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I started working for Doordash, a food delivery service. Technically I think I am a self-employed contractor.

I saw online that you don't have to declare taxes if you make less than $12,200 in a year. However I also read that you're supposed to declare taxes if you make more than $400 as a self-employed contractor and that you will actually have to pay taxes on everything you make.

Do I have to declare taxes if I make less than $12,200 this year, and will I have to pay taxes on that amount? Let's say I only make $8,000 before Jan 1st for the entire 2020 year; will I actually have to pay taxes on that, and if so how much? I'm in California, single no children, currently living in my car (no property or anything).

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    You probably have to file a tax return, but you may not owe any taxes.
    – chepner
    Oct 7, 2020 at 22:19
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    @chepner, is there a way to figure out if and how much I would owe? I'm trying to figure out how much of the money I make I can spend and how much I should save to pay taxes, because it's going to be pretty tight...
    – deliveryguy
    Oct 7, 2020 at 22:22
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    Didn't California force all these delivery services stop pretending that they don't have workers, or am I thinking of another state? Just because they want you to think you're not an actual employee doesn't necessarily make it so. One more thing to check.
    – pipe
    Oct 8, 2020 at 8:42
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    @pipe apparently in the EU the employees of such companies have to be classified as employees. I don't know how that actually works in practice, though. I imagine that the businesses in question have found other ways of underpaying their staff and not paying company taxes.
    – Aaron F
    Oct 8, 2020 at 10:37
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    @AaronF EU labour laws are quite different from Californian labour laws.
    – Mast
    Oct 8, 2020 at 11:56

2 Answers 2

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Because you're self-employed and make more than $400, you'll need to file a federal return. If you make less than the standard deduction ($12,400 for a single person in 2020), you won't owe any income tax, but you will still owe self-employment tax. On $8,000 of net profit you would owe $1,130 (use an online calculator like this one). Make sure you deduct all expenses to reduce the tax you owe.

Also make sure to look into California's filing requirements.

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    @deliveryguy Your most significant business expense will be mileage. In 2020 you can deduct 57.5 cents for every mile you drive on the job.
    – Ben Miller
    Oct 8, 2020 at 3:00
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    Ben Miller's point is key here. See this article: entrecourier.com/2019/08/27/tracking-miles-for-uber-eats
    – Tom Wright
    Oct 8, 2020 at 8:07
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    @TylerH I think you're forgetting about the cost of car maintenance and depreciation. Driving a car has many costs beyond gas.
    – Kat
    Oct 8, 2020 at 14:20
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    @Peter-ReinstateMonica The tax is really DoorDash paying for doing the equivalent of employing the OP. Were the OP an employee of DoorDash, DoorDash would pay that to the government directly. In a contractor arrangement, DoorDash pays that to the OP who pays it to the government. It's not really a tax on the OP, and the OP gets the benefit of only paying it on income after expenses.
    – David Schwartz
    Oct 8, 2020 at 23:54
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    @DavidSchwartz I would argue that paying taxes on a fix salary below the subsistence level is also systematically wrong (regardless of whether it's nominally deducted on the employer's or employee's side).
    – Peter - Reinstate Monica
    Oct 9, 2020 at 6:47
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You got this gist of it. However, I don't see anyone mention the Earned Income Credit. I want to say you need to be at least 25, but am not 100% sure on that. https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit

I saw someone else mention mileage and depreciation. I'd be shocked if it is better for you to keep gas receipts and depreciation records (year to year). A mileage log book isn't that hard. It sounds like you don't have a log book. A shame - NOT - since no log book -> no deduction -> higher EITC at your income level. Start keeping one now. Run the taxes both ways.

There is nothing more certain than death and taxes.

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    nothing more certain than death and taxes unless you are Donald Trump
    – Matt Coubrough
    Oct 10, 2020 at 22:31

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