Understanding How Doordash Mileage Reimbursement Works

Paying taxes is not the most exciting thing, anyone to hear of. However, the best way to approach them, undoubtedly, is to make proper plans.

If you’re a Doordash driver, this may include learning every single detail about them, keeping a percentage cut of your earnings, and understanding the reimbursement on the platform.

This article attempts to approach a guide for Doordash Mileage Reimbursement.

Understanding Doordash Mileage Reimbursement System

Paying your income tax may seem easy at first, but however, should be taken with care.

For instance, if you’re not aware of mileage reimbursement on Doordash, you probably would be paying tax out of your full earnings.

And this is the mistake most people make and unfortunately, not the right way to go.

So now, how does mileage reimbursement work on Doordash? and what can you do about it?

Well, let’s start from the basics…

Mileage reimbursement is a system used by the IRS to cover expenses for using a personal car for business-related purposes.

The reimbursement is expected to cover everything about running the car from gas to registration and license fees. For Doordash, this should also include fees for backpacks and other related Doordash packages, as well.

In essence, the goal of this is to reduce your taxable income.

For instance, let’s say you made $4000, dashing, in a month. Typically, this is your gross income. If your tax rate was 30%, this means you’d have to pay $1200 in tax.

But that’s not the case when you have to remove deductibles like toll charges, roadside assistance, and mileage reimbursement.

If for instance, these deductibles sum up to $400, your taxable income would be $3600, hence a tax of $1080, considering our estimated tax rate of 30%.

For mileage reimbursement, there are two ways to go around it, which include;

1. Actual Expense
2. Standard mileage rate

Let’s talk about these two in the following paragraphs:

Actual Expense made

The first way you could calculate mileage reimbursement is to keep a track record of a list of expenses you make at the end of the day. It’s worth mentioning that this should be business related.

Some of these include:

• Gasoline
• Auto Insurance
• Maintenance
• New Tire Purchase
• Your Vehicle depreciation
• Car licensing fees
• Lease payments, if any.
• etc

Standard mileage rate

There’s usually an official mileage rate given by the IRS each year. This is because they’re usually subjected to changes annually and bi-annually.

For instance, the standard mileage in 2019 rate was 57, while in 2023 it’s at 65.5.

So how does this work?

Instead of taking records of every single expense you make while dashing, you could just go ahead to calculate all the miles driven for the business, and then multiply by the standard mileage rate.

The standard mileage rate multiplied by the miles driven should be able to cover every basic expense needed for the running of your car, such as gas, and most things you’d have needed to jot down while following the Actual Expense route.

Generally, this has an edge over the one that’d be mentioned below for many reasons, such as:

1. Simplicity and flexibility: Unlike the latter, you might not have to keep a track record of your actual expenses for the whole year.
2. It’s usually more beneficial: For most people, the standard mileage rate should cover way above the actual expense. However, it’s best to check to see which is better for you.

This being said, it’s important to note that while going the standard mileage route, you won’t be removing deductibles like gas, and general the expenses mentioned above.

Now the big question comes…how can you track miles?

Well, there are several ways to do this, which include:

1. Tracking your Driving Log: This involves you having to track your odometer each and every time you want to use your car for delivery with Doordash. So you’ll need to record your car’s odometer’s reading before a ride and after a ride, then subtract it.  The disadvantage, however, is the manual action required from you.
2. Use an App: There are several apps that can help you track your mileage easily without doing the whole thing manually.

Ways to Approach Paying tax on Doordash

Firstly, as a dasher, it’s important to note that you’re treated as self-employed by the IRS. This is typically a no-brainer, as it applies to most gig jobs like rideshare, and other food delivery brands.

This may seem like an edge at first. But it isn’t really one.

Why? Well, this makes you responsible for the filing of your taxes, meaning your taxes aren’t removed from your paycheck.

Unfortunately, this can make the whole thing confusing.

Thankfully, we are here.

And basically, from our recommendations, there are two ways you can go about paying taxes on Doordash, as listed below:

Contact a Professional

If you’re just starting out and don’t really know how to get around the whole thing, it’s advisable you contact a tax professional, or maybe someone who can just help you out.

They should give you proper advice and answers to the many queries you may be having.

If you have your 1099 NEC form, they should also be able to help you file the tax for the first time.

But here goes the con…It would cost you money.

Make use of Turbotax

Undoubtedly, this is the most used platform among delivery and rideshare drivers for filing taxes.

Typically, you just need to sign up for the platform and can begin filing your tax. It’s worth mentioning that you must have gotten your 1099 form and manually put it into the input field of the app.

Conclusion

At first, paying tax for Doordash can seem overwhelming, however, you shouldn’t be worried. With proper information like this, you should get the hang of the whole thing, ready to get into business.

And remember, the beginning is always the hardest.