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A Complete Guide to Shipt Tax Write Offs

A Complete Guide to Shipt Tax Write Offs
Ines Zemelman, EA
07 April 2022

The Shipt grocery network is a relationship-based online grocery store. It offers its subscribers the option to receive fresh food and household essentials on the same day.

When you work for Shipt, you'll have the freedom to set your own work hours, never report to someone else and build relationships with your clients. However, as the tax deadline approaches, you may find yourself taking on a pretty daunting task by yourself: filing your Shipt 1099 tax returns without paying too much.

No matter who you work for as a grocery delivery driver, whether it is for Shipt or similar businesses, keep reading to learn about the tax forms you are required to complete, the 1099 forms you may receive, and how you can maximize your 1099 deductions.

Are Shipt Shoppers Self-Employed?

Shipt shoppers are considered independent contractors by the Internal Revenue Service, which means they run their own business. It should be noted that since Shipt shoppers fall into this category, they're often indifferent to the rules and regulations that typically govern employees.

In addition, you must pay your federal and state taxes yourself since they are not automatically deducted from your paycheck. The Social Security and Medicare taxes you owe are covered by your employer.

Solopreneurs are responsible for both employer and employee portions, so you are completely responsible for both halves of revenue. Please note that Shipt tips, as well as all other things you receive through Shipt, are taxable as well. 

As far as Shipt is concerned, you won't receive a W-2 form, since you're not an employee. The amount of money you earn from the platform will determine how many 1099 forms you'll receive.

How To Maximize Your Shipt Tax Write-Offs?

All expenses incurred by freelancers that are "usual and necessary" for the type of work they do can be deducted. They are referred to as business expenses. For Shipt tax write offs at the end of the tax year, you must track and record your receipts. Thus, as an independent contractor or a grocery delivery driver, you may be able to claim certain deductions with regard to your business income.

Phone Bill

You might be able to claim a tax deduction for your cell phone if you constantly talk to customers during tax season and claim a tax deduction for your cell phone. To get an idea of how many hours you spend on your phone while working for Shift, calculate the number of hours you spend.

The second way is to own a separate phone for your Shipt business. It is possible to deduct 100% of the cost of the phone plus the phone bill in this case.

Mileage

You can deduct the mileage you travel for business when you don't commute. Keeping a mileage log would be sufficient for this. This involves driving to your first delivery pickup, as well as the distances you drive between your deliveries, and also the distance you drive back home. Taxpayers will be able to claim an IRS standard mileage deduction using a mileage rate of $0.56  for every mile they work in 2021.

It's also a great idea to monitor your car expenses. It is possible to deduct your car expenses instead of mileage expenses when your car expenses exceed your mileage expenses.

Hot Bags

Have you ever thought about keeping food cool using blankets and bags made from insulating material? Yep! You can deduct them as a business expense.

Tolls

You are entitled to a deduction for the toll charges that you pay when shopping. Just make sure you haven't been reimbursed for these charges.

Parking

There are times when finding a place to park can be difficult, especially if you live in the city. You can claim Shipt tax write offs for work-related parking expenses.

Supplies And Equipment

All the items you use to get your job done every day can be deducted by the IRS, and these costs are 100% deductible. This is a straightforward deduction. You can deduct office supplies and equipment used exclusively for work-related purposes.

How To File Taxes For Shipt?

So, how to file Shipt taxes? The IRS requires that you complete Form 1040, Schedule C, and Schedule SE when you have self-employment income from Shipt. 

Form 1040

Form 1040 is required by the IRS for all taxpayers. You need to fill out this form, which provides a comprehensive overview of your annual income during the year. Furthermore, it provides details on the expenses you have claimed and the tax credits you received in return.

Taxes are calculated by using the information that you provide to determine just how much you owe them. In addition to Form 1040, you also need to complete other forms to break down, in detail, the income sources you outlined in it, and the types of deductions and credits you’re entitled to.

Schedule C

A Schedule C is used by self-employed taxpayers to report income and expenses related to their small businesses. By calculating the difference between your income and expenses, the IRS is able to figure out how much profit you've made. The only tax that is usually levied is on your profit, which is displayed on Line 12 of Form 1040. This form must be attached to your tax returns.

Schedule SE

The Schedule SE is used to calculate the amount of self-employment tax a taxpayer owes to the IRS. As an independent contractor, you owe both Social Security and Medicare tax on your earnings. The amount owed is the same as the amount withheld from your paycheck when you are employed.

You must file Schedule SE with the IRS if you earn $400 or more in a year from Shipt income.

Ines Zemelman, EA
Founder of TFX