Postmates 1099 Tax Filing: The Complete Guide
Being an independent delivery driver for Postmates, Uber Eats, DoorDash, GrubHub or Amazon Flex has many perks. You can choose your own hours, get paid instantly, work at your own pace and take home 100% of your earnings. Until tax time comes. Filing your own Postmates 1099 taxes for the first time can be stressful, especially if you are used to getting a tax refund in the past. Lowering your tax bill is easier than you think, and I’ll show you in just a moment.
This article will give you the confidence to:
- File your Postmates 1099 taxes
- Answer how much taxes do I pay on 1099 income
- Automate your 1099 expense tracking
- Be prepared for IRS audits
- Know which 1099 forms to file
- Write off deductible business expenses
- Know when your quarterly due dates are
- Get a personal bookkeeper for less than a tank of gas a month
How to Report Postmates 1099 Income
When you are self employed the IRS considers you a non-employee. This means that your income taxes will not be withheld for you in most cases. You are in charge of filing your own federal, state, and FICA self-employment taxes. FICA stands for Federal Insurance Contributions Act and includes Social Security and Medicare taxes.
As an independent contractor you will have to file your FICA taxes both as the employee and the employer which totals 15.3%. Combining this percentage with your federal and state taxes can be alarming. Fortunately, you are allowed to write off the employer portion, which is 7.65% in the year 2020. This is one of many write offs, keep reading for a full list of the most common Postmates 1099 tax deductible write offs.
Finally, you must make sure that your delivery company is collecting sales tax if your state requires it. Postmates is well known for being in compliance with state sales tax laws, but Uber Eats and DoorDash 1099 contractors have not in the past.
How to get a Form 1099?
Contrary to popular belief, you are not guaranteed to receive a 1099 from Postmates. It all depends on how much you make and the state you live in. Also, if you don’t receive a 1099 you will most likely have to report your earnings on your tax return.
As a general rule, if you make more than $600 in a calendar year, Postmates will usually send you a Form 1099.
If you make less than $600 a year, you won’t receive a 1099 from them, but you will still have to report the gross amount to the IRS.
The IRS requires them to send out their 1099s by January 31st. If you don’t receive a 1099 from them by letter or email, contact the Postmates Fleet support team.
Next you need to figure out which 1099 tax form you need.
1099-NEC vs 1099-K
If you have reported any independent contractor income in the past, you are probably familiar with the Form 1099-MISC. Income from the tax year 2020 is going to be filed on Form 1099-NEC, which is replacing the 1099-MISC from last year.
There are a couple exceptions for this rule though. If you are a full time driver who processed $20,000 or more in total order transactions and had 200 or more transactions, then you will usually get a 1099-K.
This rule varies slightly from state to state. People in Vermont and Massachusetts have to file a 1099-K if they make more than $600 a year.
Making more money is exciting, especially when working for yourself, but when that tax bill comes you will want to minimize your payment as much as possible.
How to Write Off Independent Contractor Expenses
The first rule to lowering your tax bill is to keep a detailed record of all your Postmates business related expenses. That way you will be prepared if you get audited. Accurate record keeping can be very time consuming and frustrating if you don’t have the right system. Save yourself valuable time by using a 1099 tax software that automates business expense tracking so you can spend more time making money.
The most common Postmates tax deductions are:
- Car insurance
- Vehicle registration or lease payments
- Gas mileage deduction
- Parking & toll fees
- A bike
- Depreciation of your car over the year
- Repair or maintenance for your transportation
- Delivery bags
- A portion of your phone and bill
- Postmates commission fees
Keep in mind that you are only allowed to write off the exact percentage something is used for delivering. You are not allowed to write off the whole expense if it's partially for personal use. For example, if you use your car for 50 hours a week but only 30 of them are for deliveries, then you can only write off 60% of the insurance, registration, and lease costs.
The IRS is very strict about only writing off the business portion of your expenses. For clean record keeping open a separate business checking account or credit card. If you don't then it will be up to you to separate all your business and personal expenses, manually or use a software that does it for you.
When to File Postmates 1099 Taxes
If you are expected to owe the IRS $1000 or more when you file taxes then you need to make quarterly estimated income payments. That means you will need to estimate how much you will owe the government by four specific dates a year.
- April 15th
- June 15th
- September 15th
- January 15th
*These dates may be extended due to COVID in 2021.
Make sure to put these dates on your calendar. If you miss a due date, the IRS will tack on extra interest to your bill up to 25%.
Knowing how much to pay for each quarter is tricky. The easiest way is to use a reliable online estimated tax calculator.
Double Check with a Professional
This article is going to arm you with the knowledge to file your taxes properly to avoid audits and lower your tax bill as much as possible. When dealing with the IRS you must double check your work to prevent a costly tax mistake.
Keeper Tax is an expense tracking software that assigns every subscriber with a personal bookkeeper to look for common tax mistakes. Instead of paying 300 for a CPA, you get one for less than the price of a tank of gas for a month. Tax errors are very common for business owners. Consider outsourcing your bookkeeping to a professional for more peace of mind.