It's tricky enough figuring out taxes as individuals. Then, as self-employed delivery drivers, we get even another tax form. What is this Schedule C you speak of? So you start asking around in forums and Dasher communities, and everyone has a different answer. Can it get any more complicated?
We'll walk through the common questions about completing your Schedule C and try to de-mystify the process for you. This is part of a multi-article series of articles and FAQ pages.
If you have more questions about taxes in general, you can start with our overview of how Doordash taxes work. We then created a series of FAQ's on different tax topics. As I write this, I count 109 questions between five articles.
That's a lot of questions. That's because a lot of Dashers have a lot of questions about taxes. Unfortunately those questions aren't often addressed for us. Most resources I find are very general and don't cover specifics.
That's why I created this series, so you can drill down into the specific questions that you might have.
Make sure you understand this before going further:
This is not tax advice. You should not take anything in here as advice specific to your situation.
I will only offer this one piece of actual advice: Get a tax pro.
Do not take this as advice for your specific situation. You should seek out someone who understands taxes for gig economy contractors to help you with your specific situation. The best thing to do is to find someone who is educated in all this and who works with this every day.
In my opinion that's a lot better than relying on a tax preparer for a big chain who's only been trained to operate their software.
The more you deliver for Doordash or any other gig company, the more it's worth it to find someone who knows exactly what to look for to make sure your tax payment is minimal.
This is not designed for tax advice purposes. It is purely informational.
I'm just another Dasher. I've delivered full time for three years (as of March, 2021) for Doordash, Uber Eats, Grubhub, Postmates, and some smaller gig companies. I noticed there was a need to put together information that relates specifically to delivery contractors. I sincerely hope it is useful for you.
Doordash Taxes and Schedule C.
You can learn more about how the Schedule C works here. The video below walks through filling out a Schedule C.
Schedule C is maybe the most important form in your taxes when you deliver for Doordash, Uber Eats, Grubhub, Instacart, Uber, Lyft or any other gig economy platform.
This is where you get to reduce your taxable income by claiming your expenses. This is what lets you claim miles and business expenses while still taking the Standard Deduction for your personal deductions.
We'll go through the questions below. You can also scroll down to the end of the article for a glossary of questions. That list will have links to the particular question, making it easier to jump to the answer.
Frequently Asked Questions about Schedule C on your Doordash taxes.
What is Schedule C
Schedule C is called “Profit and Loss From Business.” This is where you list your income and your expenses as an independent contractor for Doordash, Uber Eats, Grubhub, Postmates and other gig platforms. By completing a Schedule C you create what is essentially the self-employed person's version of a W-2. That's because your profit from line 31 is what gets moved over as income to your 1040 form.
Can I file my Doordash taxes without Schedule C?
You should not file taxes as an independent contractor without a Schedule C. Schedule C allows you reduce your business income by claiming business expenses. It also makes sure all the right taxes are paid. If you skip the Schedule C, you skip important business deductions and thus pay higher taxes.
Should I create a new Schedule C if I also deliver for Uber Eats, Grubhub, Postmates or any others?
No. Independent contractor work for other delivery apps is the same type of business. You should not create multiple Schedule C forms for the same business code.
Should I create a new Schedule C if I operate a different type of business beside my Doordash contracting?
If you operate more than one type of business with a significant difference between the types of business, then it is a good practice to create a Schedule C for each business type. For example, I create a schedule C for my online business that is different than my Schedule C for delivery work. One is home based with office expenses while the other is out on the road.
If you do different styles of gig work that are similar, then it becomes a matter of choice. For instance, I think you can make a strong enough case for completing a single Schedule C for both. At the same time, if you prefer to keep them separate, they're different enough that two Schedule C's would be reasonable.
Can I use Schedule C-EZ for my Doordash taxes?
Starting with the 2019 tax year, the IRS phased out Schedule C-EZ. Schedule C-EZ was a simplified version of the form for some part time contractors. However, it is no longer an option.
What is my principal business or profession (line A)?
The IRS instructions say to describe your business here. A short simple phrase works nicely. I have always used “on demand delivery services.”
What is the best business code for Doordash contractors (Box B)?
