How To File Instacart Taxes on TurboTax

As an Instacart shopper, you’re classified as an independent contractor, which means you’re responsible for managing and paying your own taxes. The process can be daunting, especially if it’s your first time. However, with the right tools and knowledge, you can navigate through tax season with ease. In this guide, we’ll walk you through the process of filing your Instacart taxes using TurboTax, a popular tax preparation software.

Understanding Instacart Taxes

Instacart shoppers are considered self-employed, and therefore, must handle their own taxes. Unlike traditional employees who receive a W2 form, Instacart shoppers receive a 1099-NEC form if they earn at least $600 in a year.

This form reports your earnings and must be included when filing your taxes. It’s essential to understand that Instacart does not withhold taxes from your earnings. This is why it’s crucial to set aside a portion of your income for tax purposes and keep track of your expenses to claim deductions.

Necessary Documents and Information

To file your Instacart taxes accurately, you need the following documents and information:

1. Form 1099-NEC: This form indicates your earnings from Instacart for the year.
2. Schedule C: This form is where you report your income and expenses from your Instacart work.
3. Schedule SE: This is where you calculate your Social Security and Medicare taxes.
4. Form 1040: This is the individual tax return form.
5. Records of your expenses: This includes mileage, supplies, vehicle expenses, and more.

The Process: How To File Instacart Taxes on TurboTax

TurboTax has made the process of filing taxes relatively straightforward. Here’s how to file your Instacart taxes on TurboTax:

1. Gather your documents: This includes your 1099-NEC form and records of your expenses.
2. Choose the right TurboTax product: As an Instacart shopper, you should use TurboTax Self-Employed or TurboTax Live Self-Employed. These versions are specially designed for independent contractors and freelancers.
3. Sign up or log in: Create a new account or log into your existing TurboTax account.
4. Enter your personal information: Include your name, address, Social Security number, and other necessary details.
5. Report your income: Enter the information from your 1099-NEC form in the appropriate section of TurboTax. This will help you report your self-employment income on Schedule C.
6. Claim deductions: TurboTax will guide you in uncovering industry-specific deductions, such as mileage, phone bills, insulated bags, and other expenses related to your work as an Instacart shopper.
7. Review your tax return: Before submitting your tax return, carefully review it to ensure all information is accurate and complete.
8. File your tax return: Once you’re satisfied with the information, submit your tax return electronically through TurboTax.

Common Mistakes to Avoid

When filing your Instacart taxes on TurboTax, avoid these common mistakes:

1. Not reporting all income: Whether or not you receive a 1099-NEC form from Instacart, you’re still required to report all your earnings.
2. Not claiming all deductions: Make sure to claim all eligible deductions, including mileage and other business expenses.
3. Not using the correct tax forms: You should be using Form 1040 and Schedule C to report your income and expenses.
4. Not making estimated tax payments: If you expect to owe $1,000 or more when you file your return, you’re generally required to make quarterly estimated tax payments.

Maximizing Your Tax Returns

To get the most out of your tax returns, consider these tips:

1. Track your mileage: The IRS allows you to deduct mileage driven for work purposes.
2. Deduct business expenses: You can deduct expenses such as car repairs, vehicle depreciation, parking, and toll fees.
3. Use TurboTax Self-Employed: This version of TurboTax is specifically designed for independent contractors and can help you find industry-specific deductions.
4. Make quarterly estimated payments: Making these payments can help you avoid a large tax bill at the end of the year.

Filing your Instacart taxes on TurboTax doesn’t have to be a complicated process. With the right preparation and understanding, you can navigate through tax season with ease. Remember, if you need additional help, TurboTax offers resources such as TurboTax Live, where you can get unlimited, year-round tax advice from real experts.