Filing Tax Returns for Food Delivery Drivers

In the United States, all workers need to file and pay taxes if they make more than $400 in a year. However, the potential tax deductions and required tax forms vary depending on whether you are considered self-employed or an employee.

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Here is what you should know about filing tax returns as a food delivery driver.

Are Food Delivery Drivers Considered Self-Employed?

In most cases, food delivery drivers are considered self-employed independent contractors instead of employees. Uber Eats, GrubHub, DoorDash, Postmates, and other food delivery apps hire independent contractors.

In 2020, residents in California pushed for legislation that would have required app-based delivery services to count drivers as employees. However, Proposition 22 failed to receive enough votes.

Whether you drive for an app-based delivery service in the United States, Canada, or the United Kingdom, you are considered an independent contractor.

Employers typically withhold employee pay to cover taxes. As a self-employed individual, you are responsible for paying all applicable income taxes.

What Tax Forms Do Food Delivery Drivers File?

In the United States, you need to file Form 1040, whether you are an employee or an independent contractor. However, independent contractors must also fill out Schedule C and Schedule SE.

Schedule C is used to report profit or loss from business. The first part of the form requires you to list all income to calculate gross profit.

In the second part of the form, you subtract food delivery tax deductions to calculate your net profit. Schedule C includes additional sections for those who need to deduct car expenses.

Some food delivery drivers may be eligible to fill out form Schedule C-EZ. Schedule C-EZ is a simplified version of the Schedule C form available to individuals who claim less than $5,000 in business expenses.

Self-employed individuals must also submit Schedule SE, which determines how much you owe in self-employment taxes. Independent contractors typically need to pay estimated taxes throughout the year. If you fail to pay estimated taxes, your self-employment taxes may include a penalty.

In Canada, independent contractors use Form T2125 to report self-employed income. You may also need to collect T4A forms throughout the year to track your pay from food delivery apps.

Independent contractors in Canada who make more than $30,000 in a year must also file form GST34 and register for a GST/HST number to file the GST/HST return.

What Can I Write Off as a Delivery Driver?

Delivery drivers can write off a variety of expenses when filing taxes as independent contractors. If you are considered an employee, your employer may reimburse you for certain expenses, such as mileage and parking fees. Yet, self-employed drivers can typically deduct approved work-related expenses.

Work-related expenses are deducted on the Schedule C form for US taxpayers. Common food delivery tax deductions include:

• Mileage
• Parking fees
• Platform fees
• Work phone
• Essential work-related supplies

Deductions reduce your net profit, which may reduce your tax liability. For example, if you bring home $20,000 in payments from Uber Eats and GrubHub and deduct $1,000 in expenses, your remaining taxable income is $19,000.

Drivers in Canada can also typically deduct many of the same expenses. Here is a closer look at how business expenses work for food delivery drivers.

Mileage

Food delivery drivers can deduct car expenses. You can use the standard mileage rate or actual expense method to deduct car expenses.

With the standard mileage rate, you may deduct $0.575 per mile driven for a food delivery app. With the actual expense method, you can deduct a portion of the costs for almost all car-related expenses, such as gas, maintenance, registration, and insurance.

If you decide to claim actual expenses, you must decide on the percentage of the time that the vehicle is used for business. For example, if 50% of your time on the road is spent driving for Uber Eats, you can deduct 50% of your car expenses.

Keep records of all car-related expenses that you want to claim, including gas receipts, insurance statements, and bills from auto repair shops. Some drivers also use mileage apps to help track car expenses.

Parking Fees

All parking fees and tolls paid when driving for a food delivery service are deductible. However, you cannot deduct parking tickets and fines.

As with car expenses, you need to keep copies of receipts for parking fees that you want to claim on a tax return. Add the fees and include the total on the return.

Platform Fees

Some food delivery apps charge commissions and fees. You may also pay fees for a payment processing service, such as PayPal. You can typically include these fees in your business expenses.

Work Phone

As with your car, you can claim your phone as a business expense. However, you can only claim the portion of the phone that you use for business.

For example, if you exclusively use the phone for work as a food delivery driver, you can claim 100% of the cost of the phone and your data plan. However, if you use the phone for both personal and business use, you can only claim a portion of the costs.

Essential Work-Related Supplies

As with your car, you can claim your phone as a business expense. However, you can only claim the portion of the phone that you use for business.

For example, if you exclusively use the phone for work as a food delivery driver, you can claim 100% of the cost of the phone and your data plan. However, if you use the phone for both personal and business use, you can only claim a portion of the costs.

Conclusion

Food delivery drivers are considered self-employed individuals. Paying taxes becomes a little more complex, but you can claim a variety of business-related expenses to lower your tax liability.

Food delivery driver expenses are not part of your standard or itemized deductions. In the United States, expenses are reported on Schedule C and subtracted from your gross income.

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Keep receipts and documents for any of the expenses that you claim on your return. While you do not need to submit receipts with a tax return, you may need to produce proof of your expenses if you are audited.