I worked Instacart as a shopper for a few months and received a 1099 from them. What happens if this isn't included in our taxes? If you intentionally do not include a form on your return, you are basically committing tax fraud. You would be understating your income and your tax liability would also be understated. Plus, your return will likely be delayed in being processed as the IRS does have a copy of your 1099, so they will send you a letter saying they are making adjustments to your return. If for some reason they did not catch it prior to processing your return, and you received a refund when you should have had a tax due, you would have to pay back the refund and the actual amount you owed, plus any penalties and interest that accrued from the time it was due until they found the mistake.
One of the reasons it is drastically affecting your return is because it is self-employment income which requires you to pay SE taxes which is 15.3% of your net earnings in addition to your regular taxes. It is a good idea to make quarterly estimated payments to cover your SE taxes of 15.3% and avoid penalties.
Additionally, we purchased a home in December 2022. Our first mortgage payment was in February 2023 and we paid property taxes, HOI and PMI throughout all of 2023. We thought this would provide us some kind of tax break but again, not seeing that in our return. Is it because we are going with the Standard Deduction and it is very high now or is there another reason? Yes, it is because you are taking the standard deduction. If you are married filing a joint return, your standard deduction is $27,700. In order to benefit from your home purchase you would need to have total itemized deductions greater than that.
Standard versus Itemized Deduction
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