As a Shipt driver, it is important to be aware of your tax obligations.
In this article, we will discuss Shipt tax forms, deductions you can take at tax time, and how to file your Shipt taxes. We will also provide some tips to help make the process easier for you.
So whether you are a new grocery delivery driver or have been driving for a while, read on for information about Shipt taxes.
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Do Shipt Drivers Have To Pay Tax?
Working as a Shipt driver is similar to working as an Instacart shopper. You are called an independent contractor. Shipt drivers are responsible for filing and paying their taxes. The process for filing includes federal, state, and local taxes.
How Much Do I Need To Make With Shipt To Pay Tax?
You will need to make at least $600 with Shipt to trigger a tax filing. Here are a few steps to consider if you earned more than $600 last year.
The first step is to gather all of your tax forms from the previous year. Next, you will need to fill out a Schedule C form. The IRS wants you to use Schedule C to report business income and expenses.
Then, you will need to file your federal and state taxes. Lastly, you will need to pay any taxes owed. You can do this by setting up a payment plan with the IRS or by paying the full amount owed.
When Am I Exempt From Shipt Tax?
There are a few cases where you may be exempt from Shipt tax. If you drove for Shipt for less than 90 days, you may not need to file taxes. You may also not need to file if your total earnings were less than $600. If this is the case, you will not receive a 1099 Form from Shipt.
You should consult a tax professional before deciding against filing and reporting your Shipt earnings.
What Shipt Tax Forms Are There?
As a Shipt driver, you will fill out a W-9 Form. The W-9 is a form that provides your taxpayer identification number to Shipt. Shipt will use your taxpayer identification number to prepare your tax forms at the end of the year.
Your taxpayer identification number might be your social security number or your employer identification number (EIN). You will use an EIN if you run your taxes through a corporation or limited liability company (LLC).
The other main tax form is the 1099-NEC. The form will come from Shipt and it will report the total amount you earned from driving with Shipt during the year.
Shipt also sends the 1099-NEC to the IRS. If you do not report your earnings, the IRS may come after you for back taxes.
You might also receive a 1099-K. The requirements for this form include the following.
- You must earn more than $20,000 in gross payments from Shipt
- You must have had 200 or more transactions with Shipt
Any completed order qualifies as a transaction. The total amount of the order does not matter.
To file taxes as an independent contractor, you’ll use Form 1040, Schedule C, and Schedule SE.
Form 1040: This form is the standard individual tax return. You’ll use the form to report your total income for the year.
Schedule C: The IRS wants you to use this form to report business income and expenses. You’ll need to include information about your vehicle, gas, and maintenance costs.
Schedule SE: The SE Form calculates your self-employment taxes for the IRS. Your self employment tax goes towards Social Security and Medicare.
How Do I Get My Shipt Tax Forms?
You can get your Shipt tax forms in a few ways. The first way is to log into the Shipt app and go to the Account section. From there, you will select Tax Forms.
The second way is to wait for Shipt to send you the forms in the mail. Shipt will send tax forms to all drivers who earned more than $600 during the year.
The third way to get your tax forms is to contact Shipt customer support. Customer support can help you with any questions you have about your tax forms or how to file your taxes.
What Expenses Can I Write Off on Shipt Tax?
There are a few expenses that you can write off on your Shipt taxes. The three most common expenses include the following.
- Equipment and supplies
- Telephone bill
Mileage is the most common tax deduction that Shipt drivers take. Depending on the current tax year, the Internal Revenue Service lets you deduct a certain amount per mile driven for Shipt orders.
You should track your mileage throughout the year so that you have an accurate record when it comes time to file your taxes. You can use a mileage tracker app or write down your mileage in a notebook.
The IRS provides two ways to deduct mileage. Choose between the standard mileage deduction or the actual expenses method.
The standard mileage deduction is a set amount that you can deduct per mile driven. The actual expenses method lets you deduct the actual costs of operating your vehicle. These might include items such as gas and oil changes.
You can also deduct the cost of equipment and supplies that you use for Shipt orders. For example, you might deduct items like car chargers, phone cases, or GPS units.
