Whether you’re a delivery driver for UPS, Amazon, or an app-based delivery company, you’ll benefit at tax time by fully understanding some of the tax issues that come with your profession.
Here's are a few things you need to consider when filing your income tax return.
Whether you’re a freelancer, independent contractor, small business owner, or have multiple sources of income, when you use TurboTax Self-Employed, we’ll help you uncover industry-specific deductions you qualify for to get you every dollar you deserve. It’s free to start, and enjoy $20 off TurboTax Self-Employed when you file.
What is your employment status?
Are you an employee of a company, or self-employed as an independent contractor? The difference is huge when it comes to reporting income and deducting expenses.
- If you receive a payroll check that includes withholding for income tax, Social Security, and Medicare, you are an employee. Typically you’ll receive a Form W-2 at the end of the year that shows your total income and how much tax was withheld.
- If you’re paid with no withholding, you’re typically considered self-employed. You should receive a Form 1099-NEC that shows the total the company paid you for the tax year.
If you're unsure of your status, ask your employer.
What forms are right for you?
If you're an employee or a self-employed individual (not a corporation), you’ll typically use Form 1040 to report your delivery driver income.
- If you're filing as an employee, you’ll report the total wages from Form W-2 on line 1 of Form 1040. The total of the federal income taxes withheld by your employer go on line 25.
- If you’re filing your tax return with tax preparation software like TurboTax, the application will enter your income information on the proper lines automatically.
If you’re an independent contractor, you’ll likely need to include some additional forms with your return.
- Typically you’ll attach Schedule C to your return to report the income you earned.
- You'll also use Schedule SE to compute any self-employment tax you owe.
As before, TurboTax will guide you through these forms by asking simple questions and completing the correct forms as you go.
What tax breaks are you entitled to?
If you're working as an employee, there aren’t many opportunities to use tax write-offs to reduce your income as a delivery driver. However, if you’re self-employed as an independent contractor, you typically can deduct various business-related expenses on your Schedule C.
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Here are a few common expenses that delivery drivers might be able to write off:
- Business mileage. As long as you keep an accurate record of your business mileage, you normally can deduct expenses related to mileage spent picking up items to deliver, making your deliveries, and running errands for your business. You can either use the standard mileage rate of $0.575 per business mile (tax year 2020), or deduct the actual expenses related to the business use of your vehicle. These expenses can include costs such as fuel, maintenance and repairs, vehicle insurance, registration, and leasing payments or vehicle loan interest.
- Tolls and parking fees. You usually can deduct any work-related tolls and parking fees.
- Bicycle costs and accessories. If you use a bicycle to make your deliveries, you usually can deduct business-related expenses.
- Cell phone. If you have a mobile phone that is dedicated for your business, you usually can deduct 100% of the phone’s cost plus your monthly phone bill. If you use one phone for both business and personal use, you can deduct only the business use of your device.
- Business supplies. If you spend money on items like a backpack to hold deliveries, phone charger, or hot bags to keep food deliveries warm, such expenses usually can be deducted.
- Roadside assistance. Did you sign up for a roadside assistance plan when you decided to become a delivery driver? Normally you can deduct a portion of your membership fees based on the number of business miles you drive.
- Commissions and fees. If your delivery app charges a commission, you typically can deduct the various fees you pay to the app platform.
Should you make quarterly estimated payments?
If you expect to owe $1,000 or more in taxes, you normally are required to make quarterly estimated tax payments. Such payments typically are due on April 15, June 15, Sept. 15, and Jan. 15 of the next tax year. Paying late or failing to make a payment at all can result in penalties.
Help with bookkeeping and filing tax returns
It’s easy to get help for your delivery driving gig. QuickBooks Self-Employed will track your expenses and income throughout the year and compute any estimated tax payments you need to make. You can use QuickBooks Self Employed to transmit your tax information to TurboTax Self-Employed. TurboTax will help you uncover industry-specific deductions. You'll file with confidence, knowing that nothing was overlooked.