As a Shopper, you’re an independent contractor so Shipt doesn’t automatically withhold taxes from your paycheck. Instead, it is up to you to keep track of how much you owe based on what you’ve earned working with Shipt (this is where mileage and expense-tracking apps like Everlance come in handy!).
While this can seem like more work on the front-end, the good news is that as an independent worker there are lots of business deductions you’re entitled to take! Taking those deductions reduces how much you owe on your taxes and increases how much money you get to keep. If you want to maximize your deductions, and therefore maximize the money you keep, read below so you can have a better idea of the types of deductions you can take.
What expenses can I write off?
Self-employed individuals can deduct their non-commuting business mileage. This includes miles that you drive to your first delivery pickup, between deliveries, and back home at the end of the day.
Track Your Miles Automatically with Everlance!
Please note, you can’t deduct both gas and mileage at the same time! The IRS standard deduction rate is $.56 for every work mile in 2021. You can think of the Standard IRS Mileage Rate as the average cost to use your car for work purposes. This includes the cost of maintenance, petrol, car payments, car insurance, and depreciation.
Pro Tip: Using the mileage deduction usually means you can deduct more from your business income than you would if you had deducted all of your individual car expenses! Meaning you save more in taxes! You also don’t have to keep track of gas and maintenance receipts in addition to your mileage log.
Phone & Service
As a Shopper, you can’t do your job without a phone, lots of data, and some basic accessories. For example, if you drive for work, a car charger and phone mount are essential and would be deductible. But be careful – if you use this for work and personal, you can only deduct the “work percentage.”
For example, if you use your phone for personal 70% of the time, and work 30% of the time, you’d deduct 30% of your phone and related expenses.
We understand it might be difficult to estimate how much of your phone usage is for work. We recommend going through your phone records for a normal month and look at how much of your data/phone calls occur during work hours, and apply the average to the rest of the year.
Hot Bags & Blankets
You know those insulated bags and blankets that you use to keep food nice and cold? Yep! They are deductible as a business expense.
Toll fees that you pay while shopping are tax-deductible! Just make sure they're not already being reimbursed to you.
We understand that sometimes it’s difficult to find a place to park, especially if you drive in the city. Any parking you pay for while working for Shipt is tax-deductible.
Don’t push it: Traffic violations, speeding tickets, and parking tickets are not deductible, as these occurred because of inappropriate driving and not directly because of work.
Vehicle inspections and background checks are also deductible if it is required for your delivery job!
Fees for AAA or other roadside assistance programs are tax-deductible based on the percentage of this service that you use for work. For example, if you use your subscription four times in a year for work, and twice while you’re driving for personal reasons, be sure to only deduct the portion of the expense that covered you for work.
Health insurance premiums are deductible if you’re self-employed, and if you meet a few requirements. You can read more about the IRS requirements here.
Tools and Services
Tools you use to keep everything organized are tax-deductible. For example, Everlance Premium is 100% tax-deductible. Our reports are also IRS-compliant. Start Tracking your Trips and Transactions with Everlance today.
Do your Research
Filing taxes as an independent contractor can be stressful and time-consuming, but if you have a clear idea of what items are tax-deductible, it will make tax season that much easier for you. We compiled this list of popular deductions for Shoppers, but we recommend that you still run everything by a tax professional. If you’re looking for help with your taxes, be sure to check out our service bundled with HR Block Advisors here