Getting started as a Spark driver comes with its share of learning curves. And filing taxes as a contractor for the first time can be a particularly steep challenge.
We’re here to help you navigate tax season with confidence. In this guide, we’ll cover the forms you need to file, how to track your business expenses as an independent contractor, and when your taxes are due.
Let’s get started with the taxes Spark drivers are responsible for.
What taxes do Spark drivers pay?
If you make $400 or more in profit as a Walmart Spark driver, you should expect to owe two main types of taxes: self-employment tax and income tax.
This is because drivers aren’t classified as Walmart employees. In the eyes of the IRS, you’re considered an independent contractor or self-employed worker, and Walmart is one of your clients. So the tax rules work a little differently than they do for W-2 employees (for instance, a Walmart sales associate).
Here’s a closer look at self-employment and income taxes.
1. Self-employment taxes
Also known as FICA (Federal Insurance Contributions Act), self-employment taxes are how gig workers contribute to Social Security and Medicare. They’re also sometimes referred to as 1099 taxes, after the 1099 tax forms contractors have to file.
When you pay FICA taxes, you’ll pay 15.3% of your self-employment income. For comparison, W-2 employees pay 7.65% in FICA taxes, and their employers match the same amount. Because you’re self-employed, you’re responsible for both portions: 15.3%.
Luckily, you can deduct part of the employer portion on your income taxes. (We’ll explain those next.)
2. Federal and state income taxes
Your federal tax rate will vary from 0% to 37% based on your income level.
Your state tax rate depends on where you live. Some states charge one flat rate to everyone regardless of income level, while others base taxes on your income bracket.
These states don’t charge any income tax:
- South Dakota
For an approximation of your federal and state tax bills, check out Keeper’s income tax calculator.
What are 1099 forms?
1099 forms detail the various types of payments you receive throughout the year as a contractor.
Delivery drivers typically receive two types of 1099 forms:
- 1099-K: includes payments received through credit cards or third party payment processors
- 1099-NEC: includes “nonemployee compensation” — in other words, your delivery earnings from Walmart
Whenever you receive a 1099 form, a matching document will be sent to the IRS.
What 1099 forms do you need to file your Spark driver taxes?
Up until recently, the 1099-NEC and 1099-K were the two forms you’d use to file your Spark driver taxes. Together, these would tell you your income from the previous year, including delivery earnings and tips.
However, with buyouts and changing tax rules, confusion has understandably developed around which forms are needed to file Spark driver taxes for 2022 and 2023.
Here’s where the confusion stems from: In August 2022, Walmart bought Delivery Drivers Inc. (DDI), a gig-labor management company. DDI has always powered the Spark driver app, but previously it did so as a Walmart partner, and now it does so as a Walmart subsidiary.
Before the acquisition, DDI processed tip payments from customers to delivery drivers, while Walmart handled delivery driver earnings. Now, both types of payments are handled directly by Walmart.
This means the forms you receive for your 2023 taxes will be different from 2022. Let’s go over both forms and how they’ve changed.
Before Walmart acquired it, DDI would send Spark drivers a form called a 1099-K, which documented their tips.
Drivers would only receive this form if they:
- Earned at least $20,000 in tips
- Across at least 200 transactions
For 2022, this was still the case, but only if you met the above threshold between January 1 and August 16 — the date Walmart bought DDI. (Of course, earning over $20,000 in tips is rare, so most drivers didn’t receive a 1099-K.)
Moving forward, Walmart will not be issuing a 1099-K for tips. Instead, tips will appear on your 1099-NEC.
For the 2023 tax year, Walmart will send a 1099-NEC that documents:
- All your earnings, and
- All your tips
Walmart is obligated to send you a 1099-NEC if you earned $600 or more during the previous year.
Your tips will show up here regardless of their total or how many transactions were made. The “$20,000 across 200” rule won’t apply.
What 1099 tax forms will I receive?
We know this is a lot of information to take in. Let’s quickly summarize the above. Remember: Due to Walmart's acquisition, the forms you receive as a Spark driver for 2023 might be different from the ones you received for 2022.
If you earned any amount as a Spark driver in 2022…
You should have received a 1099-NEC from Walmart documenting your 2022 earnings on January 31, 2023.
If you earned at least $20,000 in tips across 200 transactions between January 1, 2022 and August 16, 2022…
You should have received a 1099-K from DDI on January 31, 2023.
If you only started earning tips after August 17, 2022…
You should have received a 1099-NEC from Walmart documenting both your tips and earnings on January 31, 2023, regardless of the income amount or number of transactions.
If you’ve been working as a Spark driver in 2023…
You will receive a 1099-NEC from Walmart documenting tips and earnings (regardless of the income amount or number of transactions) on January 31, 2024.
