-employment taxes can be beneficial, especially if you find the tax-filing process overwhelming or need assistance with maximizing your deductions. An accountant can help ensure you are complying with all tax laws and optimize your tax return for the best possible outcome.

Remember, staying on top of your tax obligations as a Dasher is essential to avoid any penalties or issues with the IRS. Keeping accurate records and seeking professional guidance when needed will help you navigate the complexities of self-employment taxes successfully.