In the back of the Schedule C Instructions starting on page C-17 there is a list of different business codes. The best match I find for Doordash and other delivery platforms is 492000 for Couriers & Messengers.
Should I put anything down for a business name (Line C)?
Do not put Doordash (or any other platform) as your business name. You are not filing taxes on behalf of Doordash. You are filing as a business that has contracted with Doordash.
If you have not registered a business name, such as by creating an LLC or a corporation of some type, do not enter a business name here. If you do have an official business name, use that name.
What should I put for my Employer ID Number (Box D)?
Most of us will leave this blank. You only put an Employer ID Number (EIN) if you actually HAVE an EIN. If you're not sure if you have an EIN you probably don't. An EIN is assigned to your business by the IRS if you apply for one. Generally it's used if you have employees, or if you want a tax number that identifies your business instead of yourself.
What accounting method should I mark on Line F?
If you're asking the question, you're probably using Cash Accounting. The vast majority of independent contractors for gigs like Doordash, Uber Eats, Grubhub etc. use cash accounting. It simply means you pay as you go and get paid as you go. Accrual accounting is a more advanced form of accounting used by larger businesses.
If you're using accrual accounting it's more likely either you already know what to put here or you have an accountant who knows what to put here.
Did I materially participate in my business as a Doordash independent contractor?
Almost certainly yes. I have yet to meet someone in the delivery gig economy world who did not materially participate. If you were involved in the actual deliveries or managed the deliveries in any way, you materially participated.
Should I check box H that I started my business in 2020?
The IRS instructions say “If you started or acquired this business in 2020, check the box on line H. Also, check the box if you are reopening or restarting this business after temporarily closing it, and you did not file a 2019 Schedule C for this business.” If you filed a Schedule C in 2019, you would not check this box.
Should I check “yes” on Line I (required to file form 1099) if I received a 1099?
The wording of Line I is a little confusing. This is not about if you received a 1099 form, it's about if you had to send a 1099 form to someone else. If you used a subcontractor and paid them more than $600, you are required to send a 1099 form to them and the IRS. That is when you would check yes.
Where do I put my Doordash 1099 information?
You don't actually put any of your Doordash 1099 (or from any other platforms) anywhere on the form. Neither do you attach your 1099 to the form. If Doordash was your only income for this business, you would enter the earnings from your 1099 on line 1. If you worked multiple delivery companies, you would add up all income and put it on line 1.
What would I put for returns and allowances?
Returns and allowances are rare for delivery contractors. This is used if you received money, such as for selling an item or getting paid for work, and then had to return or refund money.
What is Cost of Goods Sold?
Cost of Goods Sold is usually related to if you're selling products. When you buy and resell items, the cost of the purchase is a Cost of Goods Sold.
If I have to drive to provide my service, isn't that a Cost of Goods Sold?
No. Your vehicle costs will be entered later on Schedule C. Do not put your business expenses here in the Cost of Goods Sold category. Driving is an indirect cost and thus vehicle costs are recorded as expenses
Is there a time when I would have a Cost of Goods Sold as a Doordash contractor?
There aren't any scenarios that come to mind for Doordash. There might be a place where it's used with some gig platforms. For example, Uber Eats will report they paid $13 but you only received $10 (hypothetical numbers). They then say they charged you a $3 service fee. Some accountants say to use Cost of Goods Sold for that service fee since it's a cost related directly to the service you are providing. Others will tell you to put it down as an “Other Expense” in line 27.
I have more questions about what income and 1099s on my Doordash taxes
You can look for more information in our FAQ about income and 1099's on your Doordash taxes. You can also read up in our tax guide about how independent contractor income works.
What expenses can I claim for my Dashing?
Although there are several expense categories on Schedule C, we don't get into the specifics here. The Business Expenses FAQ covers many of those expenses, and we have a general article on non-car business expenses that examines many of these categories. We also have another FAQ that covers miles and car expenses for your Doordash contracting.
What does question 32 mean by if my investment is at risk?
On line 32 of Schedule C, you indicate if your investment is at risk if you had a loss. As gig economy contractors, we're probably thinking, what investment? Loophole Lewy explains it as well as anyone in the screenshot below: “as a sole proprietor you are using your own money for the business.” That's your investment. The loss comes out of your own pocket, so your investment is at risk.
