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Postmates 1099 Taxes and Tax Deductions

Postmates 1099 Taxes and Tax Deductions
Ines Zemelman, EA
26 April 2022

There are many advantages to working for Postmates. Part-time work sounds great and brings in extra income. Your schedule is flexible, and you're paid right away, so you can work when it's convenient for you. Although making money seems convenient, filing taxes can be stressful. If you are a Postmates delivery driver, you'll have to deal with the scary task of filing your taxes, particularly if it is your first work experience in the global marketplace and you're accustomed to tax refunds. However, decreasing your tax burden is easier than it sounds if you have the correct resources at your disposal. This post informs you on how to do taxes for postmates.

What are Postmates?

Ordering online became the new normal during the COVID-19 pandemic. Postmates is a food delivery service that offers to deliver items at the customer's door within an hour of placing the order.

Postmates can deliver just about anything, from a new pair of headphones to a new blouse for a big date. The most typical orders come from fast-food chains like McDonald's. Compared to its rivals like DoorDash, Postmates claims that customers can order "anything."

How To File Postmates Taxes?

Breaking down this seemingly dreadful task into manageable steps will help you realize that it's not as difficult as it first appears.

Determine About Postmates Taxes that You Must Pay

Everyone who works as an independent contractor is liable to file taxes for self-employment income as required by the federal, FICA, and state laws. It's important to remember that self-employment taxes do not apply if your net income is less than $400. This also means that you don't have to file returns if you made $400 or less and had no other sources of income. However, you are required to report this income to the IRS. 

Get Your 1099 Tax Forms

Postmates issue you a 1099 form provided you earned a minimum of $600 in the tax year and were a member of the platform. You get this form in January.

Keep Track of Your Postmates Taxes

You can save a lot of money on your taxes if you keep records of everything you purchase with Postmates. Taxes will be reduced because you'll be able to write off some of your expenses.

Fill out the Schedule C Section of Your Postmates Tax Return

When you submit your taxes, that's where you'll put your write-offs as well as self-employment income.

Determine When You are Required to Pay Taxes

Most people are aware of the April 15th deadline, but depending on your earnings, you may also be required to file quarterly taxes. Now that we've covered the fundamentals, let's dig further into the process of how to file Postamtes taxes.

You must pay taxes quarterly if you owe $1,000 or more in taxes for a given year and if they aren't already being deducted from your income. You'll have to pay quarterly taxes because Postmates doesn't withhold taxes from your earnings.

Fill out Form 1040-ES or use an online tax calculator to estimate your taxable income for the year and the amount you owe in your Postmates taxes. Pay quarterly taxes if you're going to owe more than $1,000 in taxes that aren't being withheld from your paycheck. Paying them directly on the IRS website is an option if you do so.

What Are The Tax Forms?

There are three main tax forms you need to be familiar with in order to file Postmates taxes.

1099-NEC 

You must have worked as a freelancer before 2020 to be familiar with Form 1099-MISC. Non-employee remuneration was previously reported on the 1099-MISC, which was superseded by the 1099-NEC. Just the non-employee compensation component of the IRS 1099-MISC form was transferred to the 1099-NEC. As a Postmates worker, you will receive a tax form from Postmates reporting your earnings.

As a matter of fact, independent contractors are frequently the recipients of this document. If you received more than $600 from a firm other than your employer, you must obtain a tax form.

Businesses aren't required to issue 1099 forms to freelancers who earn less than $600 in a year. You won't get a tax form if your income is less than $600. There is still the possibility that you'll be compelled to pay your Postamtes taxes on any money you earn from working as a Postmates contractor. 

Form 1099-K

The total of all remittances that must be reported is included in the 1099-K. So, even if Postmates deducts its service fees from your $100 payment, your 1099 will still indicate that you received $100. A 1099-K is required if you had more than 200 transactions and got more than $20,000 in compensation. Postamates, for example, would not issue you a 1099-K if you conducted 250 transactions but only collected $20,000 in earnings.

An additional purpose for the 1099-K is for third-party payment operators such as PayPal, who utilize it to report transactions totaling more than $20,000 per year. Those who make more than $600 per year in Vermont and Massachusetts will be sent a 1099-K. 1099-K is often issued to make it appear as if your clients are actively working with your company.

Schedule C

Your net profits as a self-employed person will usually be calculated using the IRS Schedule C. Whenever you file your Postmates taxes, that's where you'll list your professional profits and losses, as well as any business deductions. Schedule C is included in Form 1040. Use it to notify the IRS of how much money you made or lost last year. In addition to 1099, you will need to submit a Schedule C.

What are Postmates Tax Deductions?

One of the advantages of working as an independent contractor is how you can deduct expenses of the business from your income, allowing you to pay less in taxes overall. When filing Postmates taxes, any money you spent to maintain your business operating effectively (within reason) can be deducted from your business revenue, thus reducing the tax burden.

There are several other business expenses that can be deducted along with the mileage on your automobile. Expenses incurred in the course of operating your business are tax-deductible. Running a delivery service comes with a slew of "common and necessary" costs. Learning how to file Postmates taxes also includes getting to know the deductions you can take advantage of to reduce the burden of your Postmates taxes. There's a complete list of them available.

These are:

  • Your monthly mobile phone bill and service
  • Motor vehicle costs
  • Bags & Blankets & Backpacks for Courier
  • Health Insurance covers medications
  • Inspection
  • Roadside Assistance
  • Tolls
  • Parking
  • Business Licenses
  • Health Insurance

It's important to remember that you can only deduct the percentage of these expenditures that are associated with your company and not private use. For example, you can only deduct 50 percent of your phone charges if you are using the phone for work only half of the time.

Conclusion

The very prospect of having to file taxes is stressful, and the wealth of information available on the subject on the internet only serves to compound the problem. Postmates taxes are no longer a problem if you master the basics and become familiar with the system.

Ines Zemelman, EA
Founder of TFX