Is DoorDash Worth It After Taxes In 2022?

In 2022, it is actually very hard to have the life you want by doing only one job. It is one of the reasons why many people adopt a side hustle to create additional streams of income. And when it comes to multiple income streams, food delivery service is often lucrative to many.

With the ease of working hours that suit you, the food delivery service also has other charms. For instance, the food delivery service providers often benefit from the opportunity to get generous tips, promotions, etc.

DoorDash is also a popular food service in the US that is probably the most used by American citizens. The services of DoorDash are available in the US, Canada, and Australia.

We have already covered the DoorDash service from customers’ perspectives, and you might want to check if DoorDash is worth it here:

Is DoorDash Subscription Worth It? (Link to Previous Article)

In today’s article, we are going to talk about DoorDash from dashers’ or independent contractors’ point of view. We will talk about the payment structure, taxes, and if earnings are enough after paying taxes or not.

In short, this article has everything a dasher should know before he joins the food delivery service as a dasher.

So let’s get into it.

What Is DoorDash?

DoorDash is a food delivery service chain that operates across different USA, Canada, and Australia. You can order food from your favorite restaurants, and cafés, virtual groceries, or other edibles by connecting yourself to DoorDash.

DoorDash identifies itself as a food-tech company that is connecting people with the best eateries and restaurants around them.

This on-demand food delivery service connects the local drivers who don’t belong to a single restaurant. The drivers choose their availability in their specific areas and then deliver orders to customers on behalf of local hotels in that area.

Students of Stanford University incepted the idea of DoorDash in 2012. Tony Xu, Stanley Tang, Andy Fang, and Evan Moore are the names behind today’s successful food delivery service.

The company was founded in Palo Alto, California, and is headquartered in San Francisco, California.

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The company holds a 56% market share in the USA, making it America’s largest food delivery company. The company also holds a 60% market share in convenience delivery services.

In January of 2013, PaloAltoDelivery.com was launched by the company. By December of 2018, DoorDash had surpassed Uber Eats and grabbed the USA’s second position in total food delivery sales.

Who Is A Dasher?

When we say DoorDash, a dasher is the delivery boy who delivers you the food you ordered using the DoorDash platform.

A dasher is also called DoorDash Driver, and his average tasks are delivering food to the customers and receiving cash in case of cash orders. Many people join DoorDash in the role of Dasher for a side hustle.

Unlike a general working model, Dashers are not employees of DoorDash. Instead, they work on base pay per order. Therefore, most DoorDash Drivers report themselves as Independent Contractor or Self-Employed for tax purposes.

How Do DoorDash Payments Work?

The general structure of what a DoorDash Driver gets by delivering the orders is as follows:

Base Pay + Promotions + Tips = Total Earnings.

Let’s break down each component to know what it is like to be a DoorDash Driver.

Base Pay

Base pay depends on several primary factors: time, order distance, and desirability. Time and order distance are easy to understand. What is desirability?

Desirability is an index that DoorDash uses to signify the overall acceptance rate of DoorDash drivers against specific order types or food chains. So the acceptance rate represents the total number of accepted orders by Dasher out of the total order requests.

The normal range of the DoorDash base pay given to drivers is $2 to $10+. The maximum amount depends on the factors discussed.

However, one thing important to know is that base pay is the guaranteed payment irrespective of tips or promotions.

Promotions

Promotions are the incentives that DoorDash gives to drivers who accept orders that might be long distances or the drivers who complete most orders. There are three types of promotions available for DoorDash drivers, which are as follows:

  1. Peak Pay is a promotion added to the earnings during the busiest hours of the day. The promotion lasts during dinner peak hours, and the window is from 5:30 pm to 8:30 pm on weekends. It is because many DoorDash drivers don’t work on weekends. Therefore, the company also incentivizes the riders who work on busy days.
  2. Challenges have been introduced by DoorDash as a new incentive to encourage the dashers to stay active most of the time. The promotion allows the riders to earn extra money by completing a certain challenge, which can be completing a specific number of orders within a specific time limit. Riders can always check any challenges and earn extra money by completing the challenges.
  3. DoorDash Drive is also an incentive given to the driver who successfully accepts large catering orders and delivers them. These orders have special requirements and handling in general. Therefore, only experience dashers can get the incentive by taking the DoorDash Drive promotion. The minimum criteria to be eligible for DoorDash Drive is 100 deliveries with an overall rating of 4.8 and an order completion rate of 90%.
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Tips

The third part of a dasher’s earnings is from tips. Tips belong to the riders, and there is no share of the company in it. Therefore, the dashers can keep 100% of whatever they receive as tips.

The tip amount depends on your service and how quickly the orders are delivered. But it is not a book rule that you will always get a higher amount of tip when delivering on time. Sometimes the customers might not give you as many tips as you expect.

Expenses Of Dashers

What are the general expenses of dashers regarding their service for DoorDash?

It is important to know because the expenses have to be deducted from the total earnings to find the taxable income as a self-employed individual. So the main expenses of the dashers are as follows:

  1. Gas is the major expense you must bear when working as a dasher. The cost of gas depends on the orders you fulfill and what you spend on the gas. However, the gas expense can be cut off if you use a bike for delivery.
  2. The second expense you have to account for when filing a tax return is depreciation and maintenance of your vehicle.
  3. Your uniform, car topper, etc., are also required as a dress code when working as a delivery guy. However, with DoorDash drivers, you are a free agent, and you don’t need to have other accessories. But it is good to work on presentation and efficiency. Therefore, keeping your phone charger, powerbank, etc., with you is a good idea. You can carry an insulated bag to keep food warm. These are usually one-time expenses.
  4. In big cities, you will often be paying parking fees.
  5. And if you have to deliver orders where tolls are on the way, toll taxes are also in this game
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Taxes For Dashers

How do taxes work for dashers?

As mentioned earlier, dashers are free agents who can file their returns as self-employed. The company won’t deduct any withholding taxes from dashers. However, they have to pay for FICA (Federal Income Insurance Contribution) besides the federal tax.

The percentage of FICA is 6.2% against Social Security Taxes and 1.45% against medicare taxes if you are self-employed. You might have to pay sales tax as well. So, in general, you can expect to pay taxes around 15.3% if you are working as a DoorDash.

Is DoorDash Worth It After Taxes?

So is it worth it to be a dasher after estimation of the taxes?

There is no straight answer to this question. The answer depends on you. If you are making enough with DoorDash deliveries and satisfied with what remains with you after paying taxes, it is worth it to do the side hustle. However, if you think that taxes are too much for your earnings, you can drop the idea of becoming a dasher.