If you’re looking for a side hustle to make some extra money while collecting unemployment, you may have considered Doordash as a great option.
Like most similar services however, income can be sporadic, with some weeks being fantastic and others hardly making you any money at all.
That being said, the last thing you want Doordash to do is come between your unemployment benefits.
Therefore, you may be wondering – does Doordash report to unemployment? If so, how frequently, and can you still do Doordash while collecting unemployment from the state?
In this article, we’ll cover everything you need to know.
Does Doordash Report To Unemployment?
Here’s the short answer – not all payments are reported to your state’s unemployment office. However, Doordash issues a 1099 form at the end of each tax year if you make more than $600, and reports your income as an independent contractor expense.
This means that inevitably, the IRS and other agencies will certainly become aware of your earnings by January 31st of the following year, which is the deadline for 1099s to be submitted in the United States.
Will Doing Doordash Affect My Unemployment?
This is where things get complicated.
Laws regarding unemployment benefits vary by state, and each state has its own rules regarding what you’re allowed to make before it affects your unemployment benefits.
One thing that is common however is that you’re supposed to report any income you make, so benefits can be adjusted as necessary.
In many states, any amount you earn will be deducted from the benefits that are paid out. This effectively completely negates the work that you’ve done – you’d have made just as much doing nothing at all.
Therefore, Doordash (and other gig jobs) may only make sense if you believe you will earn more than what you’re receiving in unemployment benefits.
Another situation that complicates things is calculating how much money you actually make from Doordash.
Typically, independent contractors are taxed on their income after all expenses. For example, if you took a job for $100 (and were paid $100 by the person hiring you) but had $50 of expenses to actually do the job, your taxable income from that job would only be $50.
If your unemployment office calculates based off of your revenue (gross income) and not your profit (net income), you could actually come out a loss – as expenses such as fuel and vehicle maintenance won’t be deducted.
Do I Have To Report Doordash Earnings?
Yes, you are required to report earnings from Doordash to unemployment.
Failure to do so may constitute unemployment fraud, which can cause you to have to pay back all of the benefits you’ve received + an additional penalty. In some cases, you could even be banned from receiving unemployment benefits for life.
Remember that the government will inevitably find out about your income anyway. Don’t take unnecessary risks by failing to disclose the money you earn from Doordash.
How Many Hours Can I Do Doordash And Still Collect Unemployment?
Typically, unemployment is based on how much you earn, not how many hours you work.
Therefore, it doesn’t really matter how many (or how few) hours you end up doing Doordash – what matters most is the total amount of money you earn when your work is done.
Does Doordash Take Out Taxes From Your Payments?
Like most gig jobs, Doordash does not take any out or withhold any money for your taxes. This is typical for businesses paying people as independent contractors.
You will be responsible for paying taxes on any income earned through Doordash, including self-employment tax.
Typically, withholding around 30% of your income is a safe number.
Will doing Doordash affect your unemployment? It’s likely, as the money you earn from Doordash may be deducted from your unemployment benefits – effectively rendering it a waste of time. Laws and rules in regards to this vary by state and by your own unique situation, however – including how much you used to earn at your prior job.
If you believe you can make more than you receive from your unemployment benefits however, it may still be worth doing.
Regardless of whether Doordash shares your income directly, it will certainly be reported to the IRS eventually – and your unemployment office will find out. Therefore, the safe thing to do is always to follow the rules and report any income that you receive, to avoid accusations of fraud, repayments, and penalties.