Instacart Taxes | How Taxes Work for Instacart Shoppers
One of the most common workers today is someone in the “gig economy” driving Uber, Lyft, or delivering for Instacart. For a new freelancer, Instacart taxes can be an overwhelming and confusing topic, especially since there’s no guidance and freelancers don’t have an HR department to rely on.
Check our FAQs for quick answers to some questions
Instacart workers are divided into two categories:
In-store only shoppers: you go from store to store and conduct shopping in store, but never deliver anything to customers directly
In-store and delivery shoppers: you do a combination of in-store shopping and delivering those goods to customers.
Depending on your working relationship with Instacart, there are different tax implications.
If you are an in-store only shopper, you will receive a W2 from Instacart with taxes withheld. This makes the tax situation much simpler, however, you are generally locked into an hourly wage and have little control over which jobs you can take.
For most Instacart workers, you will be doing a combination of both in-store shopping and delivering goods. This makes you fall into that second category and that means you won’t receive a W-2. Instacart treats these workers as freelancers, or contingent workers. Instead, you will receive a 1099 form, with no taxes withheld. This means that you have to be on top of paying taxes, and if you make enough, quarterly tax payments. There may even be scenarios where you are filing W2 and 1099 together, but we won’t be over complicating it in this article.
How do you get your tax form on Instacart?
For Instacart workers, Instacart taxes can vary. If you’re an in-store only shopper, you should receive a W2 form, based on your address on file. You can also download the W2 off your profile directly from the internet. If you’re a combination shopper, then you should receive a 1099 form instead. Delivered and downloaded in the same way.
Instacart Taxes for in-store only shoppers:
You might be wondering: can you get pay stubs from Instacart? If you are classified as an in-store only shopper, yes. You should be receiving regular pay stubs with taxes withheld and also a W2 at the end of the year, which summarizes your earnings.
Instacart Taxes for full-service, or combination shoppers:
Similarly, for a combination shopper, you will receive a 1099 and this will also be mailed to you, or downloaded off your profile.
How do you file a 1099 on Instacart?
To use the 1099 you received from Instacart, you will need to include the information from the 1099 on your 1040 when you file taxes at the end of year. There is nothing to do on the Instacart platform. Instead, you will input the information on your individual tax return. Depending on which software you use to file taxes (TurboTax, TaxAct, etc.), the 1099 information will be transferred over to that platform.
Do You HAVE to Pay Taxes on Instacart?
Yes–anyone who generates income, regardless if it’s with Instacart or an employer, must pay taxes on that income. For freelancers working Instacart, taxes can be a bit more complex. We’re here to help.
Types of Instacart Taxes:
As with any type of tax you pay (like being an employee), generally you have to pay taxes at the Federal level, and also at the State and Local levels. Because Instacart shoppers are generally considered contractors, you also have to pay “self-employment tax”. Let’s explain each of these concepts in more detail:
Federal Taxes:
Any income you make will first be subject to the federal income brackets. This means that if you make $45,000, you’ll pay:
Your taxable income: $45,000 - $12,550 (Federal standard deduction) = $32,450
$995
plus any amount over $9,950, or: 12% x ($32,450 - 9,950) = $2,700
Your Federal Tax Owed: $3,695
| Tax rate | Taxable Income Range | Amount owed |
|---|---|---|
| 10% | $0 to $9,950 | 10% of taxable income |
| 12% | $9,951 to $40,525 | $995 plus 12% of the amount over $9,950 |
