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A Guide to Instacart Taxes
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A Guide to Instacart Taxes
Spending time at the grocery store is becoming a thing of the past thanks to companies like Instacart and Postmates, who deliver groceries right to your doorstep. For some self-employed individuals and freelancers, spending time picking out groceries and getting paid to deliver them is an ideal job.
But not everything is so easy when it comes to delivering groceries and taxes. The IRS considers this gig to be a sole proprietorship, which means you're responsible for your own taxes as a self-employed person. Freelancing has its perks, too, like setting your own schedule and taking on clients at your convenience. And, when it comes to Instacart and taxes, there are some serious tax deductions you can qualify for if you're working as a delivery driver.
Key Takeaways:
- A 1099 form tells you how much income you made from a client or company that paid you for your work
- Based on the clients you work for, you may receive several 1099 forms
- As a 1099 contractor, you need to pay 15.3% in Social Security and Medicare taxes
Table of contents
Is Instacart a 1099 job?...Read more
How to file Instacart taxes...Read more
How much do you make with Instacart?...Read more
Documents when filing taxes...Read more
Do you pay taxes working for Instacart?...Read more
Does Instacart take out taxes?...Read more
How to get Instacart 1099?...Read more
How to get Instacart 1099 online?...Read more
What is an Instacart 1099-NEC?...Read more
Instacart tax deductions...Read more
Other deductions...Read more
Is Instacart a 1099 job?
You might be wondering: Is Instacart a 1099 job? The short answer is yes. Per the IRS, you are considered an independent contractor if you work for Instacart, and you should receive an Instacart 1099 form in the mail. You will need to pay taxes on your income working for Instacart.
For example, if you are only a W-2 employee, you will not receive a 1099. W-2 employees are full-time employees, who have their taxes directly withheld from their income. If you are also a part-time freelancer – earning $600 or more yearly – you’ll receive a 1099 form, as well.
How to file Instacart taxes
You must be wondering how to file taxes for Instacart, if you work for them. Filing taxes with Instacart can be tricky. There are different requirements depending on whether you're an in-store or full-service worker. So to answer the question, Do I need to file taxes for Instacart? Yes, you do, and you're in the right place to learn how Instacart taxes work and how to file taxes with Instacart.
For instance, if you are an in-store worker for Instacart you’ll be taxed as a normal W-2 worker. Your estimated taxes will be withheld from your income each tax year, and you will have to file taxes as a W-2 employee.
The other instance is when you work as an independent contractor with Instacart, also known as a full-service worker, and you have to pay and file your own taxes. You’ll receive a 1099 form from Instacart, which you'll use to file your taxes.
How much do you make with Instacart?
Things are not very straightforward when it comes to payments with Instacart. The pay structure varies, and you could be paid per item, per mileage, with a base pay and through tips from customers. There’s no clear answer to how much you can make with Instacart. Typically, if you shop and deliver for Instacart, you will make at least $10 per order.
Documents when filing taxes
You’ll use Schedule C to determine the amount of money you’re taxed on and include any income you’ve made with Instacart as well as any deductions.
You’ll use Schedule SE to determine the amount of self-employment tax you owe.
You’ll use Form 1040 to file your normal tax return. With this form, you’ll attach Schedule C and Schedule SE.
Do you pay taxes working for Instacart?
Since you’re considered an independent contractor by the IRS, you are responsible for paying your taxes. Typically, when you work for an employer on a payroll, your employer will withhold some of your taxes. When your taxes are withheld, that amount goes towards the Social Security and Medicare taxes, which everyone is required to pay. Your employer covers the other amount, totaling 15.3%. As a self-employed individual, you’re considered the “employer” and “employee” and are responsible for paying the full 15.3% on your own, and estimated taxes.
Say your taxable income as a W-2 employee is $50,000. Your Social Security and Medicare contribution at 7.65% of your income will be approximately $3,800. If you made that same amount delivering for Amazon Flex, this amount will be around $7,600 because as a 1099 freelancer you pay the whole 15.3%.
The good news is that as a 1099 freelancer, you can deduct that second half of the 15.3% from your taxable income.
You’re also responsible for paying taxes on any income you make working for Instacart or other delivery driver gigs such as Doordash, Grubhub, Uber or Lyft.
Does Instacart take out taxes?
Instacart only takes out taxes for W-2 employees. So if you’re a full-service Instacart worker, you are responsible for reporting any income you make through Instacart and paying taxes on that income, along with the self-employment tax.
How to get Instacart 1099?
If you work for Instacart as a delivery driver and shopper, one question arises, how do I get my 1099 from Instacart? If you’ve earned $600 or more during the tax year, you will receive an email with a 1099-NEC from Instacart’s partner, Stripe, as an Instacart tax form. If you don’t receive an email from Stripe, check your spam or junk folder and ensure the email address on your Instacart account matches your primary email address. You might receive an Instacart 1099 form as a paper copy in the mail.
How to get Instacart 1099 online?
Instacart uses a platform called Stripe Express, which allows you to view your earnings, review your tax information and download tax forms, including 1099 Instacart tax forms. To access Stripe Express, you need to earn at least $600 and then you’ll receive an email from Stripe called Confirm your tax information with Instacart accompanied by a login invitation to create an account.
What is an Instacart 1099-NEC?
You’ll need this Instacart tax document when it comes time to file your taxes. When you work as a shopper and driver for Instacart, the IRS considers you an independent contractor. Stripe will send this form to you if you earn $600 or more for the tax year. It can be helpful to use a 1099 tax rate calculator to help determine how much you might owe.
Instacart tax deductions
You can catch a tax break by making certain deductions to lower your gross annual income. As an Instacart driver, you need your car to make your deliveries. It’s important to keep track of all the miles you drive for Instacart since you can deduct the miles you drive.
You have two options when it comes to mileage deductions:
- Standard deduction: You can take the standard deduction, which is a fixed rate and multiply it by the number of miles driven. The rate for the 2022 tax year is 62.5 cents per mile for business use starting from July 1. The rate from January 1 to June 30, 2022 is 58.5 cents per mile. You can deduct tolls and parking fees but can’t deduct any other car-related expenses with the option.
- Actual expenses deduction: You can deduct the actual expenses for the cost of upkeeping and maintaining your vehicle. This route is a bit complicated, so it’s best to use the actual expenses deduction under the guidance of a tax expert. For example, as an Instacart delivery driver, you can deduct expenses like car repairs and your vehicle’s depreciation. You can track these deductible expenses and ask a CPA any question about car-related deductions using FlyFin.
Other deductions
A cell phone is a crucial part of your job with Instacart. If you have a separate cell phone for Instacart purposes, you can deduct the cost of the cell phone and your monthly cell phone bill. If you use a personal cell phone, you can only deduct the amount used for business.
The groceries you deliver might need to stay hot or cold during transport. You can write off any coolers or insulated bags you might need to transport the groceries. You can write off your uniform costs if you have to wear an Instacart uniform. Also, if Instacart charges any commission fees, you can write those off too.
What’s FlyFin?
FlyFin was built to solve the tax needs of self-employed individuals, including freelancers, gig workers, independent contractors and sole proprietors.
The A.I.-powered tax service tracks all your business expenses automatically to find every possible tax deduction.
Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. And anyone, self-employed or not, can have their taxes filed through FlyFin!
Download the FlyFin app and let the CPA team file a 100% accurate tax return for you in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
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