Driving for DoorDash, Uber or Instacart: a first-year tax guide
The forms the apps send, why the number is too high, the mileage deduction that does most of the work, and the payments nobody withheld for you.
Quick answers
- Do I owe tax on app driving if I never got a form?
- Yes. Income from gig work is reportable whether or not a platform sends a form, and the reporting thresholds only decide who has to send you paperwork, not who has to report the income.
- Why is the amount the app reported more than I was paid?
- The platform reports the gross fares or order totals it processed, then takes its commission and fees out before paying you. Those fees are business expenses on your return rather than reductions to the reported total.
- Do tips through the app count for the no tax on tips deduction?
- They can. Rideshare driving and goods delivery are both on the IRS list of occupations that customarily received tips. For self-employed drivers the deduction is capped at the net income of the business the tips came from.
Driving for an app makes you self-employed, which means a Schedule C, mileage records and tax nobody withheld. The forms the platforms send report more than you were paid, and understanding why is where the first year's tax bill is decided.
What changed for 2025
The reporting threshold for Form 1099-K went back up. A platform that settles payments on your behalf generally sends one only once it has processed more than $20,000 across more than 200 transactions in the year, so a driver who expected a form after a modest year may not receive one at all.
None of that changes what you owe. Gig income is reportable whether or not a form arrives, and the threshold decides who has to send paperwork rather than who has to report. The 1099-K threshold for 2026 has where the rule goes next.
The two forms an app sends
Many drivers end up with two. A 1099-NEC covers what the platform paid you directly — incentives, quests, referral bonuses and other non-rider money — and a payer generally issues one once those payments reach $600 for the year. A 1099-K covers the fares and order totals the platform processed on your behalf.
They are not duplicates and they are not interchangeable. 1099-NEC and 1099-K explain each one, and both feed the same place: a single Schedule C for the driving business.
Why the number is bigger than your deposits
This is the first-year shock. The platform reports the gross fare or the gross order total it processed, before its commission, service fees and adjustments come out. What reached your bank account is what was left afterwards.
You do not quietly subtract the difference from the reported figure. You report the gross, then take the commission and fees as business expenses along with everything else the work cost. The bottom line comes out the same, and it matches what the IRS already holds. Schedule C is where that happens.
Mileage does most of the work
For most drivers the standard mileage rate is the largest deduction on the return, bigger than the platform fees. It runs at 70 cents per mile for 2025, applied to business miles.
Business miles are the miles driven for the work: from the first pickup through the last drop-off, and the repositioning between orders in between. Driving from home to the area you plan to work in is generally commuting, and a detour for your own errands is personal either way. Home office and mileage carries the rule in full.
The log is what makes the deduction survive. Date, miles and purpose, recorded as you go, from a tracking app's export or a written notebook. A number reconstructed from memory months later is the weakest record there is, and it is the first thing questioned.
The rest is smaller but real: the business-use share of a phone plan, hot bags and equipment, tolls and parking, car washes, and the platform fees already mentioned. Keep the receipts as they happen.
Self-employment tax is the surprise
| Combined self-employment tax rate | 15.3% | 2025 Schedule SE lines 10–11 |
|---|---|---|
| Share of net profit subject to self-employment tax | 92.35% | 2025 Schedule SE line 4a |
| Net earnings below which no self-employment tax is due | $400 | 2025 Schedule SE line 4c |
| Deductible share of self-employment tax | 50% | 2025 Schedule SE line 13 |
An employee splits Social Security and Medicare with an employer. You carry both halves. The combined rate above applies to the stated share of your net profit, none of it is due if net earnings come to less than the floor, and half of what you do pay then comes off your income as a deduction. 1099-NEC walks the same arithmetic in more detail.
Tips through the app
App tips can qualify for the deduction for qualified tips. The IRS list of occupations that customarily and regularly received tips on or before the end of 2024 includes code 802, taxi and rideshare drivers and chauffeurs, which names platform and app-based rideshare drivers, and code 804, goods delivery people, which covers delivering food products and picking up or delivering packages.
So voluntary cash or charged tips from customers, including tips received through sharing, are qualified tips for a driver. The deduction is capped at $25,000 and phases out once modified adjusted gross income passes $150,000 for a single filer. What OBBBA changed for 2025 sets it in context.
The limit that catches self-employed drivers
Here is the part written for employees that reads differently for you. If you are self-employed, the tips deduction cannot exceed your net income, before this deduction, from the trade or business in which the tips were earned.
That bites exactly where drivers live. A driver whose mileage deduction and platform fees leave a thin profit deducts the profit, not the tips, however large the tips were. Two further conditions apply: you need a valid Social Security number, and if you are married you have to file jointly.
Paying as you go
Nobody withheld anything from any of it, so the money has to go in during the year. Most drivers send quarterly estimated payments on Form 1040-ES, figured from expected profit. Paying in 100% of the prior year's tax, or 90% of the current year's, generally keeps the underpayment penalty away. Quarterly estimates has the dates and the arithmetic.
If you or your spouse also holds a W-2 job, raising the withholding there is the simpler route, because withholding counts as paid evenly across the year.
Before next January, set up the four things that make the second year easier: a separate bank account for the driving money, mileage tracking switched on from the first shift, the platform's annual summary saved when it appears, and a fixed share of every payout moved aside the day it lands.