The term “quarterly taxes” causes some confusion. There is no additional quarterly tax for Doordash delivery drivers. However, if you deliver for Doordash, you may need to make quarterly tax payments.
Dashers are independent contractors and not employees. You deliver for Doordash as a business, meaning you are on your own regarding taxes. Doordash does not take out taxes, making it your responsibility to do so.
We'll clear up this confusion between quarterly taxes and estimated quarterly payments. We will also examine why, when, and how you would need to make those payments. We'll talk about:
- What are quarterly taxes (or tax payments)?
- Do Dashers need to make quarterly tax payments?
- When are quarterly tax payments due for Doordash delivery drivers?
- What happens if you don't make estimated quarterly tax payments?
- How do you know how much to send in for quarterly payments?
- How to pay Doordash estimated quarterly taxes
About this article
This is about taxes and tax payments for United States federal income and self-employment taxes. We focus on Doordash delivery drivers in this article, however, these principles apply to most self-employed individuals and sole proprietors.
Many state and local governments have their own taxes, and taxes in other countries may be quite different. You should seek professional guidance or information related to those taxes.
Information on this website is not tax advice. It's only intended to inform and educate. Our purpose is to help you understand how taxes work to help you prepare for taxes, not to offer professional advice. You should seek out a tax professional if you need advice for your particular tax situation.
Finally, this is part of a series of articles about Doordash taxes. Rather than go down a rabbit hole about different tax topics, we'll link to different articles in the series where appropriate. Further down, you'll find a list of articles in the series.
What are Doordash quarterly taxes and why aren't they really taxes?
There isn't a quarterly tax for 1099 Doordash couriers. Federal income and self-employment taxes are annual. We file those on or before April 15 (or later if the government extends the deadline).
Payment for taxes is a different story. There is a system for making quarterly tax payments that is often mislabeled as quarterly taxes.
Our income tax system in the U.S. is pay-as-you-go, meaning Uncle Sam wants our taxes paid up by the end of the year rather than when we file.
When you run a business, which you do as an independent contractor, no one takes money out of a paycheck for you. Therefore, we have to do so for ourselves. It's a good practice to regularly set aside money from your Doordash income to cover taxes.
The quarterly estimated tax payment system is the method where you send in those tax savings. It's a system where you estimate how much money you need to cover your taxes based on your quarterly earnings. You send that estimated amount to the IRS as a pre-payment of your tax bill.
Do Dashers need to make quarterly tax payments?
Depending on how much money you will make and your potential tax liability, you may need to make quarterly estimated tax payments.
A rule of thumb is that you should not have to pay in more than $1,000 when you file your taxes. You will be fine if your total withholding, estimated payments, and tax credits add up to within $1,000 of your tax bill. However, if you anticipate owing more than $1,000, you should be making payments throughout the year.
In this screenshot, the IRS makes a couple of allowances. Like many tax things, it can feel like some mental gymnastics trying to figure it out. Therefore, it's simplest to stick with the $1,000 rule.
Remember that the amount owed includes both income and self-employment tax.
Self-employment tax is assessed on every dollar of income (profit) and not adjusted by personal tax deductions or filing status. This often results in a much larger tax bill than many Dashers anticipate.
When are quarterly tax payments due for Doordash delivery drivers?
The due dates for quarterly payments are:
- April 15 for the first quarter
- June 15 for the second quarter
- September 15 for the third quarter
- January 15 for the fourth quarter.
Why is the third quarter tax payment due in September instead of October?
The fiscal year for the US government ends on September 30. The quarterly payments were once due in three-month intervals (April, July, October, and January). Somewhere along the line, the government was running out of money before the end of the fiscal year. They figured they could fix that by moving the third quarter due date to September. It was a form of borrowing 25% of the year's revenue from the next fiscal year.
Why is the quarterly tax payment due date in June instead of July?
Moving the third quarter due date to September created a two-month quarter. For some reason that I couldn't find, they decided it was better to change the second quarter date. Evidently, it made more sense to make the second quarter two months than the third quarter.
What happens if you don't make estimated quarterly tax payments?
If you have to pay less than $1,000 on tax day, or if you get a refund, there's no problem with not making estimated payments.
The typical penalty is 5% of the underpayment amount. For example, if you underpaid by $2,000, your penalty might be around $100. Interest may also be charged.
How do you know how much to send in for quarterly payments?
There are a few ways to calculate what to send in for quarterly payments.
The IRS prefers four equal payment amounts. You can estimate your total tax bill and what payments and credits will be applied. That's the amount you expect to owe. Divide that by four to get your estimated quarterly payment.
However, if your income is unsteady and unpredictable (as it often is when working in the gig economy with apps like Doordash) you can base your payment on your income. We'll look at four options:
- You can estimate what to save for taxes each week based on your earnings and expenses. Each quarter, send in what you saved up.
- The IRS has a worksheet (page 8) that you can use. It's not the easiest to follow.
- Track your earnings and expenses using an app like Hurdlr or Quickbooks Self-Employed. Both have a feature that looks at your profits and tax profile and estimates what to set aside.
- You can use our tax calculator to estimate the tax impact of your earnings. Keep in mind that this calculator is designed for yearly earnings, so you'll want to adjust your numbers accordingly.
The process I use.
After several years as a self-employed contractor, I've determined that 20% of my profits are more than enough to set aside. This is based on several factors, including filing status, additional income, and other payments and withholding.
I set aside money each week for taxes. At each quarterly deadline, I send that money in. I take the following steps weekly:
- Multiply the miles driven that week by the standard mileage allowance (62.5 cents as of the second half of 2022) to determine my car expenses (I don't typically calculate other business expenses at this time)
- Subtract expenses from the money I received from Doordash and others for the week. This determines my weekly profit.
- Multiply profit by 0.2 (20%). This is the amount I set aside.
The ideal percentage varies with your individual situation. If you have W2 income with extra money withheld, or if you have significant tax credits, you may not need as much. However, you may want to save more if you're in a higher tax bracket or have substantial additional income.
To help you gauge your savings, remember that self-employment tax is 15.3% of every dollar of profit. Income tax brackets start at 10%, but that doesn't kick in until you've earned a certain amount. Many use these numbers to form a 25% baseline for saving.
Do I forfeit the money if I sent in too much?
No. Quarterly estimated payments work the same as paycheck withholding. If you've paid in more than you owe for your taxes, you will get the difference back as a tax refund.
How do you send in Doordash quarterly tax payments?
In my experience, the process is very simple: Send in IRS form 1040-ES with your payment.
It's not a complicated form. It boils down to two things:
- Who are you?
- How much are you sending us?
At the top right of form 1040-ES is a box where you enter the amount you are sending in.
The rest of the form comprises identifying information: name, address, social security number, and your spouse's information (if filing a joint return).
That's pretty much it. Fill out the form and send it in with your check.
Some business banks have a feature that allows them to submit the payment for you. Check with your financial institution to see if they can do that for you.
Finally, the IRS offers several electronic payment options, including:
- IRS direct pay
- The IRS2Go mobile app
- The US Treasury's EFTPS system (for business accounts)
- Cash payments at certain retailers ($1.50 fee)
With each option, you'll receive instructions on how to file, and whether the 1040-es can be submitted electronically or needs to be mailed in separately.