For individuals ordering through the DoorDash platform, a common question is whether their delivery driver, known as a Dasher, is permitted to accept cash tips. The short answer is direct and straightforward: Yes, DoorDoorDashers are fully permitted to accept and keep cash tips from customers. This practice is entirely consistent with the company’s policy and provides an important, immediate source of income for the independent contractors who complete the deliveries.
The Policy on Cash Tips
DoorDash officially confirms that Dashers are entitled to receive 100% of all tips, whether the gratuity is provided electronically through the app or directly by the customer in cash. Dashers operate as independent contractors, meaning they are not traditional employees of the platform. This independent status allows them to retain the entirety of their earnings from service, including every dollar offered as a tip. The company does not claim any portion of the tips received by the Dasher, nor is there any rule that prohibits accepting physical currency at the time of delivery.
How Cash Tips Interact with DoorDash Earnings
Understanding the Dasher pay model clarifies how a cash tip functions as a pure addition to a driver’s earnings. The total pay for a delivery consists of three components: Base Pay, Promotions, and Tips. Base Pay is the amount DoorDash contributes for each order, ranging from $2 to $10 or more, depending on factors like time, distance, and desirability. The algorithm determines this Base Pay amount before any tips are calculated.
A central point of customer concern is whether a high tip might reduce the Base Pay offered by the company. DoorDash’s current policy is that the Base Pay will not be lowered based on the tip amount a customer provides. This means a cash tip is treated as an entirely separate transaction added on top of the Base Pay and any promotional earnings. For example, if Base Pay is $5 and a customer gives a $5 cash tip, the Dasher earns $10 total, ensuring the cash tip provides a genuine increase in total compensation.
This structure ensures that cash tips do not subsidize the platform’s contribution to the delivery payment. The electronic payment is processed and paid out by DoorDash, while the cash tip is received instantly at the customer’s door. Because the platform is unaware of the cash transaction, it cannot factor that amount into its initial Base Pay calculation. This separation makes the cash tip a definite bonus for the Dasher, which is why many drivers appreciate this form of gratuity.
Tax Reporting Requirements for Cash Tips
Despite being received in physical currency, all cash tips constitute taxable income and must be accounted for by the Dasher. As independent contractors, Dashers are responsible for tracking and reporting all income from their work, which includes both the electronic payments reported by DoorDash and any cash gratuities. The Internal Revenue Service (IRS) requires that self-employed individuals report this income on Schedule C of their federal tax return.
The lack of an electronic paper trail for cash tips does not exempt them from taxation. Dashers are legally required to maintain accurate records of all self-employment income, including the daily total of cash tips received. This obligation extends to filing estimated quarterly taxes if the Dasher expects to owe more than a certain amount in taxes for the year. Failing to report cash tips can result in penalties and interest from the IRS.
Benefits of Cash Tips for Dashers
Cash tips offer several advantages from the Dasher’s perspective. The most immediate benefit is instant access to the funds, providing money that can be used immediately for expenses such as gasoline. Unlike in-app tips, which may take time to process and deposit, cash is available the moment the delivery is completed. This immediate liquidity is helpful for managing daily operating costs.
Receiving a cash tip also helps a Dasher avoid processing fees associated with electronic payouts. While weekly direct deposits are typically free, services like Fast Pay often charge a small fee per transaction for instant transfers. A cash tip sidesteps these charges entirely, maximizing the Dasher’s net earnings. The physical exchange also provides an immediate and personal acknowledgment of good service, offering a psychological benefit that electronic transfers cannot replicate.
Practical Advice for Customers Giving Cash Tips
Customers who choose to tip with cash can take a few steps to ensure the transaction is smooth and effective. It is recommended to offer a small tip through the app in addition to the cash, as the initial electronic tip helps ensure the order is picked up quickly. When a Dasher views an offer, they see a guaranteed minimum payout, and an offer with a $0 tip may appear financially unattractive, potentially leading to delays.
The best time to present the cash is directly at the moment of delivery. Handing the currency to the Dasher ensures they know the money is a gratuity for their service. Customers should also be explicit that the money is a tip, which removes any ambiguity about the purpose of the cash.