For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post. Show Key Takeaways • If you’re an employee of Amazon, UPS, or another company, your Social Security, Medicare, and possibly federal and state income taxes will be withheld from your paycheck. At the end of the year, you’ll receive a Form W-2 showing the income you earned for the year and total tax withheld. Use this information to file Form 1040. • If you’re an independent contractor, you’re responsible for paying both the employer and employee portions of your Social Security and Medicare taxes, also known as self-employment taxes. Use Schedule SE to calculate this tax. • As an independent contractor, you should receive a Form 1099-NEC showing your total earnings for the year. You should receive a 1099-NEC from each company you deliver for. • If you’re an independent contractor, you can typically deduct work-related expenses on Schedule C. These write-offs may include mileage, tolls, mobile phone charges, supplies, and more. Typically, these deductions are not available if you’re an employee. Taxes for delivery driversWith the growth in the on-demand economy, being a delivery driver can be a great way to make money, either full time or as a side gig. Whether you work for companies like Amazon, UPS or a new app-based platform, being a delivery driver means understanding key facts so you can file your taxes accurately and on-time. Here's what you should know about filing tax returns for delivery drivers. Step 1: Employee vs. independent contractorHow you report your income and whether you can deduct expenses depends on whether you're an employee or an independent contractor.
If you're not sure whether you're an employee or a contract worker, talk to your employer. Step 2: Select the right tax formsWhether you're an independent contractor or an employee, you'll use Form 1040 to file your tax return as a delivery driver.
Independent contractors have to attach some additional schedules to Form 1040.
Again, if you use TurboTax to prepare your return, the software will ask you a series of questions and fill out the proper forms for you.
TurboTax Tip: If you’re an independent contractor and expect to owe taxes of $1,000 or more, you're usually required to make quarterly estimated tax payments in order to avoid underpayment penalties. Those payments are generally due during the year on April 15, June 15, September 15 and then on January 15 of the following tax year.
Step 3: Take advantage of tax write-offsIf you're an employee, you don't have a lot of opportunities for tax write-offs related to your delivery driver income. Your employer might cover or reimburse you for work-related expenses. Independent contractors, however, can typically deduct work-related expenses on Schedule C. Here are some common expenses you may be able to deduct:
Step 4: Make estimated tax paymentsAs an independent contractor, you're usually responsible for paying your own taxes. You typically don't have an employer to withhold them for you. And just as an employer withholds a portion of each paycheck, the IRS expects you to pay taxes as you earn money throughout the year.
Tips for Filing Tax Returns for Delivery DriversIf all of this seems like a lot of work, don't worry. You can use QuickBooks Self-Employed to track your income and expenses and figure out your estimated tax payments. The software will handle the math for you. It can even walk you through making an electronic payment to the IRS. With TurboTax Live Full Service Self-Employed, work with a tax expert who understands independent contractors and freelancers. Your tax expert will do your taxes for you and search 500 deductions and credits so you don’t miss a thing. Backed by our Full Service Guarantee. You can also file your self-employed taxes on your own with TurboTax Self-Employed. We’ll find every industry-specific deduction you qualify for and get you every dollar you deserve. |