Maximize Your Delivery Driver Tax Return: A Helpful Guide

While some industries have struggled to attract and retain talent, the high-demand delivery driver profession has defied that trend. Some drivers prefer the flexibility and additional cash a part-time gig provides. In contrast, others have made it a full-time career working independently or for big corporations like UPS and Amazon. 

For many, the delivery and driving aspects of the job are a cinch. When they get into taxes for delivery drivers, they begin to spin their wheels. 

A seasoned driver wouldn't attempt a delivery without knowing where they're going, and they shouldn't do their taxes without knowing what they're doing, either. Delivery drivers of every type should use this blog to gain a foundational understanding of navigating and maximizing their delivery driver tax return so they'll always know the best route for tax savings.

Read on to learn how to file taxes as a delivery driver and save money today!

Types of delivery drivers

Delivery drivers can deliver almost anything, but for tax purposes, there are two main types: W-2 employees and independent contractors. Each driver classification must understand their responsibilities regarding their unique tax situation.  

W-2 Employee

If working for an employer, such as Amazon, and those drivers receive paychecks regularly with taxes already withheld from their wages, they are W-2 employees. A Form W-2 will be sent to them at the end of the year, which details the income they've earned and the total tax withheld for that period.  

Independent Contractor (1099 delivery driver)

Independent contractors might have more freedom and flexibility than W-2 employees, but that freedom comes with more responsibilities. The businesses independent contractors work with won't typically withhold the taxes an employer would on their employee's behalf. Instead, independent contractors must calculate their quarterly estimated taxes and submit payments to the government four times yearly.

At the end of the tax year, independent contractors will receive a 1099 form detailing their total earnings from the businesses they've worked for.

Which tax forms do delivery drivers need to file?

The tax forms delivery drivers need to file are based on how their work is classified. 

If an employee is driving for a business, the main form they must file is a W-2. Filing is less complex than independent contractors' steps to file their returns.

Independent contractors will need a combination of forms and accurate recordkeeping to complete their returns. 

• Form 1099. Contractors typically use a 1099-NEC or 1099-MISC to report the income they've received.  
• Tips. Tips are considered taxable income, so contractors must keep accurate records.   
• Expenses. Contractors must file a Schedule C and Form 1040 related to expenses, and profits and losses for the year are reported via these forms. 

Certain losses can be deducted, so keeping detailed records is essential.

Top 8 delivery driver tax deductions

Drivers might wonder, "What can I write off as a delivery driver?" Deductions are a crucial area where a tax return for delivery drivers will differ. 

W-2 drivers are limited in what they can deduct, while independent contractors can take advantage of numerous deductions with the help of detailed tracking and recordkeeping throughout the year. 

1. Mileage

Independent contractors can deduct work-related mileage as long as they keep detailed records. Deductions can be made per mile or via the actual expense method, which deducts a portion of costs, including gas, maintenance, and more. Delivery mileage rates usually change from year to year. 

2. Phone

Whether contractors use their phones for personal and business use or have dedicated business phones, they can deduct costs associated with their monthly plans. Accurate records must be kept to isolate business costs if the phone is split between personal and business use. 

3. Fees and tolls

Independent contractors can deduct parking fees and tolls received while on the job. 

4. Supplies

Independent contractors can deduct certain supplies as a business expense, including phone chargers and mounts. 

5. Roadside assistance

Independent contractors can deduct a portion of membership fees associated with this service.

6. Commissions and platform costs

Drivers who work with delivery apps can deduct fees paid to the platform. 

7. Home office

Drivers can deduct a home office used for administrative activities related to the business.

8. Health insurance

Independent contract drivers can deduct health insurance premiums that they pay themselves.

Do delivery drivers pay quarterly estimated taxes?

Because taxes aren't withheld from independent contractors, they must calculate and make four quarterly estimated payments annually.

Quarterly estimated taxes are due if independent contractors make over $1,000 and are usually made in the middle of April, June, September, and January. Independent contractors who miscalculate their quarterly estimated taxes or fail to pay on time or at all may invite penalties and additional IRS scrutiny. 

Recordkeeping for delivery drivers

Detailed, accurate recordkeeping is vital to minimizing an independent contract driver's tax burden. Establishing processes to capture this information regularly might seem intimidating initially, but it's easy when independent contract drivers have the right tools.

1-800Accoutant's bookkeeping services for small businesses have the tools independent contract drivers need to easily and accurately track expenses, mileage, and more, so they can focus on the road while we handle the rest. Independent contract drivers will also enjoy the easy-to-understand reporting that aids in calculating quarterly tax payments and making data-backed decisions for their delivery-driving business.  

Work with tax professionals who specialize in delivery driver taxes.

Delivery driving is rewarding, but keeping track of mileage, fees, and maintenance can feel like a full-time job without the proper tools and protocols. That's why so many drivers use 1-800Accountant, America's leading virtual accounting firm for small businesses. to deliver. 

Whether it's tax preparation for independent contract drivers, small business taxes, valuable educational content, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we go the extra mile for delivery drivers like you.