What will you have to owe on tax day as a delivery driver who contracts with gig economy companies like Grubhub, Doordash, Postmates, Uber Eats or others?
I have no clue.
You might owe a lot.
You may be getting a hefty refund.
There are so many factors that impact whether you pay in a ton or get a bunch back. Do you have other income? Are you filing single or married? Do you have dependents? Do you have investments? Are there any tax credits? Have you paid in? These questions barely scratch the surface.
Introducing the Delivery Driver’s Tax Information Guide.
Before we go any further: Get Tax Help!
Here’s the thing: This is not tax advice. I am not a tax professional. I don’t even play one on tv. This is NOT meant to be tax advice or any advice to help you with your particular situation. It is meant to be information to help you understand how your delivery driver business works with the tax situation. I can’t recommend enough that you get someone who can sit down with you and go over your own situation and help you figure out your specifics. Go. Do it.
Understanding The Tax Impact of your Self Employment Income with Grubhub, Doordash, Postmates, Uber Eats and other contractor based gig delivery companies.
This guide isn’t meant to help you know your total taxes.
We’ll touch here and there on the bigger picture of your income taxes. However the purpose here is more about understanding the self employment part of your taxes. In particular, it’s meant to be a guide to help understand the tax related things you need to know about when delivering for Grubhub, Doordash, Postmates, Uber Eats, etc.
Let me ask a question: What were your taxes last year?
Most of you will answer with “I got a refund of….” or “I had to pay in…”
That’s not the same thing. There’s a huge difference between what you had to pay and what you got as a refund, and what your taxes were. My guess is, you have no clue what they were. You probably never even looked, or if you did you didn’t pay attention long enough to know.
That’s okay. I’ll be honest: I’m not sure myself.
But that’s how it works with taxes. We fill out all the forms or someone does it for us, and then we just pay attention to what we have to do (or what we get) at the end.
We pay even less attention when we work as an employee. The company takes money out of our paycheck and sends it in to the IRS on our behalf. We really don’t even notice it because it never came out of our pocket. In fact it never went INTO our pocket in the first place. So then April 15 rolls around and we hope enough was taken out that we get a refund. Other than that, we often don’t pay that much attention to our taxes.
And that’s why we feel so unprepared when we are self employed.
As employees, we are used to having everything done for us. The boss sends in our withholding AND our Social Security/Medicare. The most we think about it is when we wonder if we should change our withholding amounts.
But now that you are a contractor for any of these gig companies, it’s all on you. No one is taking taxes out for you. They just send you the money and the rest is up to you. A lot of us are really accidental business owners. We may not have planned to actually BE a business, but here we are, being taxed like one.
That’s a stark reality: There are TWO taxes involved here. Income tax and Self Employment Tax. The thing is, you ALWAYS had two taxes involved. As an employee, it was known as FICA – Social Security and Medicare. We never thought about it because it was just paid. But that brings us back to being self employed and having to do it ourselves now. We have to take care of that part too.
We’ll cover more on those things later in the guide.
This guide will be broken down into individual articles. They’ll look like a normal blog post on this site. The idea is to talk in detail about a particular topic. You can follow the menu for the guide or just pick and choose the articles that you need help with.
This is about helping you understand how your earnings as an independent contractor, business owner and self employed individual will impact your taxes overall. That means we’ll get into the topics that really apply to our particular area of work. My goal is to help you understand the concepts, NOT provide advice. If you need individual advice, you should seek a tax professional.
The Topics We Will Cover
1. Understand that you are taxed on PROFIT, not what Grubhub, Doordash, Postmates, Uber Eats and others pay you.
There are going to be a lot of articles here. When it is all said and done, you will be taxed based on how much you had left over after your expenses. That means we’ll talk about:
- Money In. What earnings do you report? What to do with the 1099’s?
- Money out. What are your expenses? This is going to include a LOT about your car because your car is typically by far your greatest expense.
- Tracking miles
- Actual car expenses
- Car expenses you can claim when taking miles
- Other business expenses.
- Completing your Schedule C to get your taxable income.
2. How Your Income impacts your taxes.
We’ll get into what happens once you’ve figured out your profit.
- Self Employment Tax
- The impact on your income tax
- Saving money for next year’s taxes
In case you didn’t catch it before.
I’m not a tax pro. I just saw the need to present this information in a step by step manner to help understand how taxes work. This is not tax advice. Instead, it’s intended as education, to inform and explain the concepts.
Let me know how this helps. Let me know your feedback. Are there questions that remain unanswered? Is this explaining things well or muddying the picture even worse? There’s a lot of misinformation and disinformation out there about taxes. There’s bad advice and incorrect data all over. I want to provide something that helps. Hearing from you will help me refine and hone this. Thank you in advance for your feedback!
The Tax Information Series for Delivery Drivers (Grubhub, Doordash, Postmates, Uber Eats, etc.)
- Introduction to the Delivery Driver’s Tax Information Series
- Your Taxes are Based on your Profits, not Revenue
- Understanding your Revenue: Money In
- Understanding your Expenses: Money Out
- Filling Out Your Taxes
- Preparing for next year: How much should I save?