As a self-employed individual, it’s essential to be aware of the tax implications of your work. If you’ve been working for Instacart over the past year, you may have received a 1099 form from them.
This blog post will provide an overview of what that form means and the Instacart 1099 taxes you may need to pay.
Always consult with a tax professional to get specific advice for your situation. As every person is different. Keep reading for all the details!
What is Instacart
Instacart is a grocery delivery and pickup service that operates through an app. Customers can order groceries and other products from the convenience of their own homes, and the “Instacart shopper” will shop for them and deliver them to their doorstep.
To fulfill the customer’s order, you’ll visit local supermarket chains, pet stores, specialty shops, and convenience stores as an Instacart shopper. If an item is out of stock while shopping, you will alert the customer and work with them to find a suitable replacement.
How Taxes Work for Instacart Shoppers
Instacart taxes can be somewhat tricky. For one, your tax situation varies depending on whether you shop in-store or as a full-service shopper.
The IRS gave the following guideline to distinguish if a company hired you as an employee or independent contractor:
“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.”
Taxes for In-Store Shoppers
In-store shoppers are considered Instacart employees. This may not be the same in every state. Consult with Instacart to see if you qualify. They will be taxed in the same way as anyone performing a traditional 9-to-5 job: If you’re wondering, “does Instacart send a W2? The answer is yes if you’re an in-store shopper. Instacart will handle the withholding and send you a W-2 form come tax time.
So, if you work as an in-store shopper, you can put stop reading this article now!
Taxes for Full-Service Shoppers
On the other hand, if you’re a full-service shopper who works as a delivery driver and a store shopper, your taxes will be more complicated since you’re treated as an independent contractor instead of an Instacart employee.
Unlike in-store shoppers, you don’t have your taxes withheld. You’ll have to file and pay them on your own.
Instacart 1099 Tax Forms You’ll Need to File
Like all other taxpayers, you’ll need to file Form 1040. This tax form summarizes your income for the year, deductions, and tax credits. This information is needed to calculate the amount of tax you owe.
Additional details from various other forms break down the particular types of income, deductions, and credits you intend to claim. As an Instacart shopper, familiarizing yourself with these forms is a must:
This report shows how much money Instacart paid you throughout the year. All businesses, including Instacart, must furnish this form if they paid you $600 or more in a given tax year. You will not submit this form with your tax return but can use it to determine how much business income to declare on your Schedule C.
This form is provided to all full- and part-time employees. It indicates your total wages and the tax amount your company has already sent to the government. You won’t get this form from Instacart as an independent contractor.
This form is used to report your business income and costs. It also aids in calculating your business profit by deducting business expenses from your income. The profit you compute is taxable and must be reported on Line 12 of your Form 1040.
When to File for Instacart 1099 Taxes
If you’re an Instacart shopper, you’re self-employed and most likely owe quarterly taxes. Since taxes aren’t withheld from your salary like most independent contractors, you’re responsible for making quarterly tax payments based on your annual income.
If you owe more than $1,000 in taxes for the year and don’t pay them quarterly, the IRS will charge you a late payment penalty.
To avoid paying additional fees and to file your quarterly taxes on time, you’ll need to calculate and pay what you owe by the following deadlines:
|Pay Estimated Taxes for Period
|Q1: April 18, 2022
|January 1 – March 31
|Q2: June 15, 2022
|April 1 – May 31
|Q3: September 15, 2022
|June 1 – August 31
|Q4: January 16, 2023
|September 1 – December 31
How Much Do You Need to Set Aside for Instacart Taxes?
Top Instacart Tax Deductions
Luckily, you won’t be taxed on all the income you report. One of the many perks of being self-employed is deducting your business expenses from your income.
As an Instacart shopper, there are several tax deductions you need to be tracking. The following potential write-offs should be on the top of your list:
The first deduction you need to track is the mileage you drive for work and includes the following:
- When you pick up orders
- When you’re delivering orders
- In-between deliveries
- Trips to the gas station while working
- Trips to shops for your car maintenance
Note: The mileage you incur to and from home at the start and end of your workday isn’t deductible.
There are two ways you can deduct mileage. Depending on the type of vehicle you have, you can save a lot more money than the other:
Standard IRS Mileage Deduction
In 2022, you can deduct a fixed amount of 58.5 cents per mile, while the rate for 2021 was 56 cents per mile. These rates include all your vehicle’s operational expenditures, such as gas, depreciation, oil changes, and maintenance. Usually, it’s the best option for most Instacart shoppers.
The Actual Expenses Method
This method allows you to sum up and deduct your business-related vehicle expenses. It’s often a more cost-effective alternative for those who have recently acquired a vehicle (usually within the past year) or are making monthly loan payments for a new vehicle.