| 22% | $40,526 to $86,375 | $4,664 plus 22% of the amount over $40,525 |
| 24% | $86,376 to $164,925 | $14,751 plus 24% of the amount over $86,375 |
| 32% | $164,926 to $209,425 | $33,603 plus 32% of the amount over $164,925 |
| 35% | $209,426 to $523,600 | $47,843 plus 35% of the amount over $209,425 |
| 37% | $523,601 or more | $157,804.25 plus 37% of the amount over $523,600 |
State Taxes:
State taxes work exactly the same way, but are often combined with local taxes as well. Here’s an example of taxes for someone who lives in Los Angeles County in California:
For the same $45,000, you would have to pay in addition to your Federal taxes:
Your taxable income: $45,000 - $4,803 (State standard deduction) = $40,197
$860.29 plus
6% of amount over $34,892 = 6% x ($40,197 - $34,892) = $318.3
Your State Tax Owed: $1,178.59
| Tax rate | Taxable income range | Amount owed |
|---|---|---|
| 1% | $0 to $9,325. | 1% of taxable income. |
| 2% | $9,326 to $22,107. | $93.25 plus 2% of the amount over $9,325. |
| 4% | $22,108 to $34,892. | $348.89 plus 4% of the amount over $22,107. |
| 6% | $34,893 to $48,435. | $860.29 plus 6% of the amount over $34,892. |
| 8% | $48,436 to $61,214. | $1,672.87 plus 8% of the amount over $48,435. |
| 9.3% | $61,215 to $312,686. | $2,695.19 plus 9.3% of the amount over $61,214. |
| 10.3% | $312,687 to $375,221. | $26,082.09 plus 10.3% of the amount over $312,686. |
| 11.3% | $375,222 to $625,369. | $32,523.20 plus 11.3% of the amount over $375,221. |
| 12.3% | $625,370 or more. | $60,789.92 plus 12.3% of the amount over $625,369. |
FICA, or Self-Employment Taxes:
“Self-employment tax” is actually just another name for FICA (Federal Insurance Contributions Act). This is a tax that pays for certain benefit programs in the US like Social Security and Medicare. Collectively, the FICA tax is money collected to support retired individuals, disabled individuals, children, etc. Here is how much you’ll pay in FICA taxes, as a freelancer:
If you made $45,000, you’ll pay:
Unlike Federal and State taxes, FICA taxes are calculated on gross (all) income, instead of taxable income.
$45,000 x 15.3% = $6,885.
IMPORTANT: If you are classified as an employee (in-store ONLY Instacart shopper, in this case), you will only pay half of this FICA amount. This is because employers are responsible for paying half of the FICA tax
| Tax Type | Tax Rate |
|---|---|
| Social Security tax | 12.4% |
| Medicare tax | 2.9%. |
| Total (Known as FICA) | 15.3% |
What is FICA tax?
In Summary:
If you add up all the numbers above, you should expect to owe:
$3,695 plus
$1,178.59 plus
$6,885
$11,758.59 in Total Taxes
Please note that you won’t have to do any of the calculations manually, if you use a tax software like TurboTax, TaxAct, etc.
IMPORTANT: This amount will be reduced by:
Any deductions you can claim, illustrated below
Estimated quarterly tax payments, if you made any
½ of the self employment tax (FICA) is eligible to be taken as a deduction as freelancers
What deductions can you take as an Instacart shopper?
Being a freelancer, or Instacart shopper, can have its benefits! One of the many benefits is the ability to take some deductions against your income so you effectively pay less taxes. The modern workforce comprises of many independent contractors that offer professional services like realtors, graphic designers, and writers. As a general rule of thumb, you can deduct anything that you spend money on to operate as an Instacart shopper. For example, you purchased a bag to help you carry all the groceries and goods you pick up at the store for delivery, you can deduct that expense against your income.
The importance of Tax Deductions
Illustrated with numbers:
You make $100 as an Instacart Shopper
You spent $50 on a durable bag to help you carry stuff
You file $100 - $50 = $50 of income, instead of $100.
If your tax rate is 20%, on $100 you would pay $20 in taxes. Instead, because you deducted $50, you only pay 20% x $50 = $10 in taxes.
