If you worked for Delivery Driver Inc as a Walmart Spark driver, here’s what you need to know about taxes.
Who is Delivery Driver Inc?
Delivery Driver Inc’s website says it is an independent contractor management solution that connects drivers with businesses. However, in 2022, Walmart bought the company and DDI notified its other customers that it would no longer serve them.
Why is this important? If you’re working exclusively for Walmart through a company owned by Walmart, there’s a chance that some places could find that you’re misclassified as an independent contractor.
How do I file taxes as an independent contractor Delivery Driver Inc driver?
When you’re an independent contractor, you file a Schedule C with your Form 1040 tax return each year. You’ll include both your business income and expenses (more on deductions below).
If you worked for multiple delivery services, you’ll normally combine all of your income and expenses on a single Schedule C.
Delivery Driver Inc will post your 1099 in your online account. Other services may do the same thing or send your tax forms by mail or email.
Reminder: As an independent contractor, your 1099 replaces your Spark driver W2.
What’s the difference between an employee and an independent contractor?
The main difference between an employee and an independent contractor is how you pay taxes.
As an independent contractor, Delivery Driver Inc won’t take out taxes for you. Instead, you have to pay estimated taxes (more below).
Independent contractors also have to pay a 15.3% self-employment tax. This includes a 12.4% Social Security tax and 2.9% Medicare tax. Employees only pay half of that through FICA withholding, while the employer pays the other half.
Does Spark take out taxes?
Spark doesn’t take out taxes since you’re an independent contractor. Instead, you’ll need to make estimated tax payments.
How do you pay estimated taxes?
As an independent contractor, you can’t wait until you file your tax return to figure out what you owe and pay your taxes. If you owe more than $1,000 when you file, you may have to pay a penalty.
To avoid penalties, you usually need to make four estimated tax payments during the year.
The payments are due on the 15th of April, June, September, and January. Then you file your taxes by April 15th
So the April 15th estimated tax payment is for the tax return you’ll file NEXT April. Don’t confuse your first estimated tax payment with paying any taxes you owe when you file.
Your quarterly payments should usually be about 25% of the taxes you owe. If Delivery Driver Inc is your side hustle and you also have a W-2 job, you have the option of increasing your W-2 job tax withholding to cover some or all of your estimated tax payments.
What deductions can Delivery Driver Inc drivers take on Schedule C?
As a delivery driver, your biggest tax deduction will almost always be your vehicle expenses. That includes things like gas, insurance, maintenance, and depreciation.