The Top Tax Deductions for Instacart Shoppers - Updated for 2024

Navigating tax season as an Instacart Shopper doesn't have to be daunting. With the right knowledge and strategies, you can significantly reduce your taxable income and keep more of your earnings. This guide dives deep into the tax deductions available for gig economy workers, specifically tailored for Instacart Shoppers. From vehicle expenses to home office deductions, we cover all you need to maximize your tax savings.

Introduction to Tax Savings for Gig Economy Workers

The gig economy offers unparalleled flexibility but requires you to manage your taxes more proactively. Understanding the tax deductions you're entitled to as an Instacart Shopper can lead to substantial savings, making your gig work more profitable.

The IRS does not tax your income, they tax your profit. That's a key difference compared to a W2, where you're taxed on what you bring in. The government understands it costs money to run a business, and that these expenses are necessary to keep the proverbial lights on.

Annually (or quarterly) you take. your earnings, subtract your expenses and voila! You have your profit. This is the amount you'll be taxed on.

So what are some of the most used deductions by Instacart shoppers?

Top Instacart Tax Deductions

Mileage and Vehicle Expenses

The #1 deduction among 1099 contractors, including Instacart, is car expenses. This is also often the most underreported.

Standard Mileage vs. Actual Expenses

Instacart Shoppers can choose between deducting their actual vehicle expenses or using the standard mileage rate (67 cents per mile for 2024, but always check the current rate). The standard mileage deduction is easiest, and often provides a larger deduction and simplifies record-keeping, as it covers all costs associated with operating a vehicle for business, excluding tolls and parking fees, but not always! Especially if you incur some large vehicle expenses over the course of the year.

Eligible Vehicle Expenses

If opting for actual expenses, keep track of:

• Gas and oil
• Repairs and maintenance
• Vehicle insurance
• Lease payments or depreciation
• Registration fees and taxes

The portion of these that are attributable to the % of miles you drove for business can be deducted.

Tracking and Documentation

The IRS is very specific about the documentation you need to be able to claim these miles. You must keep an up to date log featuring:

1. Date
2. Time
3. Miles Driven
4. Purpose
5. Destination

Many people opt to do this by hand in a mileage log, or on a spreadsheet like our mileage log template. An advantage to this approach is it's free, but it leaves you exposed to a lot of risk, and it's time-consuming!

Mileage tracking apps such as Everlance help ensure IRS compliance, while automatically tracking all of your trips to make sure you never miss one!

Shopping Supplies and Equipment

Investments in supplies and equipment necessary for your Instacart deliveries, such as insulated bags or coolers, are fully deductible. Additionally, a portion of your smartphone purchase and monthly bill can be deducted, proportional to its use for Instacart shopping.

Home Office Expenses

If you manage your Instacart business from a home office, you may deduct a portion of related home expenses based on the size of your office as a percentage of your home. This includes:

• Rent or mortgage interest
• Utilities
• Home insurance
• Property taxes

Communication Expenses

A significant portion of your phone and internet bill is deductible if used for Instacart shopping. Determine the percentage of use that is business-related to accurately calculate this deduction.

Health Insurance Premiums

Self-employed individuals, including Instacart Shoppers, can deduct premiums for medical, dental, and qualifying long-term care insurance for themselves and their dependents.

Fees and Subscriptions

Any fees or subscriptions that are necessary for your work, such as costs associated with specialized apps for scheduling or route optimization, are deductible. (Even your Everlance subscription!

Best Practices for Instacart Shoppers: Tracking Expenses and Mileage

Digital Tools to Simplify Your Tax Preparation

Maintaining meticulous records of expenses, mileage, and income is paramount. Leveraging tools like Everlance can streamline this process, ensuring accuracy and compliance. The average Everlance user finds 233% more tax deductions than those who don't, and they save an hour a week in extra work!

Filing Your Taxes: How Instacart Shoppers Can Claim Deductions

Utilizing Schedule C for Instacart Income and Deductions

Report your Instacart earnings and related deductions on Schedule C (Form 1040), attaching it to your personal tax return. This ensures you take full advantage of the deductions available to you.

For more on how to fill out your schedule C, check out our helpful guide - How to Fill Out Your Schedule C Tax Form

FAQs: Answering Your Top Questions on Instacart Shopper Tax Deductions

Can I deduct clothing or uniforms?

Only specific work-related attire that isn't suitable for everyday wear is deductible.

What about meals or snacks while shopping?

Generally, these are not deductible unless you're traveling overnight for work.

Is my Instacart income subject to self-employment tax?

Yes, it's subject to both income tax and self-employment tax.

Can I deduct my Instacart service fees?

Yes, any necessary service fees are deductible.

How do I handle tips received through the app?

Tips are taxable income and must be reported.

What if I use my personal vehicle for both Instacart shopping and personal trips?

Only the portion used for business is deductible.

By leveraging these deductions and maintaining diligent records, Instacart Shoppers can navigate tax season confidently, ensuring they maximize their earnings and minimize their tax liabilities. For personalized advice, always consult with a tax professional familiar with the gig economy's unique challenges and opportunities.