Does Instacart Provide W2 in 2024? And Other Key Tax Questions
As an expert in the retail and finance industries catering to consumers, I often receive questions this time of year about Instacart shopper taxes. With over 650,000 shoppers in 2022 relying on Instacart as income, understanding tax rules is essential.
Let’s walk through what shoppers need to know to file properly and minimize hassle.
The Complex Tax Landscape for Gig Workers
First, some background on 1099 tax rules. The IRS requires self-employed service providers to file taxes if they earn over $400 per year from a single payer. When earnings pass $600, companies must issue a 1099 tax form.
As a freelance finance writer covering the gig economy and taxes for five years, I’ve seen the confusion this creates. Gig Tax software provider Keeper Tax found 48% of gig workers feel anxious about taxes. That‘s understandable given 63% of US households participated in the gig economy in 2021 alone.
With the majority of Instacart shoppers working as independent contractors, navigating 1099 tax rules is a must.
Who Gets a W2 from Instacart in 2024?
While Instacart utilized over 650,000 shoppers in 2022, only a small subset work as official employees. Instacart publicly confirmed in-store shoppers who only fulfill orders onsite are W2 employees. As staff, they receive W2s for taxes like any payroll worker.
However, the vast majority work as full-service shoppers who shop and deliver groceries. These contractors receive 1099-NEC tax forms.
Instacart Tax Forms by Shopper Type
| Shopper Type | Tax Form |
|---|---|
| In-store shoppers | W2 |
| Full-service shoppers | 1099-NEC |
So if you’re an in-store shopper filling orders at grocery stores, you can expect a W2 from Instacart. All other shoppers receive 1099 tax forms.
Do Instacart Shoppers Need to File Taxes?
In short, yes – all Instacart shoppers must file taxes on earnings as with any other income source.
For W2 employees, federal tax law requires reporting all income regardless of amount.
For independent contractors, you must file a tax return if you earned over $400 from Instacart within the year. While the 1099-NEC threshold sits at $600, your overall tax filing requirement begins at just $400.
Issued in late January, 1099-NEC forms also go directly to the IRS. So failing to report earnings above $600 when you receive a 1099 could prompt the agency to inquire. Not filing at all with over $400 in undisclosed income can open the door to audits and penalties.
How Do Instacart Shoppers Get Tax Forms?
Another frequent question is how shoppers actually receive those critical W2s and 1099-NECs from Instacart.
Here is the process Instacart follows annually:
- Early January – Instacart prepares tax forms for all eligible shoppers from the prior tax year
- By January 31 – Digital tax forms are emailed to the address on your shopper account
- January 31 – Hard copy tax forms are mailed for any returned emails
Be sure to check both your main inbox and spam folders in late January. If you still don‘t receive your form, quickly contact support. They can resend digitally or mail a duplicate copy.
Filing Taxes as an Instacart Independent Contractor
For full-service shoppers, filing taxes with 1099 income involves a few key steps:
1. Track business expenses
As a self-employed shopper, many costs directly related to working with Instacart can be deducted and reduce your tax liability:
- Mileage for deliveries
- Insulated cooler bags
- Vehicle maintenance
- Cell phone fees
- Portion of auto insurance
- Charges for printing order summaries
Keeper Tax analyzed data from thousands of on-demand workers and found over $9,000 in average annual deductions. Track any costs incurred while shopping and delivering for Instacart.
2. Make quarterly estimated payments
Unlike payroll workers who have taxes automatically taken out by employers, independent contractors must pay their own taxes directly to the IRS.
The agency requires freelancers to make quarterly estimated payments on expected tax liability. Otherwise, you risk underpayment penalties when filing your return. NerdWallet recommends saving 30% of earnings to cover what‘s owed.
3. Report earnings properly
When tackling your annual tax return, be sure to accurately calculate all income sources. For Instacart, reference your 1099-NEC form for exact earnings.
If you worked with other on-demand platforms like Uber, Lyft, DoorDash or GrubHub, you should receive additional 1099s as appropriate. Report all 1099 income under Schedule C on your personal tax return.
I recommend using tax software designed specifically for freelancers and side gigs over doing manual calculations. Companies like Keeper Tax auto import 1099s across platforms and maximize deductions. For optimal tax prep and ensuring IRS compliance, the cost is well worth it.
Post any questions below, and I‘m happy to provide more details from my years as a tax and finance writer tailoring content to gig workers and solopreneurs. Wishing you minimal tax stress this season!