You would only check that it's not at risk if there were outside interests that would absorb the loss. That's pretty rare for independent contractors.
There's a spot for the home deduction. Can I claim a home office?
The IRS requires two things if you are going to claim space for a home office: 1) the space is dedicated to your business and is not used for personal purposes, and 2) a substantial part of your business operations happen in that space. In most cases, it's difficult to make a case that a significant part of our operations as a Dasher happen in your home office. We go into more detail on the home office deduction for delivery and rideshare drivers here.
What do I do if I had more than one vehicle?
You should keep records separately for each vehicle. On a lot of tax software programs they'll have you input information for each vehicle and then it will generate a Part IV for each vehicle.
Was my vehicle used for personal use during off duty hours?
If you used your car for personal use outside your Doordash deliveries or other business driving, you would select yes. If you were strict about using the car only for business, you would put no.
Why would they ask if I have another vehicle for personal use?
I see this as a consistency check. For example, if you listed 100% of your miles for business use but then said you didn't have another vehicle available for personal use, that can raise some doubts.
What kind of evidence are they asking for in question 47?
The main thing they're looking for is if you have a record of your miles. The IRS requires a log that has a daily record of your business miles, showing date, miles driven, where you went and the business purpose.
I used Hurdlr or another GPS app to track my delivery miles. Does that mean it's not written?
As long as an acceptable mileage log can be printed out, that qualifies as a written log.
What's the purpose of Part V Other Expenses?
There are several expenses that don't fit well into the expense categories in lines 8 through 26. Part V is where you write a description of the items and the total paid for those items. Without that description, it's easier for someone to just make up a number and stick it in ‘Other expenses.'
Some ‘other expenses' might be business subscriptions and memberships (think AAA or if you joined an online community of Dashers), Uber Eats service fees, etc.
This other expense section is one reason I'm not a fan of Quickbooks Self Employed or of Stride Tax. Neither one lets you create different “other” expense categories for tracking. Thus you get stuck doing a lot of work later.
Glossary of the frequently asked questions about Schedule C in your Doordash taxes
Questions about Schedule C in General
- What is Schedule C?
- Can I file my Doordash taxes without Schedule C?
- Should I create a new Schedule C if I also deliver for Uber Eats, Grubhub, Postmates or any others?
- Should I create a new Schedule C if I operate a different type of business beside my Doordash contracting?
- Can I use Schedule C-EZ for my Doordash taxes?
Questions about the Business Information part of Schedule C as a Doordash contractor
- What is my principal business or profession (line A)?
- What is the best business code for Doordash contractors (Box B)?
- Should I put anything down for a business name (Line C)?
- What should I put for my Employer ID Number (Box D)?
- What accounting method should I mark on Line F?
- Did I materially participate in my business as a Doordash independent contractor?
- Should I check box H that I started my business in 2020?
- Should I check ‘yes' on Line I (required to file form 1099) if I received a 1099?
Questions about the Income section of Schedule C for Dashers
- Where do I put my Doordash 1099 information?
- What would I put for returns and allowances?
- What is Cost of Goods Sold?
- If I have to drive to provide my service, isn't that a Cost of Goods Sold?
- Is there a time when I would have a Cost of Goods Sold as a Doordash contractor?
- I have more questions about what income and 1099's on my Doordash taxes.
Questions about the Expense section of a Dasher's Schedule C
- What expenses can I claim for my Dashing?
- There's a spot for the home deduction. Can I claim a home office?
- What do I do if I had more than one vehicle?
- Was my vehicle used for personal use during off duty hours?
- Why would they ask if I have another vehicle for personal use?
- What kind of evidence are they asking for in question 47?
- I used Hurdlr or another GPS app to track my delivery miles. Does that mean it's not written?
- What's the purpose of Part V Other Expenses?
Where can I learn more about how taxes work for independent contractors in the gig economy?
This series of questions addresses the Schedule C specifically, especially from a Dasher's perspective.
The IRS has a special section with information on gig economy taxes. Elsewhere on this site is a series of articles on delivery based independent contractor taxes in our tax guide. You may find that series helpful as it addresses the topics in a broader manner. Finally we created a Doordash Tax Calculator to help you estimate the tax impact that your delivery profits will have.