Does Amazon Flex Take Out Taxes in 2024? (Complete Guide)
Driving for Amazon Flex has become an increasingly popular side hustle, providing flexible hours and potential decent pay. However, before jumping into Flex delivery, it’s important to understand how taxes work when self-employed through this gig.
I’ll provide a comprehensive guide on whether Amazon Flex takes out taxes, tax requirements for drivers, how much tax you may owe, and key tips to stay compliant.
The Self-Employment Tax Landscape for Amazon Flex Drivers
First, let’s level-set some key statistics:
- 64% of Amazon Flex drivers rely on this as a side gig in addition to a full-time job [1]
- The typical Flex driver makes $18-25 per hour [1]
- Around 200,000 people currently deliver for Amazon Flex in the US [2]
As independent contractors, Flex drivers are considered self-employed. You are responsible for tracking and paying all applicable federal, state, and local taxes on Flex income.
Being self-employed shifts significant tax duties onto individuals. For example, a NerdWallet survey found that 36% of self-employed gig workers will owe an average of $800 in tax underpayment penalties this year [3].
To avoid penalties yourself, follow the recommendations in this guide for staying compliant as a Flex driver.
Are Amazon Flex Drivers Self-Employed?
Yes, when you sign up to deliver packages for Amazon Flex, you agree to be an independent contractor. This means Flex legally considers you self-employed, not an employee.
Key implications include:
- No taxes are withheld from your earnings by Amazon
- You will not receive a Form W-2 wage statement
- You have control and flexibility to set your own hours and choose delivery blocks
- You must provide the main delivery vehicle and gas/maintenance
- You are solely responsible for all tax duties related to your self-employment income
Bottom line – Amazon does not automatically handle or file any taxes on your behalf as a Flex driver.
Does Amazon Flex Withhold My Taxes?
No, Amazon Flex does not withhold or take out any taxes from what you earn. This includes:
- No income tax withholding
- No FICA (Social Security & Medicare tax) withholding
You avoid payroll taxes partly because you use your own vehicle for deliveries. With no employee-employer tax relationship in place, the full tax payment responsibility lies with you as an independent contractor.
I’ll cover later what this tax payment responsibility entails and how to avoid issues with the IRS.
Am I Required to File Taxes for Amazon Flex Work?
Yes, you must file taxes reporting your Amazon Flex income, regardless of how little you earned.
According to IRS rules, you must file a tax return for self-employment income exceeding $400. For most Flex drivers, you will easily surpass $400 per year.
When filing, report your Schedule C business income and expenses, then attach to Form 1040. This is where you calculate and pay owed self-employment taxes.
You should also make quarterly estimated payments on any expected tax liability, as the IRS requires for self-employed individuals. More details on how to handle this below.
Fun fact: Studies show Uber drivers only report around 50-80% of their actual rideshare revenue when filing taxes [4]. Don’t let tax fears tempt you to under report!
Will I Receive a 1099 Tax Form for Amazon Flex Work?
Yes, Amazon is legally required to issue you an IRS Form 1099-NEC by January 31st each year, detailing your prior year’s Flex earnings.
For the 2023 tax year, you would receive your 1099-NEC document by 1/31/24. This form simply reports total payments received from Amazon Flex deliveries.
Log into your Amazon Tax Central account to securely access digital copies of your 1099 and any other tax documents at tax time.
You‘ll need to reference the 1099 details about your 2023 Flex income when filing your 2023 taxes in early 2024.
How Much in Taxes Will I Owe on Amazon Flex Income?
As a self-employed Flex driver you will owe both income tax and self-employment (SE) tax, which support Social Security and Medicare systems since no employer pays a share for contractors.
Your total tax liability comprises:
- Income Tax – 10-37% marginal tax rate depending on income level and filing status
- Self-Employment Tax – 15.3% (Social Security 12.4% + Medicare 2.9%)
For simplicity, assume 25% for federal income tax + 15.3% self-employment taxes = around 40% total tax rate on Flex earnings.
However, you can reduce taxes owed by tracking deductible business expenses – more on that shortly!
Planning for taxes upfront makes a huge difference. Use an estimated tax calculator to determine what you may owe.
Then make quarterly payments to the IRS to avoid penalties. 2023 estimated payment deadlines are 4/18/23, 6/15/23, 9/15/23 and 1/16/24.
What Tax Deductions Can I Claim to Reduce My Tax Bill?
As a self-employed contractor, luckily you can claim related business expense deductions which lower your taxable income amount!
Track expenses like:
| Expense Type | IRS Standard Rate |
|---|---|
| Vehicle Mileage | $0.625/mile |
| Cell Phone Use | Bus. % x Monthly Bill |
| Supplies, Equipment | Actual amounts |
Deduct eligible expenses on Schedule C when filing your Form 1040 each year. Apps like Everlance help track tax-related mileage and expenses.
Taking advantage of deductions provides significant tax savings – make sure to capture everything allowed!
Where Can I Learn More About Taxes for Amazon Flex Workers?
Navigating self-employment taxes seems complicated at first. But don’t let that scare you away from the advantages of delivering for Amazon Flex!
Here are a few handy resources with further guidance:
- IRS Self-Employed Tax Center
- Blogs & Guides focused specifically on Amazon Flex taxes
- Tax preparers experienced working with self-employed rideshare drivers and delivery contractors
And feel free to drop any questions in the comments section below!
Key Takeaways: Does Amazon Flex Withhold Taxes?
As an independent contractor delivering packages for Amazon Flex, let‘s recap:
- You are considered self-employed and responsible for all your own taxes
- Amazon does not automatically withhold or remit any taxes on Flex earnings
- Be sure to make quarterly estimated tax payments to the IRS to avoid penalties
- Deduct eligible business expenses from your taxes to maximize savings
- Use available resources to educate yourself on contractor taxes
I hope this guide cleared up the tax implications of driving for Amazon Flex. Being prepared from the start will set you up for success!
