The lives of Amazon Flex delivery drivers are already busy and complicated. Having to deal with self-employment taxes can add a significant amount of stress to an already stressful job.
The following guide can answer your questions related to your tax status or responsibilities if you drive for Amazon Flex. With Beem, America’s first Al-powered Smart Wallet App, you’ll be able to get your business accounting and tax bookkeeping under control in a simple and affordable way.
Filing Taxes As An Amazon Flex Delivery Driver
If you have earned at least $600 during the tax year working as an Amazon Flex delivery driver, you can expect to receive a 1099 form.
The IRS defines 1099 forms as “information returns,” which are tax returns containing taxpayer-identifying information but not tax liabilities. The form is used to specify the earnings made from a given contract without calculating the tax debt on any of those earnings.
Clients or employers who work with freelancers or independent contractors typically fill out a 1099 form, which they then send both to the freelancers and the IRS. There are a number of different versions of the 1099 form, each one designed for different kinds of non-salary income.
Is Amazon Flex Income Taxed?
There is no exception to the requirement that American taxpayers pay taxes on every dollar they earn! It means regardless of how much money you make as a Flex driver for Amazon, you have to pay tax on it.
In the event that you don’t receive a 1099-NEC from Amazon Flex, which you are supposed to receive by April 15, you must still report that income on Schedule C of IRS form 1040 (which is your tax return for the prior tax year).
Independent contractor income and expenses are reported on Schedule C, which accounts for the “Profit or Loss from Business.”
Forms For Amazon Flex Delivery Drivers
Some of the common forms Amazon Flex Delivery Drivers can receive during the 2023 tax season are:
1099-NEC: If you earn over $600 with Amazon Flex, you will receive the “non-employee compensation” 1099 form (if it’s under $600, you will not receive the form, but you must still report the income to avoid penalties).
Form 1099-K: In the event that you make a virtual sale via a third-party platform, such as PayPal, the K forms are used to keep track of the transaction.
Receiving Your 1099 From Amazon Flex
In order to receive a 1099 from Amazon Flex, you must complete a W-9 form, which provides the company with your personal information.
You should receive your 1099-NEC form from Amazon Flex by late January/early February if you earn at least $600 per tax year.
What to do if you don’t receive a 1099 from Amazon
Drivers are not all supposed to receive 1099-NECs. The company isn’t needed to send you a form if your Amazon Flex income is less than $600.
Although if you don’t receive a 1099, you must still file your income taxes with the IRS. Simply add up your Amazon Flex direct deposits on your bank statements to make sure you’re doing this right.
Taxes For W2 vs 1099 Workers
Typically, W-2 employees don’t have to worry about paying their taxes on time as their employers withhold estimated taxes from each paycheck throughout the year.
Individuals who work for themselves, for instance, ride-hailing drivers or food/retail delivery drivers, pay taxes differently. It is required to estimate your salary for the upcoming tax year. At the same time, review your quarterly estimated taxes and tax return.
Drivers who are self-employed using apps such as Amazon Flex are responsible for paying the following taxes:
Federal Income Tax: Anyone who earns income in the United States is affected by this tax (you can find your marginal tax brackets based on your salary range in 2021 by clicking here).
State Income Tax: The U.S. imposes a flat-rate income tax in some states, a graduated-rate income tax in others and no income tax in some states.
Self-Employment Tax: The self-employment tax of 15.3% includes Social Security and Medicaid tax for self-employed taxpayers, who must comply with the following rules if they want to avoid any penalty:
Ensure that the estimated taxes aren’t underpaid, which incurs a fine.
On a quarterly basis, make your estimated tax payment by the IRS-specified deadline (ignoring the deadline and paying estimated taxes late will also result in financial penalties).
Are Amazon Flex Driver Expenses Deductible?
You can deduct expenses incurred while driving for Amazon Flex from your income as self-employment tax deductions. The purpose of a tax deduction is to reduce income subject to taxation and increasing your return.
You can figure out your taxable income by subtracting all the qualifying deductions from your Adjusted Gross Income (AGI). It’s obvious that the lower your AGI, the less tax you’ll have to pay. In contrast, the less taxes you pay, the more money you can reinvest into your business.
Keeping all your expense receipts and mileage records is therefore a regular habit that should not be neglected.
For Amazon Flex drivers, the following business expenses can be deducted from their gross income:
- Mileage/Gas Expenses: While making deliveries for Amazon Flex, drivers can deduct business miles. When calculating deductions, drivers can choose between “standard mileage” and “actual expense.”
- Cellular phone costs: Deduct the cost of your phone bill you used for the business.
- Parking/Toll Fees: Deductions are available for parking and road tolls incurred while making deliveries for Amazon Flex.
If you save business expense receipts, you can claim more deductions.
Penalties For Underreporting/Misreporting Of Income
The IRS recommends reporting all 1099 income accurately. Chances are, they received a copy from your client/employer, and their software has “red-flagged” your account for something “fishy.” It is likely that the IRS will catch a missing 1099. In such a s case, they can contact you to clarify any discrepancies they find.
Of course, such offenders are penalized by the IRS with fines and interest! Depending on the amount of tax liability that they determine. The IRS may impose a penalty of 50-200% on the tax liability for income that has been omitted. The penalty amount may vary depending on whether the IRS determines the income either “underreported” (due to unintended negligence) or “misreported” (due to fraud).
Let’s take a step back. Remember when we said gig work has both benefits and cons when it comes to taxes? During our discussion, we focused largely on the downsides. Fortunately, you don’t have to pay taxes on all your Amazon Flex earnings.