Claiming Tax Deductions as an Instacart Shopper in Canada
You run your own small business as an Instacart shopper or delivery driver. That means you can claim various work-related expenses when filing your taxes with the Canada Revenue Agency (CRA). Understanding which expenses are deductible can help you save money and minimize your tax liability, especially as tax season for 2024 approaches.
In this blog post, we'll break down some of the most common expenses you can claim as an Instacart shopper, ensuring that you can maximize your deductions while staying compliant with CRA regulations.
1. Vehicle Expenses
Since your vehicle is essential to your work as an Instacart shopper, vehicle-related expenses are some of the most important deductions you can claim. Here’s what you need to know:
You'll need to use the actual expense method to calculate your vehicle expenses. This method involves tracking all receipts and calculating the percentage of time the vehicle is used for business. It may take more effort, but allows you to claim actual costs.
2. Cell Phone Expenses
As an Instacart shopper, you likely use your phone to communicate with customers, manage deliveries, and stay in touch with the Instacart app. You can claim a percentage of your phone bill based on how much you use the phone for work-related tasks.
Record how often you use your phone for business purposes versus personal use to calculate the correct deduction.
3. Supplies
Anything you purchase specifically for your job as an Instacart shopper, such as insulated bags, cleaning supplies, or equipment for safely handling groceries, can be claimed as a business expense. Even small purchases can add up, so remember to save your receipts and track these costs.
4. Meals and Entertainment
You can potentially deduct these expenses if you're out on the road and need to buy meals while working. However, the CRA has strict rules about meal deductions. For instance, the meal must be necessary for the business, and you should document the purpose of the meal. Remember that only 50% of meals may be deductible, so it's crucial to track these expenses carefully.
5. Business Insurance
You can deduct the cost as a business expense if you have business-specific insurance, such as liability insurance. This is especially important to consider in the event of accidents or other issues while delivering. Insurance is an important safeguard for your work, and the CRA allows you to claim this expense.
6. Accounting and Tax Services
As a self-employed individual, managing your taxes can be complex. If you hire an accountant or tax professional to assist with filing your taxes, their fees are deductible. Tax professionals can help ensure you claim all eligible deductions, reducing your risk of errors and potential audits.
7. Bank Fees
If you maintain a business bank account specifically for your Instacart work, any fees associated with that account, such as monthly service charges or transaction fees, can be claimed as a business expense. These fees can add up, so it's worth keeping track of them.
Keep Accurate Records for Maximum Deductions
Accurate record-keeping is key to successfully claiming deductions. The CRA may request documentation if you are audited, so keeping receipts, invoices, and a log of your business-related activities is critical.
Invest in an expense tracking app or accounting software to stay organized. Keep a mileage log for vehicle expenses that tracks the distance you travel for work versus personal use.
Why You Should Consult a Tax Professional
Navigating the world of tax deductions as a self-employed individual can be tricky. While it's great to know about the various expenses you can claim, the CRA has specific rules and guidelines that need to be followed to ensure compliance. A professional tax preparer or accountant can help you navigate these rules and identify every deduction you qualify for, ultimately saving you money in the long run.
If you need assistance filing your taxes, don't hesitate to contact Instaccountant. Our experts specialize in helping self-employed individuals like you maximize your deductions and ensure everything is in order when you file your 2024 tax return.
In Conclusion
Being a self-employed Instacart shopper has its benefits, but it also means you're responsible for keeping track of your expenses and filing your taxes correctly. You can reduce your taxable income and keep more of your earnings by claiming vehicle expenses, cell phone costs, supplies, insurance, and other eligible expenses.
Remember, the more organized you are with your receipts and records, the smoother tax season will be. Happy filing!
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