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How to prepare for taxes from income earned through shopping app (Shipt, Instacart, etc.)

I have been working as a shopper for an app and as this am an independent contractor. How do I prepare for taxes? What receipts, mileage, gas, etc. should I be setting aside? How much should I prepare to remove? I began January 2022 and am lost as to what is and isn’t needed. 

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Employee Tax Expert

How to prepare for taxes from income earned through shopping app (Shipt, Instacart, etc.)

You want to capture all ordinary and necessary expenses you incur in your Shopper App Business.  So you might buy an N95 mask or hand sanitizer or a pen and pad of paper.  Get a file folder or a box and get all receipts or other evidence of expenditure in that box or file.  This is important because the Self Employment Tax is 15.3 % of your net profit from your Shopper App Business.

  1. Capture the receipts and put them in one place; a folder or a box.
  2. Establish a rhythm when you review the folder ( the 20th of every month or the fourth Sunday afternoon of every month).
  3. At your board meeting (see 2 above) summarize your expenses on a cover sheet that goes with your folder or box.
  4. When January 2023 comes, you will not be dreading the accounting work because you "chunked" it into small pieces.
  5. Mileage is either actual or standard mileage.  Most driver/delivery workers take standard mileage.
  6. Some of the app companies track your mileage which helps.  If not, get an app to track your mileage.
  7. Put a calendar reminder in your phone for December 27, 28, and 30 today.  Why?  I want you to take an odometer reading on your vehicle.  Then, for all future years, you will have a beginning and year end mileage which is helpful in justifying expense to the IRS.

I do not want you to be lost.  The basics are you can deduct all ordinary and necessary expenses associated with your Shopper App Business.  Do your best to "capture" your expenses.  Establish a rhythm where you take some quiet time to organize the stuff every month (you are running a business, all successful businesses I have worked with have a rhythm of meetings).  Then, in February 2023 you will get your 1099 NEC which is your revenue; and you will have all your expenses on your folder cover sheet; and you will have your mileage and your odometer reading and be ready to go for the tax return.

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