When you do gig work, you want to keep as much money as possible in your pocket, right?
Right. So what's a Shopper to do? The answer is easy:
Keep reading for everything you need to know and the best Shipt tax deductions for Shoppers!
As a Shipt 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.
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!
Tax deductions, or tax write-offs, lower your taxable income, and thus, the amount you have to pay in taxes. A deduction (or write-off, they’re the same thing) is a qualified business cost you had to pay during the year to keep your business or job going.
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, keep reading so you can have a better idea of the types of deductions you can take.
One of the best tax deductions for Shipt Shoppers—or any self-employed individuals—is car or mileage deductions. As a Shipt shopper, you’re pretty much living out of your car, and all that maintenance, gas and car payments really add up.
Since having a car is required for you to do your job, it’s a tax-deductible expense. There are two ways to deduct car expenses from your taxes: either take the standard mileage deduction (the easiest and usually most profitable way) or take itemized deductions based on your actual car expenses. Here’s how to do each:
With the standard mileage deduction, you only have to keep track of all the miles you drive for work during the year. Then you can take the IRS mileage deduction—currently 62.5 cents per mile. So, for every 100 miles you drive for work, you get $62.5 back in tax deductions!
Basically anytime you drive for a business purpose, excluding any commuting miles to a regular office. For Shipt drivers, deductible mileage includes miles that you drive to your first delivery pickup, between deliveries, and back home at the end of the day. If keeping track of all that mileage sounds like a lot of work, use an automatic mileage tracking app like Everlance.
Everlance uses GPS technology to automatically record all of your work mileage, and then gives you an IRS-compliant and tax-ready report at the end of the year with all your mileage and estimated tax deduction.
Although most drivers are able to deduct more using the mileage-based deduction method (and it’s a lot easier), you can also itemize your actual car-related expenses for the year. Remember that you can’t do both! If you decide to itemize, you can keep track of expenses like:
If you drive the same vehicle for both personal and business uses, you can only deduct the cost of the expenses for the percentage of time you’re driving the car for work. For example, if you drive your car 30% of the time for work and 70% of the time for personal use, you can only deduct 30% of your overall vehicle expenses on your taxes.
The IRS verifies the percentage of your work-related driving based on a mileage log (that you’ll need to keep up throughout the year) to see the percentage of work-related mileage vs. total mileage on the vehicle.
With either deduction approach, you do need to keep an accurate record of the mileage you drive for work. A mileage tracking app, like Everlance, can help you track mileage easily and automatically and make sure you’re not missing out on any deductions!
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 any of these items (including the phone!) for work and personal, you can only deduct the “work percentage.”
For example, if you use your phone for personal use 70% of the time, and work 30% of the time, you’d deduct 30% of your phone and related expenses.
Obviously, 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.
You know those insulated bags and blankets that you use to keep food nice and cold? Yep! They are deductible as a business expense.
Tolls or other 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 job. Remember, business expenses are only deductible if they’re not already being reimbursed to you by an employer!
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 on the IRS website.
Any tools or software you use to keep everything organized are tax-deductible. For example, tax preparation or mileage tracking apps like Everlance are 100% tax-deductible.
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.
Need more help with your taxes? Find more deductions that might apply to you on our list of self-employed tax deductions, or check out our walk-through of how to file a 1099-tax form.
As a reminder, we recommend that you work with a tax professional if you’re not sure how this general advice applies to your unique situation. If you’re looking for help with your taxes, be sure to check out our service with HR Block Advisors.