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:1099-NEC
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.W-2
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.Schedule C
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:| Quarter Deadline | 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:Mileage
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
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
- Phone bills
- Phone Accessories (charger, clips, car holder, etc.)
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.Tolls
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.Parking
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.Roadside Assistance
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.Health Insurance
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)
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
- Amount of the expense
- The business purpose of the expense
- Name of the vendor for the expense
- Time and place of the expense
Bottomline
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!Frequently-Asked Questions
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