How will I receive my 1099 form?
At the beginning of the year, Walmart sends out an email where drivers can opt to receive their tax forms electronically. Keep an eye out for this email if you’d prefer to receive your 1099-NEC digitally instead of via snail mail.
If you don’t consent to receive your tax forms electronically, Walmart will mail you a hard copy by January 31. If you don’t receive it right away, don’t panic — it’s fairly common for a 1099 to arrive in mid-February.
Which write-offs can you claim as a Spark driver?
After you’ve figured out your annual earnings using your 1099 forms, it’s time to make a list of your business expenses. Expenses that are both “ordinary and necessary” for your business can be claimed as tax write-offs. This means that they’re both normal for someone in your field to deduct and required for you to do your job properly.
Luckily, many business expenses are tax-deductible, meaning that when you file your taxes, you can write off a portion of the expense from your total income. This will lower your tax bill and help you keep as much of your earnings in your pocket as possible.
As a delivery driver, the bulk of your business expenses are likely car-related. These might include:
- 🛡️ Car insurance
- 📄 Vehicle registration
- 🚗 Lease payments
- ⛽ Gas
- 🅿️ Parking and toll fees
- 📉 Vehicle depreciation
- 🛠️ Repair or maintenance
- 📱Cell phone accessories and a portion of your phone bill
- 🛣️ Roadside assistance plans
- 🎶 Music services like Spotify or Apple
- 💵 Spark service fees and commissions
- 🥡 Trunk organizers or other delivery tools
Keep in mind: You can only write off the portion of these expenses used for work. For example, if 60% of the money you spend on gas is for deliveries and the other 40% goes towards personal use of your car, you can only deduct 60% of your gas expenses.
For more information about car-related write-offs, including tracking mileage and choosing between the standard mileage and actual expenses methods, check out Keeper’s guide to car tax deductions.
It’s smart to keep track of your expenses to make things easier for yourself come tax time. Luckily, you can save your glove compartment from bursting with paper receipts with an expense-tracking app like Keeper. Keeper helps you track and record all your business transactions — ensuring you save as much as you can on your taxes.
When you’re ready to file, you can download a list of your deduction-ready expenses. Or, for an even easier option, you can even file right in the app.
How to file your Walmart Spark driver taxes
You have your tax forms documenting your income from the previous year as well as a list of your business expenses. Tax time has arrived. Now what?
For comprehensive instructions, check out Keeper’s in-depth guide to filing your self-employment taxes. But in a nutshell, these are the steps you’ll need to take.
Step #1: Complete your Schedule C
Schedule C is the form you use to deduct your business expenses and figure out your taxable income. Here’s how:
- Fill in your gross annual income from the previous year. This is the total amount you earned, including tips. Remember, this is before expenses
- List your business expenses
- Subtract your expenses from your gross income
The result is your taxable income — the amount that’ll be used to determine how much you owe in taxes. (Again, using Keeper to make sure you don’t forget any eligible write-offs can be a helpful money-saver!)
You can download a Schedule C from the IRS website.
Step #2: Fill out your Schedule SE
With your taxable income determined, you can fill out Schedule SE (Self-Employment Tax) next to figure out your self-employment tax bill.
Step #3: Attach both forms to your 1040
Form 1040 is where you’ll figure out how much you owe in income taxes. You’ll also record your taxable income here and attach it to your Schedule C and Schedule SE before sending your return to the IRS.
When to file your Spark driver taxes
Spark drivers who expect to owe at least $1,000 in taxes have to pay their taxes in quarterly installments throughout the year.
If you expect to owe less than $1,000, you’ll only have to file and pay taxes once, on April 15. (And if you think you might need a bit of extra time to file your taxes, you can also apply for a tax extension.)
The deadlines for quarterly payments typically fall on:
- April 15
- June 15
- September 15
- January 15
If you’re not sure how much you’ll owe, use Keeper’s quarterly tax calculator to figure out which deadline rules apply to you.
While the calculator provides a solid estimate of how much you’re likely to owe for each quarterly payment, keep in mind that it’s best to slightly overpay if you’re uncertain. If you overpay, you’ll receive the extra amount back as a tax refund. If you underpay, however, you could end up facing a penalty.
By now, you should have a clearer idea of how to file your Spark driver taxes, the business expenses you should be tracking, and the deadlines to keep track of. Remember that Keeper can lend a hand year-round to help you stay organized so you can cruise through tax season with confidence. And while approaching tax season might never quite feel like driving into the sunset, hopefully we’ve helped make it feel a little less like gridlock.
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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email email@example.com with your questions.