Your Guide to Instacart 1099 Taxes (And How to Stop Overpaying Them)

by
George Poullo
Updated 
May 11, 2022
February 16, 2022
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Reviewed by
Sarah York, EA

Whether you deliver groceries full-time or as a side hustler, driving for Instacart has its perks. As a full-service shopper, you can set your own schedule and head out to the local stores whenever you want.

Still, working for yourself comes with its share of downsides — especially when tax time rolls around.

Don't stress. We'll go over everything you need to get your Instacart 1099 taxes right, from from what you're on the hook for to the forms you need to file. Next, we'll teach you some tricks for lowering your tax bill by claiming write-offs. Finally, we'll dig into how — and when — to pay your taxes.

Contents

How taxes work for Instacart shoppers

Instacart taxes can get pretty complicated. For one thing, your tax situation will actually vary, depending on whether you're an in-store shopper or a full-service shopper

Taxes for in-store shoppers

In-store shoppers are classified as Instacart employees. For tax purposes, they'll be treated the same as anyone working a traditional 9-to-5: Instacart will take care of withholding for them and send them a form W-2 at tax time.

If you work as an in-store shopper, you can stop reading this article right here!

Taxes for full-service shoppers

Now, say you're a full-service shopper, working as a delivery driver as well as a store shopper.

Your taxes will be more complicated, because you're treated as an independent contractor, not an Instacart employee.

Unlike in-store shoppers, full-service shoppers don't have their taxes withheld. You'll have to file and pay them yourself.

You'll also have to contend with self-employment tax.

What taxes do full-service shoppers have to pay?

Unlike in-store shoppers, Instacart delivery drivers have to pay self-employment tax. Also known as FICA tax, it’s how freelancers and independent contractors contribute to Social Security and Medicare. 

W-2 employees also have to pay FICA taxes, to the tune of 7.65%. The amount they pay is matched by their employer.

As an Instacart driver, though, you're self-employed — putting you on the hook for both the employee and employer portions. That’s right: you'll have to pay that 7.65% twice over, for a total of 15.3%.

To make matters worse, that's on top of your federal and state income taxes

How much to set aside for Instacart taxes

That 15.3% can lead to some pretty hefty tax bills. No wonder new shoppers can be taken aback by how much they owe the IRS.

To avoid getting sticker shock, use a self-employment tax rate calculator to make sure you’re setting enough money aside.

Before you start panicking, remember: There are ways to lower your taxes by claiming write-offs. We’ll go over that down below.

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The Instacart 1099 tax forms you'll need to file

Knowing how much to pay is just the first step. To actually file your Instacart taxes, you'll need the right tax form: the 1099-NEC.

If you earned at least $600 delivery groceries over the course of the year — including base pay and tips from customers — you can expect this form by January 31. Instacart uses an online service to send it out by email, but it can also deliver it by snail mail.

Your 1099-NEC from Instacart shows how much you earned on the app. Keep in mind: The IRS gets a copy of the same form, so they'll see exactly how much you made.

One quick note on these tax forms: For veteran gig workers, the 1099-NEC might sound a little unfamiliar. That’s because it replaced 1099-MISC, which used to report nonemployee compensation, in 2021. (To learn more about the difference between these two tax forms, check out our guide on 1099-NEC vs. 1099-MISC!)

What to do if you didn't get a 1099-NEC

If you’re sure you earned more than $600 on Instacart, you should be getting a 1099-NEC. Still find yourself missing one by mid-February? You should contact Instacart support.

On the flip side, you might have earned less than $600 on Instacart — maybe because you were driving part-time. In that case, it's normal to not get a 1099. The company isn't required to send you one at all if you fall below the $600 threshold.

Let’s clear one thing up: not getting a form doesn’t mean your earnings are tax-free. You just have to report them yourself, just as if you were reporting cash income.

Make sure to find documentation of your earnings so you can report the right amount, by checking the Instacart app or your bank statements.

What deductions can you take as an Instacart shopper?

