Does Instacart Take Out Taxes? Ultimate Tax Filing Guide

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does instacart take out taxes

If taxes drive you crazy, you’re not alone. Whether you choose to work for Instacart full time or part time, it is important to be in the know about taxes.

Of course you can always get help consulting with a tax advisor but you do not have to be an expert to understand the basics.

So does Instacart take out taxes?

The short answer is that if you are an Instacart full time shopper Instacart will not take out taxes and if you are an in-store shopper, yes.

However, understanding how Instacart and taxes work is really important. We choose to make it simple for you.

In this complete guide of Instacart taxes for dummies you will find all the answers you need and important information to maximize your income with tax deductions.

Does Instacart Take out Taxes?

You may be wondering whether you are required to pay taxes on your Instacart earnings. The answer to this question is really important and will also help you to figure out how much you can make working for Instacart.

Whether an employer withholds taxes or not it depends on whether you are classified as "employee" or "independent contractor."

In order to make this determination, every company should examine the individual's relationship between the worker and the business.

Basically, whether or not a worker is an employee or an independent contractor is a legal determination.

According to the IRS an individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done. Small

Instacart is one of the best grocery delivery apps also offering pickup services in the United States and Canada. The company is growing fast and planning an IPO in the following months. In the grocery delivery platform there are different job opportunities.

As a general rule, employees have little control over their work, while independent contractors have a high degree of control over their work.

If a worker turns out to be an independent contractor, your business must still report the amount you pay the worker to the IRS, if it is $600 or more. You will report this income on IRS Form 1099-Misc.

Full Service Shopper

Over the last few years the workers classification has been controversial.

Instacart Shoppers are independent contractors and responsible for their own taxes.

This also applies to many people who work in the Gig Economy. If you drive for Uber, deliver with DoorDash or work as a freelancer in the Upwork platform you are considered an independent contractor.

This means that you have to pay self employed taxes including social security and medicare taxes.

In-Store Shopper

On the platform, in-store shoppers are Instacart employees. This means that the San Francisco headquartered company is responsible for payroll taxes and it is required to withhold and pay taxes for those workers who are classified as employees.

Instacart withholds from the In-Store shopper’s wages:

  • State income taxes
  • Federal income taxes
  • Social security
  • Medicare taxes

Instacart Tax Forms: 1099, W2

There are two different types of Instacart tax documents: the W2 and the 1099 form.

Instacart 1099

If you are an Instacart contractor and your earnings exceed $600 in a year you will get a 1099-NEC ​​(Nonemployee Compensation).

Some websites try to add confusion. Life is already so complicated... Keep it easy. Understanding the difference between a 1099 MISC does not really matter.

Here are some important information about the 1099 form:

  • You can use your 1099-NEC to file your 2021 tax return
  • Even if you do not receive a copy of the form, your income must be reported on your tax return
  • You are not required to attach your 1099 with your tax return
  • The IRS receives a copy of your 1099

💡 PRO TIP: We suggest you keep accurate records of your Instacart earnings. Create an excel file and fill out monthly with your earnings using the Shopper app.

Instacart W2

You will only receive a W2 form if you are an Instacart employee. The tax year end date is 31 December. So when do you get the W2? Every employer must send a W-2 to all the employees no later than January 31.

💡 PRO TIP: Self-employed people usually don't receive a paycheck. So if you are a Shopper, you will never get an Instacart pay stub

How To File Taxes For Instacart Step By Step Guide

If you do not know how to file Instacart taxes you are at the right place.

Step 1: Collect All Your Deduction Information

Are you looking for ways to make more money with your Instacart side hustle? Start by keeping track of your business expenses.

Step 2: Pay Instacart Quarterly Taxes

The first step of the Instacart shopper taxes is to calculate your estimated taxes and proactively pay estimated income taxes on a quarterly basis.

The IRS establishes the deadlines for the payment. We suggest you put a reminder on your phone. Missing quarterly deadlines can mean accruing penalties and interest.

Find below the IRS quarterly estimated tax payment timeline:

  • Q1 Deadline: April 15 (Pay estimated taxes for income received January 1 to March 31)
  • Q2 Deadline: June 15 (Pay estimated taxes for income received April 1 to May 31)
  • Q3 Deadline: September 15, 2021 (Pay estimated taxes for income received June 1 to August 31)
  • Q4 Deadline: January 15, 2022 (Pay estimated taxes for income received Sept 1 to Dec 31)

Step 3: Report Your Income Using The Schedule C

As an Independent contractor, Instacart shoppers must file Schedule C to report their business income and expenses.

Instacart Tax Deductions

Business expenses are deductible and lower your taxable business profit. Here is a list of commun Instacart tax write offs:

  • Miles
  • Cell phone plan
  • Cell phone expenses
  • Car mount, charger, etc.
  • Business taxes software
  • Health insurance
  • Freeway, highway, and bridge tolls
  • Tire inflator and pressure gauge
  • Flashlights and flares
  • Roadside assistance plans
  • Office supplies (if needed for businesses purpose)
  • Shoppers gear (insulated bag, Drink Carrier etc.)

The IRS requires receipts for expenses. According to the IRS, the proof of payment should identify:

  • The date incurred
  • Include a description of the item purchased or service received that shows the amount was for a business expense

The proof of expense is a key element in the process of managing taxes. Example of proof of expenses are:

  • Mileage logs
  • Invoices for purchased assets
  • Phone bills

PRO TIP: Instacart doesn't pay for mileage however, factors like mileage goes into determining how much money you make with Instacart.

Does Instacart Give You A W2?

Does Instacart give you a W2 form? If you are an Instacart in-store shopper yes. Instacart full service shoppers are classified as independent contractors, you will get a 1099 NEC instead. #instacartW...

Frequently Asked Questions

Does Instacart Track Mileage?

The Instacart Shopper app doesn't track your miles. So how to track my miles? Actually you do not need to use an app to track your mileage for work. You can do it manually by keeping a log of your miles or you can do it manually or if you want, you can take a look at our pick of the best mileage tracker apps for 2021.

How Much Do You Pay in Taxes For Instacart

The self-employment tax rate is 15.3% of the first 92.35% of your net earnings from self-employment.

To be more exact you must pay a 12.4% Social Security tax and 2.9% Medicare tax on your 1099 income.

What If I Made Less Than $600 With Instacart?

If you made less than $600 with Instacart, you are still required to report and pay taxes on your income. However, Instacart is not required to provide you with a 1099 form.

Do You Have To Claim Tips On Taxes?

For Instacart shoppers, tips are an important part of their earnings. If you want to figure out if tips are taxable the answer is yes. If you already know how tipping works on the Instacart platform, you know that customers can tip you in-app or cash. You are supposed to report your cash tips received while working with Instacart.

How To Get Instacart 1099 Online

Instacart will mail you a copy of your 1099 forms. However if you didn’t receive it you can contact the Instacart driver support and send an email at [email protected] to request the form.

Instacart Taxes Help

Understanding taxes can be a challenge. Now you know that if you are an Instacart shopper, you're an independent contractor who provides a service, not an employee. That's why Instacart doesn't withhold taxes from your payments. This is also the reason why Instacart reports your earnings on 1099 forms, rather than on a W-2.

You also know what you can write off on your taxes for instacart and get the most of your deductions. Happy taxes!

** Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties **

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