Phone + Phone Bills
For your phone, you can deduct anything that’s a necessity for your delivery job, including:
- Phone bills
- Phone Accessories (charger, clips, car holder, etc.)
You can include cell phone charges and other expenses on Part 5 of your Schedule C. After you’ve totaled all the other expenses, indicate the total amount on line 27a.
Keep in mind that you can only deduct expenses as a portion of business use. This means that if you use your mobile phone for work 50% of the time and the other half for personal purposes, you can only deduct 50% of the total phone charges.
The IRS closely evaluates technology deductions, so do your best to estimate this percentage accurately.
Protip: One of the best ways to calculate business-related phone usage is to go through your phone records for a given month, figure out how much of your data and phone calls occurred during work hours, and then apply the average to the remainder of the year.
Insulated Bag and Blankets
Again, you may deduct everything “ordinary and necessary” for your delivery job. This includes insulated bags or blankets you purchase to keep food orders warm. Remember that the IRS cracks down on using business materials for personal reasons, so if you need a hot bag outside of work, use a separate one.
The tolls you pay while working are also tax deductible, as long as they’re not already being reimbursed to you. Tolls to and from work aren’t included.
Review previous bank and credit card accounts if you’re missing paperwork for any tolls. You may also access online statements for electronic toll collecting devices, like an E-ZPass.
While working in the city, there will be times when you may choose to pay for parking. You’d be happy to know that that’s tax deductible.
Unfortunately, traffic violations, speeding fines, and parking citations aren’t included because they result from inappropriate driving and aren’t directly related to business.
Fees for roadside assistance programs such as AAA and the like are tax deductible, but only the portion used for work purposes. You can use your business mileage record to calculate your car’s business to non-business mileage ratio and then apply that to calculate the deductible portion of your AAA membership.
Your monthly health insurance payments are deductible provided you:
- Are self-employed (a full-time Instacart shopper, for instance)
- Aren’t able to receive health insurance coverage from a spouse or employer
- Have a business profit (the resulting amount when you deduct business expenses from your business income)
When deducting your health insurance, fill-out Line 29 on Form 1040. While you’re at it, keep these two rules in mind:
Fill out Line 29 on Form 1040 to deduct your health insurance. Keep the following two rules in mind:
If you receive a government subsidy for your monthly payments, you may only deduct the cost of your bill each month, not the entire cost of your plan.
If your net business profit for the year is less than the total annual cost of your health insurance premiums, you can only deduct the amount equal to your business profit.
Consult with a financial advisor be for doing anything.
Required Documentation When Filing Instacart 1099 Taxes
To claim your deductions, you need to have supporting documents as proof of each expense, including:
- Phone bills
- Mileage logs
- Invoice(s) for purchased assets, such as a new cellphone
- Receipts with notes on them
Also, don’t forget to include the following:
- Amount of the expense
- The business purpose of the expense
- Name of the vendor for the expense
- Time and place of the expense
That’s it! You now have everything you need to know about Instacart 1099 taxes. We hope you found this article to be helpful and informative.
In the end, dealing with taxes on your own may not be the best way. Always be sure to work with a tax advisor who can give you the most accurate and up to date advice. Some of the things mentioned in this article might not apply to you.
Here’s to a stress-free tax season!
Do Instacart take out taxes?
The short answer is no if you’re an Instacart full-time shopper. However, Instacart will automatically take out your taxes if you’re an in-store shopper.
What can I write off on my taxes for Instacart?
As an Instacart shopper, the entire income you reported on your 1099-NEC won’t be taxed. You can write off the following:
- Car expenses, including gas, maintenance, registration, tolls, parking fees, etc.
- Your phone bill
- Pushcart for groceries
- Phone accessories, such as car mounts and chargers
- A bike
Does Instacart send a W2?
In-store shoppers are classified as Instacart employees and are treated like other employees working the usual 9-5. Instacart withholds taxes for them automatically and sends a form W2 during tax time.
Does Instacart send a 1099?
If you’re certain to have garnered at least $600 for the year, including your base pay and tips from customers, you can expect to get this form.
Where can I find more information about Instacart 1099 taxes and other tax-related topics?
Instacart 1099 taxes can be a confusing and daunting topic for many people. However, there is a wealth of information available to those who are willing to do a little research.
The Instacart website has a section devoted to tax information and many helpful articles and videos available online. In addition, the IRS website provides a wealth of resources on tax-related topics.
By educating yourself on Instacart 1099 taxes and other tax-related topics, you can ensure that you are able to file your taxes accurately and on time.