Paying Amazon Flex Taxes As A Freelance Driver

It works a lot like the aforementioned delivery apps, but in this case you pick up packages from Amazon fulfillment centers and deliver them to Amazon customers. Like every gig-driving company, Flex has an app that you use on your smartphone. When you download the app, part of the setup is telling it the hours you want to work on a given day. Each time you open the app, the first step will be to schedule time blocks to work. An hour or so before your scheduled block of time starts, you'll receive a reminder notification to head to the Amazon warehouse or store that has the packages you'll be delivering. Using the Amazon Flex driver app, you scan barcodes on the packages to make sure you have the right ones, and then you can start delivering. Your route for each delivery is up to you, but the Amazon Flex application will plot one for you. Just keep in mind the amount of time each delivery takes, so you can complete them within your time slot. At each delivery location on the Amazon tracking map, you take the package to the client's door and scan the barcode again as proof of delivery. The app might ask you to take a photo of the package where you have set it down, which is a good practice, no matter what. If that happens, the app then sends that photo to the customer, so they know their package is waiting for them.

A feature that differentiates the Amazon Flex app from other delivery apps is it shows you how much you will make in a given time slot. That is, assuming you deliver a given number of packages determined by the app. About once a week, your payment will be deposited into your bank account. Working for Flex pays up to $25 per hour, with a minimum of $18 per hour. Getting shifts with any consistency can be difficult, and you can't just log into the app and start delivering like you can with other delivery and rideshare apps. You're really at the company's mercy, as you compete with a pool of many other drivers looking to pick up shifts.

Amazon treats delivery drivers as independent contractors, which means you're responsible for handling your own taxes, as the company does not withhold them for you. Unfortunately, Amazon doesn't provide drivers with a breakdown of their total earnings, including tips, raises or bonuses. So, it's essential to meticulously track your earnings. You can also choose to use FlyFin, which offers a built-in income tracker to simplify this process. When it comes to filing taxes as an Amazon Flex driver, there are two main types you'll be dealing with. First, there are income taxes which cover all the money you earn, whether it's from your own business or working for a company. This applies to any income you make through Amazon Flex as well. If your state imposes income taxes, you have to pay that as well. Then, there are self-employment taxes. As an independent contractor, you have to pay both the employee and employer portions of Social Security and Medicare taxes, unlike W-2 employees who only have to pay half. This means covering the full 15.3% yourself. Amazon Flex drivers also have to estimate their tax liability for the year and make estimated quarterly tax payments throughout the year if they owe more than $1,000. The penalties for missing these payments come with interest that can go up to 25%, so make sure to stick to the deadlines.

There are many key forms that drivers need to pay Amazon Flex taxes. Firstly, there's the 1099-NEC form. This informational tax form summarizes your annual earnings from Amazon Flex. You'll get this form if you made over $600 on the platform. Drivers can download 1099 forms from Amazon’s tax central. Another significant form is the 1099-K, although it's not as common for all Flex drivers. You’ll get Form 1099-K if you made over $20,000 and completed over 200 deliveries in a year. The IRS planned to change the 1099-K rules for 2023, but they decided to delay it. So, for the 2023 tax year, drivers still need to report earnings over $20,000 or involving more than 200 transactions as usual. Drivers should also be aware of Form 1040-ES, which is used to estimate and pay quarterly taxes. Since Flex drivers are self-employed, they're responsible for paying income taxes and self-employment taxes throughout the year. Form 1040-ES helps in calculating these estimated tax payments to prevent underpayment penalties. Lastly, drivers need Schedule SE and Schedule C when filing Amazon Flex taxes. These forms allow them to calculate self-employment tax and deduct business expenses related to their Amazon Flex activities, such as mileage and car maintenance. Remember that if you earned less than the set threshold with Amazon Flex, they won't send you any 1099 forms. But you still need to tell the IRS about your earnings. You can do this by checking your bank statements and adding up the money you got from Amazon Flex.

As an Amazon Flex driver, vehicle mileage and related expenses can be a big tax deduction. Every mile you drive for Amazon Flex deliveries is money in your pocket come tax time. Let's break it down. Say you drive 200 miles a week for deliveries. If you're using the standard mileage method and the IRS standard mileage rate (which was 65.5 cents per mile in 2023), that's a $131 deduction just for driving your car. Plus, you can deduct other vehicle-related expenses like oil changes, maintenance, oil, repairs and depreciation. For example, if you spent $30 on gas and $20 on an oil change in a week, that's an additional $50 deduction. So, by simply keeping track of your miles and vehicle expenses, you can significantly lower your taxable income and save money on your taxes.

Your smartphone is your lifeline as an Amazon Flex driver. You use it to receive delivery orders, navigate to customer locations and communicate with customer support if needed. The good news is, a portion of your phone bill can be deducted as a business expense. Here's how it works. Let's say you use your phone 75% of the time for business purposes, like receiving delivery notifications and using navigation apps. You can deduct 75% of your monthly phone bill as a business expense. So, if your phone bill is $150 per month, you can deduct $112.50 from your taxable income. It's a simple yet effective way to reduce your tax bill as an Amazon Flex driver.

As an Amazon Flex driver, you need certain supplies to make your deliveries efficiently. These can include insulated delivery bags, smartphone mounts for your car and even snacks or water for long shifts. The good news is the cost of these supplies can be deducted as business expenses on your taxes. For example, let's say you spent $50 on a set of insulated delivery bags and $20 on a smartphone mount. You can deduct the full $70 as a business expense, reducing your taxable income and saving you money on taxes. Tracking your delivery-related expenses and using a 1099 tax calculator can maximize your deductions and keep more of your hard-earned money in your pocket at tax time.