Instacart Taxes: A Guide for Shoppers

Understanding Your Instacart Tax Situation

Let’s get one thing straight: as an Instacart shopper and deliverer, you’re not an employee – you’re an independent contractor. What does this mean for your taxes?

• No tax withholding: Unlike a regular job, Instacart doesn’t take taxes out of your pay
• Self-employment tax: You’re responsible for both the employer AND employee portions of Social Security and Medicare taxes (15.3% total)
• 1099-NEC form: If you earn over $600, Instacart will send you this form instead of a W-2

Many shoppers mistakenly believe they don’t need to report income under $20,000. This is FALSE! You must report all income to the IRS, even if it’s just a few hundred dollars.

“But I only did Instacart on weekends!” It doesn’t matter – the IRS still wants to know about that money.

Essential Tax Obligations for Instacart Shoppers

Remember when you got your first paycheck from a regular job and saw all those deductions? Well, now as a self-employed worker, you’re responsible for handling that yourself. Here’s what you need to know:

Quarterly Estimated Tax Payments

If you expect to owe $1,000 or more in taxes, the IRS wants you to make payments throughout the year. Think of it like paying as you go, rather than one big bill in April.

Payment due dates:

• April 15
• June 15
• September 15
• January 15 (of the following year)

Missing these deadlines can cost you big time! The IRS charges penalties of up to 5% per month on unpaid amounts. That’s like paying extra interest on a loan you didn’t even want!

Filing Your Annual Tax Return

April is when everything becomes official. As an independent contractor, you must file:

• Form 1040 (your main tax return)
• Schedule C (reports your Instacart income and deductions)
• Schedule SE (calculates your self-employment tax)

This is where you:

• Report all the income Instacart paid you
• Claim deductions like mileage, phone bill, hot bags, parking, and other business expenses
• Calculate how much tax you still owe after quarterly payments

If you skipped or underpaid your estimated taxes, April is when the remaining amount gets settled.

Multi-State Considerations

Do you cross state lines for deliveries? This complicates things. You may need to file non-resident tax returns in other states where you earned income. Many learn this the hard way when they pick up deliveries in a neighboring state during a busy holiday season. Each additional state filing typically costs $50-$100 extra when using tax software.

Maximizing Deductions for Instacart Taxes

Here’s where things get interesting! As an independent contractor, you can deduct business expenses to lower your taxable income. Think of deductions as little tax gifts – they can save you thousands!

Phone and Technology Deductions

Your smartphone isn’t just for TikTok anymore – it’s a business tool! You can typically deduct 50-70% of your phone bill if you use it for Instacart.

Think about it: you’re constantly using your phone to:

• Check orders
• Navigate to stores and customers
• Communicate with customers
• Take delivery photos

Don’t forget about other tech expenses like phone mounts, chargers, and portable batteries!

Equipment and Supplies

Remember all those things you bought to do your job better? They’re probably deductible:

• Hot bags and coolers
• Insulated grocery totes
• Car organizers
• Delivery bags
• Portable phone chargers

Even small purchases add up. That $20 phone mount might not seem like much, but combine it with other deductions, and you’re looking at real savings!

Home Office Deduction

Did you know you might qualify for a home office deduction? Even though your car is your main workspace, many shoppers use part of their home to:

• Plan routes
• Track expenses
• Manage orders
• Handle administrative tasks

To qualify, the space must be used exclusively for business. That means your living room couch doesn’t count if you also watch Netflix there!

How it works: Calculate what percentage of your home is used for business, then apply that percentage to eligible expenses like rent, utilities, and internet.

For example, if your home office takes up 10% of your living space, you could deduct 10% of your rent and utilities as a business expense.

Vehicle Expenses

Your car is your most important work tool. You have two options for deducting vehicle expenses:

1. Standard mileage rate: 70¢ per mile in 2025
   • Example: 10,000 miles = $7000 deduction
   • Simpler method, just track your miles
2. Actual expenses method: Track all car-related costs
   • Gas, repairs, insurance, depreciation
   • Must calculate the percentage used for business
   • More paperwork, but might be worth it for high-cost vehicles

Which is better? For most shoppers, the standard mileage rate is simpler and often more beneficial.