Luckily, you won't be taxed on all the income reported on your 1099-NEC. One of the perks of self-employment is getting to deduct all your business expenses from your income.

Gig workers tend to forget about these write-offs, which means they end up overpaying the IRS at tax time. To hang on to your hard-earned dollars, make sure you keep track of everything you buy for work.

For Instacart drivers, that means starting with your auto expenses.

Car expenses you can write off

As a full-service shopper, you use your car for business purposes. You’re probably spending plenty every month just fueling and maintaining it — not to mention to all the other costs of car ownership.

Be sure to write off these auto expenses, by either taking mileage deductions or deducting a percentage of your actual car expenses.

Other expenses you can write off

Car expenses aren’t the only costs you can write off. Here's a longer list of purchases you might be able to deduct as a Instacart shopper:

  • 🚲  A bike
  • 📱  Your cell phone bill
  • 🔌  Phone accessories, like car mounts and chargers
  • 🛒  A pushcart for groceries

Want more ideas? Check out our round-up of write-offs for delivery drivers.

At the end of the day, tracking your expenses is key to getting an affordable tax bill. But keeping up with them manually can be time-consuming. Luckily, Keeper Tax is here to help. Our app uses software — aided by a team of human bookkeepers — to automatically scan your purchases for write-offs.

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Keep in mind: You can take these business-related write-offs even if you claim the standard deduction. They're completely separate from personal deductions (like medical expenses and charitable donations), which the standard deduction replaces.

How to file your Instacart taxes

Found all your Instacart write-offs? Now you're ready to file your taxes!

There are just a few different tax forms you'll need to fill out: your Schedule C, Schedule SE, and 1040.

For business income and expenses: Schedule C

Independent contractors use this form to figure out their net earnings — the amount they’re actually taxed on. Here's where you'll plug in your Instacart earnings and the write-offs you identified earlier.

Pro tip: If you do other gigs on the side, you'll have to fill out a separate Schedule C for each of them.

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For calculating self-employment tax: Schedule SE

Schedule SE is used to figure out how much self-employment tax you’ll actually owe. (Guess what the SE stands for?) 

Like with Schedule C, you'll need a separate one for every service you contracted with.

For your individual income tax return: Form 1040

Once your Schedule C and Schedule SE are done, you'll attach them to Form 1040.

This is the form all taxpayers use when they file their returns. You’ll only need to fill out one.

If you'd rather not pay an accountant or deal with the hassle of filing your own business taxes, Keeper Tax can help. You can file your Instacart taxes through our app, right on your mobile device.

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When to pay Instacart taxes: Quarterly vs annually

Your Instacart taxes are almost good to go! There’s just one final wrinkle: unlike a W-2 employee, you might have to pay them in four batches throughout the year.

As a general rule, self-employed people who expect to owe at least $1,000 in taxes should make these quarterly tax payments. They're due on the following days:

  • 🌷 Q1 - April 15
  • 🏖️ Q2 - June 15
  • 🍁 Q3 - September 15
  • 🌲 Q4 - January 15

Not sure if you should be making these payments? Use our free calculator to estimate your quarterly taxes. (It's also the best way to know if you're off the hook entirely!)

If you are expected to pay quarterly, missing these deadlines will result in fees and penalties with interest. End up paying more than you owe? You’ll get your money back.

At the end of the day, dealing with taxes can be complicated — especially if you’re new to the gig economy. It’s common for gig workers and independent contractors to make tax mistakes and then get penalized for them,

Now that you know how Instacart taxes work, though, you can avoid making these costly errors. Here's to a stress-free tax season!

George Poullo

George Poullo

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George is a freelance writer who provides valuable content, one article at a time. With a background in B2B writing, George’s key ability is creating engaging solutions in response to customer needs.

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At Keeper Tax, we’re on a mission to help freelancers overcome the complexity of their taxes. That sometimes leads us to generalize tax advice. Please email support@keepertax.com if you have questions.