The IRS allows you to deduct the cost of these items even if you do not itemize your deductions on your taxes. It is because the IRS considers them to be business expenses.
You will use your smartphone to download the Shipt app and complete Shipt orders. You can deduct a portion of your telephone bill as a business expense.
Do I Have a Shipt Tax ID Number?
Yes, you will have a Shipt tax ID number if you drive for Shipt. Your tax ID number is your social security number or your employer identification number (EIN).
Is There a Shipt Tax Calculator for Tax Payments?
Shipt doesn’t provide an official tax calculator. However, other calculator resources exist online that can help you estimate your tax payments.
For example, here are three websites with tax calculators to try.
These types of calculators ask for information such as your state of residence, filing status, and the amount you earned from Shipt during the year. They will then estimate the amount of taxes you owe based on the information you provided. Keep in mind that you’re receiving only an estimate. Your actual taxes may be different.
Top Tips on Shipt Tax
Let’s review important tips to help you file your Shipt taxes successfully.
Report All Shipt Self-employment Income
As an independent contractor, you are responsible for paying your taxes. The process includes self-employment tax.
You will need to report all of the income that you earned from Shipt on your tax return. Keep track of your earnings throughout the year so that you can accurately report them at tax time.
You can get in trouble if you don’t report your Shipt income. Here are the potential problems you may face by failing to report all income to the IRS.
The IRS may charge you penalties and interest if you don’t report your Shipt income. The amount of the penalty is usually equal to half of the unpaid tax.
If the IRS suspects that you haven’t reported all of your income, it may audit you. An audit is a review of your tax return to make sure that you have reported all of your income and claimed the correct deductions.
If the IRS believes that you intentionally failed to report your income, it could charge you with tax fraud. Tax fraud is a federal crime. The penalties for tax fraud can include fines, imprisonment, or both.
It’s not worth it to try to hide your income from the IRS. Play it safe and report all of your earnings from Shipt.
Tax Deductions for Shipt Shoppers
You can deduct certain expenses related to your Shipt shopping business. These deductions can help you lower your taxable income and save money at tax time. Here are some examples of common deductions that you can take.
- Mileage driven for shopping trips
- Parking fees and tolls paid while shopping
- Shipt membership fee
- The cost of bags and other supplies used while shopping
Be sure to keep track of your expenses throughout the year. You will need to have documentation of your expenses to claim them on your tax return. If you take deductions and can’t prove them during an IRS audit, you may have to pay a penalty.
Independent Contractors Should File Quarterly Taxes
Working for Shipt means the IRS considers you an independent contractor. You are not an employee of Shipt. You are not required to have taxes withheld from your pay by Shipt. It means that you will need to set aside money throughout the year to pay your taxes.
It’s a good idea to file your taxes quarterly as an independent contractor. Quarterly tax payments can help you avoid penalties and interest charges.
Here are the dates for paying quarterly taxes.
- April 15 – tax deadline for the first quarter
- June 15 – tax deadline for the second quarter
- September 15 – tax deadline for the third quarter
- January 15 – tax deadline for the fourth quarter
If you don’t think you can afford to pay your taxes quarterly, consider signing up for a payment plan with the IRS.
Frequently Asked Questions
You may still have a few questions about paying taxes as a Shipt driver. Here are the answers to two commonly asked questions.
Are Shipt shoppers self-employed?
Yes, you qualify as a self-employed individual when working as a Shipt shopper. You will need to report your earnings from Shipt on your tax return as an independent contractor.
What is the best way to track Shipt mileage?
The best way to track your mileage is with a GPS app. There are many apps available that can track your mileage for you. Be sure to choose an app that will give you an accurate record of your mileage. Another option includes keeping a mileage log. You’ll need to remember to fill it out each day.
Paying taxes as a Shipt driver doesn’t need to feel like a complicated process. Be sure to report all of your income to the IRS and your state income tax board. Take advantage of tax deductions to save money. Paying your taxes quarterly can help you avoid penalties and interest charges. Take action now by setting your system for keeping track of daily Shipt expenses.
Are you unsure about filing your Shipt tax return? Learn what you need to know about tracking expenses, taking deductions, and filing your taxes.