Let’s face it: That question, “Does Doordash withhold taxes?” and the frequency that I see it, tells me that Doordash is horrible at making sure people understand what it means to be an independent contractor. It’s clear that a lot of people think they are employees still.
When you deliver for Doordash, you are an independent contractor. That means that you are not an employee. It also means that Doordash does NOT withhold taxes for you. You are completely on your own.
Understand how Tax Withholding Works
Up until 1943, people paid their taxes after the fact. However, with the money needs of World War 2, the government realized they needed to adopt a pay as you go system, which means that people needed to have their taxes paid ahead of time instead of after the fact.
One of the issues is that people aren’t real good at saving money themselves for taxes, and thus the government began having money taken out of paychecks. While it helped people avoid tax troubles, sometimes it makes it difficult for people to understand how much is really taken out of your paycheck. The government publishes schedules now to help employers understand how much to take out of a paycheck. Money is taken out for state, federal, and sometimes local income taxes, as well as for social security and medicare.
However, as independent contractors, we are not employees
And that means that the companies we contract with are not under the same obligations. In fact, because of the wide variations of how peoples’ expenses work, it’s kind of impossible for a contracting organization to know what to hold back.
What that means, folks, is that we are on our own. It is up to us to know what our taxes should be, and it is up to us to get the money sent in ahead of time.
Does Doordash Withhold Taxes? No.
So how do you make sure you’re not in trouble when it comes to taxes?
My first bit of advice would be, get a tax professional. Get with someone who understands taxes well for self employed contractors. Help them get an understanding of what your total income picture looks like and how much you appear to be earning as a contractor, and with your expenses. Show them your earnings from Doordash and other gig companies. Give them employment earnings for you and your partner, if filing jointly. Let them see your mileage and other expenses. They can get a pretty good picture of what that will look like for you at tax time. They can also help you know what to save and whether you need to make quarterly payments.
Understand how taxes work for independent contractors.
If you are asking, ‘how does Doordash withhold taxes?’ you probably aren’t familiar with tax requirements for self employed people. Try to learn as much as possible. You can start with this article, and we put together this video on taxes for independent contractors in the delivery side of the gig economy. These are just a start. Ask questions of your tax pro. Your circumstances are different than others. Educate yourself as much as possible.
But here’s the thing. If you’re asking the question and you’ve done this for long, you are at risk. Falling behind in preparing for April 15 can be disastrous for you. Start learning what your unique tax situation is, and start preparing.