Instacart Question

[gwmlwb]

Hello, My daughter did Instacart and made about $411 for 2022.  She does this sporadically to make extra money for college.  Turbotax takes me to the Self Employed Section for $89 filing fee.  This does not seem correct to me so I need some help.

She made $411

She drove 523 miles (deductions)

So after you take out the deductions, she made like $105

Is there a better way to do this?

Thanks

[CatinaT1]

It depends if she has any other income or other filing requirements.  If she does need to file a return, she would have to use the section that includes Self-Employment. 

She is a business in the IRS's eyes. You do not have to carry on regular full-time business activities to be considered self-employed.  This is non-employee compensation.  She was contracted to do a job, not employed to do a job. 

When you have self-employment income, you have to file an income tax return if your net earnings from self-employment are $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 and 1040-SR instructions.

Refer to the link to see if she has a filing requirement.

[gwmlwb]

Thank you.  This was her only income in 2022 except for about 0.17 in interest on her savings account.

Is there a way to file free with Turbotax having self employment?

Thanks

[AliciaP1]

No, but she does not need to file a tax return if her self-employed income is less than $400 and her only other income was $0.17 interest income.  The link @CatinaT1 posted is helpful to review the requirements, but you can also review Do I need to file a federal return this year?

@gwmlwb  

[gwmlwb]

Thank you for your response.  The $400 is based upon net income which she did not have because of the deduction for mileage expense.  You almost wonder whether delivery is even worth doing - I guess for the kid it is if they don't have to pay for their gas and wear and tear on their vehicle.

[gwmlwb]

Hello Alicia - I have another question you may be able to answer.  My niece had the following earnings

(2) W2 jobs:  3769.76

Bank Interest:  33.02

UberEats Pay:  763.13 (Gross Pay) - 218 (UberEats defined Expenses, Fees, Taxes) - 305.87 (Mileage) = 239.26 (Net Income)

She did not meet the threshold for Self Employment Tax Filing of $400 Net

She did not meet the standard threshold for filing $12,950

She did pay federal taxes of 17.04 for her W2 job

The question is can she just file taxes on the W2 jobs and bank interest and disregard the self employment income when filing so she can recover her 17.04 in federal taxes?

Thanks

[MinhT1]

No.

I do not advise disregarding the 1099-NEC for $763.13 from UberEats even if it will result in no additional tax. This form has been filed by UberEats with the IRS.

If your niece does not report it, she might get a letter from the IRS for underreporting her income. The IRS will tax her on the gross income of $763.13 (plus self-employment tax) as expenses have not been reported.

She should file a tax return, report her W-2, interest and her UberEats self-employed expenses and income. As her net self-employed income is below $400, she has no self-employment tax to pay and no tax either as her total income is below the standard deduction of $12,950. She will then be compliant with the IRS and receive a refund of tax withheld.

[gwmlwb]

Does it matter if she did not get  a 1099-NEC as the way UberEats calculated it the total was about $539 so the did not send the tax document.

Also, it costs $89 to file self employment to get the $17.50 in fed taxes she paid on her W-2 jobs.

Thanks

[AmyC]

You are supposed to report all income and claim all deductions to which you are entitled. If you zip through a quick IRS quiz, Do I Need to File a Tax Return? the results are:

Do I need to file a tax return?

You are required to file a tax return for 2022.

You have a special situation.

You had net earnings from self-employment of at least $400.

You may be able to use the IRS free file program.