topic I started Instacart late last year. I included it in my 2020 tax return. I do work a full time W2 job. Do I file quarterly for Instacart for 2021? in Deductions & credits

I started Instacart late last year. I included it in my 2020 tax return. I do work a full time W2 job. Do I file quarterly for Instacart for 2021?

megan_marie_1 — Mon, 15 Mar 2021 19:37:12 GMT

If I need to file quarterly, how do I?

Re: I started Instacart late last year. I included it in my 2020 tax return. I do work a full tim...

BillM223 — Mon, 15 Mar 2021 20:20:34 GMT

By "Instacart", I assume that you have a side job delivering groceries and the like.

Because you also have a W-2 job, you need to estimate what your net 2021 earnings from Instacart will be. This is because, it is not uncommon for taxpayers to adjust their withholding on their W-2 to cover any taxes from the side gig, especially if the net income from your side gig is modest. In this case, if your W-2 withholding is enough, then you won't need to file quarterly estimated tax payments.

On the other hand, you have the consideration of how side gigs are taxed. You owe federal income tax on your net Schedule C income, but you also owe self-employment taxes on the same net Schedule C income. This can add up rapidly if you actually net a profit - at a minimum, 25.3% (10% federal income tax and 15.3% self-employment taxes).

Of course, we in the Community cannot see your private tax data, but why don't you go to the IRS' Tax Withholding Estimator and see what it estimates that your tax for the year might be, and then adjust your withholding with your employer so that it matches.

If this doesn't seem to give you a good result, you can do what I did as a consultant - set aside a certain percentage of your net Schedule C income (yes, this means that you will have to review income and expenses each month), and then pay that amount quarterly.

As for how to make estimated tax payments, in the past you would have mailed in a 1040-ES with a check each quarter, but now you can pay online and mark it as for estimated taxes. Please see this IRS webpage.

Re: I started Instacart late last year. I included it in my 2020 tax return. I do work a full time W2 job. Do I file quarterly for Instacart for 2021?

mesapsa — Mon, 15 Mar 2021 20:23:55 GMT

Good question? I think Instacart and places like these are dangerous for people that do not save extra money for tax reasons! Most people that do these sorts of jobs cannot pull out $4000 at the end of the year to pay the IRS! These companies should pull 25% of earnings to taxes in my opinion!

Re: I started Instacart late last year. I included it in my 2020 tax return. I do work a full tim...

DawnC — Mon, 15 Mar 2021 20:41:39 GMT

Employers are required to withhold taxes, but the work you do for Instacart is considered self-employment income. You are your own employer in this situation so you are required to handle your own withholding. In addition to that, you owe both the employer and employee portions of social security and medicare taxes on self-employment income. You can request that Instacart withhold taxes and they may do that, but they are not required to. If they will, that is great. But if they won't and you do not want to be hit with a tax bill at the end of the year, you will either need to increase your withholdings through your W-2 job OR pay some tax during the year. That means either giving your employer (if you have one) an updated W-4 form or making payments directly to the IRS during the tax year. @mesapsa