Full-service vs. in-store shoppers: why the tax treatment differs
Full-service shoppers are classified as independent contractors. They don’t have anything withheld from their payouts; they shop for and deliver orders using their own vehicle, and they set their own hours.
In-store shoppers work scheduled shifts inside a single store, picking and staging orders without delivering them. They’re W-2 employees, with federal income tax, Social Security, and Medicare withheld from their pay just like any other hourly job.
This guide focuses on full-service shoppers, since they carry the more complicated tax responsibilities—in-store shoppers generally just report their W-2 wages like any other employee.
Tax forms full-service shoppers need
| Form | Purpose |
|---|---|
| 1099-NEC | Received from the payor, reports the total Instacart paid you for the year, if it’s $2,000 or more for tax year 2026 ($600 for tax year 2025) |
| Schedule C | Filed with 1040 - Reports your Instacart income and business expenses to arrive at net profit |
| Schedule SE | Filed with 1040 - Calculates the self-employment tax owed on that net profit |
| Form 1040 | Your main tax return, where the Schedule C and SE totals land |
| Form 1040-ES | Used to calculate and submit quarterly estimated tax payments |
Regardless of the threshold, every dollar you earn is reportable income whether or not a 1099 arrives.
Estimating how much you’ll owe
You’ll owe two things on your net profits as a full-service shopper:
- Regular income tax at your marginal rate.
- Self-employment tax—a flat 15.3% (technically calculated on 92.35% of your net profit) covering the Social Security and Medicare contributions an employer would otherwise split with you.
Two adjustments reduce what you actually owe:
- Half of your self-employment tax is deductible. You can deduct 50% of the SE tax you pay as an above-the-line adjustment on Schedule 1, which lowers your taxable income for regular income tax purposes.
- The Qualified Business Income (QBI) deduction. Most full-service shoppers can deduct up to 20% of their net Instacart profit under Section 199A, on top of other deductions. This is often the single largest tax break available to gig workers and is worth calculating even if you take the standard deduction.
If you expect to owe $1,000 or more, you’ll likely need to make estimated tax payments each quarter. This can help you avoid owing a large sum at the end of the year and minimize underpayment penalties.
Paying quarterly estimated taxes: step-by-step
- Estimate your net Instacart profit for the quarter after subtracting deductible expenses.
- Calculate roughly 25–30% of that profit to cover income tax and self-employment tax combined.
- Submit the payment using Form 1040-ES—pay online through IRS Direct Pay, enroll in EFTPS, or mail the voucher with a check.
- Pay by the quarterly deadline—April 15, June 15, September 15, and January 15 of the following year—to avoid an underpayment penalty.
Deductions full-service shoppers can claim
- Mileage: Track your business miles from the start of the year rather than trying to reconstruct them later.
- Phone bill: The business-use portion of your cell phone plan, since you rely on it for the app.
- Insulated bags and delivery equipment: Supplies you buy specifically to do the job.
- Parking and tolls: Costs incurred while shopping and delivering, separate from the mileage rate itself.
- Tips: As part of the One Big Beautiful Bill, delivery and transportation workers can now deduct up to $25,000 in customer-paid tips per year through 2028, phasing out above $150,000 (single) or $300,000 (married filing jointly) in modified AGI. This only reduces income tax, not the 15.3% self-employment tax, and only counts tips explicitly labeled as such by the app—not base pay, promotions, or batch incentives. If you’re self-employed, this deduction can’t exceed your net business income from Instacart (before applying the deduction itself).
- Health insurance premiums: If you’re not eligible for coverage through an employer or spouse’s plan, you may be able to deduct the full cost of your health insurance premiums as a self-employed individual. This deduction also can’t exceed your net Instacart profit for the year.
