Taxes For Amazon Flex 1099 Delivery Drivers
As long as you have a car and a smartphone, delivering packages through Amazon Flex is a great way to make some extra cash on the side. If you drive as an independent contractor, you must be aware of how to manage your federal and state taxes. Amazon does not withhold your taxes for you. As a classified Amazon Flex 1099 self employed delivery driver you must also deduct your own expenses to decrease your tax bill. That responsibility to pay your own taxes is on you.
In this article, we will go over...
- How to properly report your Amazon Flex earning using a 1099
- The percentage that you need to save for income taxes
- Business deductions from your taxes by using a Schedule C
- How to fill out your Schedule SE for the self-employment tax
How to File Your Taxes As An Amazon Flex Delivery Driver
The IRS requires 1099s to be sent out by January 31st. You must know what you are doing if you don’t want to get in trouble. If you are an Amazon Flex self employed delivery driver you will get a 1099 form.
1099 vs W2 Forms
They are both forms that are used to report your yearly income. A W2 form is issued when you are considered an employee of a company. When you are a self-employed delivery driver, you are issued a 1099 form. The IRS only requires Amazon Flex to send drivers the 1099 form if you made over $600 the previous year. However, in the event that you don’t receive the form and you made over $600, you will still have to report your income taxes.
This tax form is how you will deduct your business expenses from your total yearly income on your 1099 form. The IRS views you as an independent contractor which classifies you as a business owner. In order to stay organized for your taxes, tax professionals suggest having a separate bank checking account or credit card for all your business expenses. We will go over deductions and write offs you can take advantage of in the next section.
Besides filling out your 1099, you will also have to fill out the IRS form Schedule C to report your income and write off your business expenses. You should only ever pay taxes on your profit.
What Expenses Can I Deduct as an Amazon Flex Delivery Driver?
As a delivery driver you will have many different write-offs available to you.
The most common tax write offs that you can claim are:
- Gas Mileage Expenses: You should deduct the gas it takes you to drive in between drop off locations. However you can’t write-off the gas it takes you to drive between the Amazon warehouse and your house. Keep track of all your logged miles, along with receipts for your gas station trips.
- Equipment Expenses: You unfortunately are not allowed to write off your personal car as a business expense. You can deduct part of your cell phone bill when using it for Amazon Flex. Most of us are using our personal phones for our delivery business. If that is the case you must measure the hours you use your phone for work and calculate the percentage that is a tax write off. Then you may write off that percentage as a business expense. A dolly or food bag are also considered deductible expenses.
- Parking and toll fees: When you are doing deliveries you may deduct the parking fees you pay while dropping off a package or the tolls you have to pay between deliveries.
For more information, check out Keeper Tax’s list of tax write offs for Amazon Flex delivery drivers. The easiest way to keep detailed records of all your business expenses is by using an expense tracker. You never know when you might be audited by the IRS so it’s better to be safe than sorry.
Your Tax Liability As An Amazon Flex Driver
As a classified independent contractor you are required to file your own federal and state income taxes as well as self employment tax. To see how much you'll owe, use our self employment tax calculator. Self employment consists of Medicare and Social Security taxes and are usually paid by employers of traditional jobs. Since you are legally considered both the employee and the business owner you are responsible to report this information to the IRS.
Reporting your federal tax income is the same for everyone but state income taxes vary. To simplify the process I highly recommend filing your taxes online through Keeper Tax because they will fill out the exact forms you need for your specific state. All you have to do is give them the information they need step by step. Using an automatic expense tracker would minimize any errors.
When to File Your Taxes
As a self employed delivery driver that makes more than $600 a year, the IRS requires that you file your taxes quarterly. This is because your taxes are not withheld already like most people with day jobs. The IRS does not want to wait until the end of the year to receive their taxes.
Keeper Tax has an estimated tax calculator that can help you figure out how much you should pay in quarterly taxes.
The dates you need to file your taxes are:
- April 15th
- June 15th
- September 15th
- January 15th
The IRS is very rigid about their deadlines. If you miss the deadline by a single day then you will be penalized. They subtract a fee of .5% of what you originally owed following the due date. For every month that you don’t pay your full taxes, the portion you owe increases. However, there is a fee penalty limit of 25% of the taxes you owe. Learn more about what happens if you miss a quarterly tax payment here.
Automate Your Expense Tracking
As discussed earlier the best way to track your expenses is by using an online software that automates the process for you. This will save you a world of headache in the future especially when an audit from the IRS could potentially happen.
Doing your taxes on your own as an Amazon Flex delivery driver may seem worrisome especially if it's your first year. Let me tell you, filing your taxes is easier than you think, but only with the right tools at your disposal. Check our Amazon Flex tips article to see how you can earn more money driving.
Sign up for 1099 Tax University
Get the tax info they should have taught us in school