Some common things you can deduct as an expense:
Portion of phone bill used exclusively for Instacart
Portion of cost of phone used exclusively for Instacart
Standard mileage deduction for use of vehicle driving for Instacart. You can deduct $0.585 per mile used for Instacart in 2022
Tolls and parking fees
Supplies and accessories to support your Instacart jobs. Like bags, phone accessories, car accessories
Note that unless you elect to deduct car expenses using the "actual cost" method, you generally cannot deduct gas costs.
How to file your Instacart Taxes:
Now that we’ve covered everything you need to know about Instacart taxes, let’s get down to how to file them.
To file your Instacart taxes, here’s what you’ll need:
Your W-2 or 1099, depending on what type of Instacart worker you are. Most likely the 1099
Your log of eligible expenses you can use as deductions (see deductions section)
Your mileage log for the use of your car (can be tracked using an app like Stride)
Tax software like TurboTax, TaxAct, FreeTaxUSA, etc.
Quarterly Tax Payments
As freelancers, taxes are not withheld from your paychecks. Which means, if you make a non-negligible amount of income, you should be making quarterly estimated tax payments to the IRS. This applies both on the Federal and State level.
To make these payments, generally you can pay it electronically online. Here is the IRS DirectPay portal
Here would be the portal for California residents. Look for something similar in your state. Make sure you’re paying estimated taxes for an individual, not business.
Here are the general Federal deadlines for making these payments:
| Period | Due Date | For Months |
|---|---|---|
| 1st Quarter | April 15th | January - March |
| 2nd Quarter | June 15th | April - June |
| 3rd Quarter | September 15th | July - September |
| 4th Quarter | January 15th, of next year | October - December |
Federal quarterly tax payment due dates
State deadlines may vary slightly from these dates, but are generally close. Be sure to check with your state’s tax authority for precise due dates.
Necessary Tax Forms for Instacart Shoppers
In addition to either the W2 or 1099 (most likely 1099) you receive from Instacart, you’ll also need the following forms, which you have access to when filing with a tax software:
Form 1040, this is your standard tax return form. It summarizes all your income and deductions
Schedule C, this is a detailed breakdown of things you are claiming as deductions (expenses). So your car, phone, and supplies deductions will show up here.
Schedule SE, this is a detailed breakdown of calculating Self-Employment Tax, which we explored above. It’s actually the same thing, just in IRS format.
Form 1040-ES, this is a detailed breakdown of any quarterly tax payments you may have made, or will make. As freelancers, taxes are not withheld from your paychecks, so you’re responsible for not accumulating a huge tax liability over the year and must pay “estimated” amounts in quarterly periods.
When Should I File My Taxes?
Everyone generally files their taxes before the annual deadline, which falls in mid April around the 15th. As long as you file your taxes before the deadline, it doesn’t matter when you file it.
We recommend getting prepared to file taxes by mid February, so you have time to gather documents or correct any mistakes.
If you need more time, don’t just skip over the deadline. You can request an extension for filing taxes relatively easily. Here’s how:
Go to the IRS website and E-File portal
Download, fill out and send Form 4868
What Happens if I Don’t File Instacart Taxes?
If you don’t file Instacart taxes, you’re actually avoiding taxes which is a crime. Even though the IRS may not act right away, you will eventually be caught. Your 1099 is not only sent to you, but also sent to the IRS–so everything you’ve made with Instacart, the IRS is well aware.
If you don’t file and pay your taxes, expect penalties, fines, and potentially legal action against you.
No, you probably won’t get away with it.
FAQs:
Do you have to pay taxes on Instacart?
Yes–everyone who makes money needs to pay taxes, Instacart shoppers are no exception. Generally you will receive a 1099 from Instacart at the end of the year, use that to file your taxes on form 1040.
Will I get a 1099 from Instacart?
Yes–if you’ve made over $600 in a year with Instacart, they should send you a 1099 to the address on file. You can also download your 1099 electronically.
Will Instacart send me a W2?
Generally no–unless you are an in-store ONLY shopper. Most people who work for Instacart also do deliveries and don’t only shop in-store. Thus, you are treated as a freelancer and will receive a 1099 instead of a W2.
