Does Grubhub report your earnings to the IRS? What is this 1099-NEC that Grubhub sent out, and how do you use it for taxes?
You may be finding that taxes for Grubhub are different than you’re used to. And the thing is, if you treat your 1099 form from Grubhub like a W-2, you could pay far more in taxes than what you’re required to do. That’s why it’s important to understand what your 1099 form is and how to use it at tax time.
I’ve delivered for Grubhub and other gig apps for five years. I found that my background in business management and owning my own companies prepared me for how taxes work with Grubhub, and I thought I could pass some of that understanding on to you.
Whether you deliver for Grubhub as a side hustle for some extra cash, or you decided to make delivery a full-time business, the whole tax picture starts with the money you made. We’ll talk about that in this article, discuss how Grubhub reports your earnings to the IRS, and examine what a 1099 form is and how it’s very different from a W-2.
Grubhub taxes can seem overwhelming. But they’re not as mysterious as they might seem. This is a part of a series on Grubhub taxes. We started with this article on the important things you need ot know about how Grubhub taxes work, and then dive into more detail in articles like this one. At the end ot this post, you’ll see a complete list of the articles in this series.
About this article
The purpose of this article is to explain how the money you make with Grubhub fits into the bigger tax picture. We’ll discuss:
- How Grubhub reports your earnings to the IRS.
- What a 1099 form is and how you use it for taxes
- How a 1099 is different from W2 forms
- Frequently asked questions about Grubhub income and 1099 forms
Do not take anything in this article as tax advice. Information here is for informational and educational purposes only, to help you understand how the different pieces of the tax puzzle fit together. You should engage a tax professional if you need specific advice related to your particular tax situation.
Finally, this article only addresses federal taxes in the United States. State and local taxes, as well as taxes in other countries, may differ. Seek guidance from your tax expert related to other tax jurisdictions.
How Grubhub reports your earnings to the IRS.
The important thing to remember with Grubhub taxes is that you contract with them as an independent contractor. Grubhub delivery drivers are not Grubhub employees. Instead, they provide services as a business.
When a company pays an independent contractor $600 or more, they are required to report those payments to the IRS. They do so by submitting IRS form 1099-NEC. When they do this, they send a report into the IRS, and a copy to the contractor providing tax identification information (your Social Security number or EIN (Employer ID Number) and the amount of money they paid you.
Grubhub sends a copy of that information to you as well on your 1099. If you earned less than $600, Grubhub does not send a report or give you a 1099 form.
Because you are not an employee, Grubhub does not provide a W2. They also do not withhold taxes from your pay. All of that is your responsibility.
What a 1099 form is and how you use it for taxes.
Form 1099-NEC reports non-employee compensation. As an independent contractor providing services as a business, income reported is actually your business’s revenue. It is NOT a report of personal income.
The form ultimately reports two things: Who you are, and how much they paid you.
Part of the signup process with Grubhub includes providing tax information. Most of us operate as sole proprietors, meaning we’re running a business as an individual. In that instance, the W9 information you provide to Grubhub includes your legal name and Social Security number.
If you’ve created an LLC or registered an Employer ID Number (EIN) for your delivery business, you would have provided your business name and EIN.
Grubhub reports whatever tax identification information you provided. The left half of a typical 1099-NEC includes identifying information including:
- Grubhub’s corporate name and address
- Grubhub’s Taxpayer ID number
- Your tax ID number (SSN or EIN)
- Your name and address
For most Grubhub contractors, the only thing filled in on the right side of the form is line 1: Nonemployee compensation. That includes the total of payments sent to you by Grubhub (including customer tips that were paid through the app).
Grubhub does not withhold taxes. Some states may require Grubhub to submit a copy of a 1099 to them as well. Drivers in those states may have information filled out including Grubhub’s state tax ID number (line 6) and the amount paid to the driver under (line 7).
Where does your Grubhub 1099 information go on your tax return?
Remember that as an independent contractor, you’re filing business taxes. This is an important point, because your taxes for your business are based on profit (what’s left over after expenses).
Because of that, your Grubhub earnings are treated very differently than employee wages. Employee wages are immediately added to the income part of your tax return. Your business revenue, or Grubhub pay, is only the beginning of the story.
It all happens on IRS form Schedule C. That form is entitled “Profit and Loss from Business.” You add your Grubhub earnings to the income portion of Schedule C. Then list your Grubhub business write-offs on the expense part of Schedule C. That’s where you’ll also take the deduction for the miles you put on your car driving for Grubhub and others.
Subtract expenses from income to get your profit. Your profit is what you add to the income part of your IRS form 1040.
How a 1099 is different from W2 forms
The most significant difference is that W2 reports your personal taxable income, whereas a 1099 form reports your business’s income. That’s a significant difference because the only part of business income that’s taxable is what’s left over after expenses.
A W2 typically reflects money withheld for state and federal income taxes. Employment taxes (FICA) are taken out as well. None of that is taken out of your 1099 pay. As an independent contractor, you’re on your own for saving and paying all taxes.
When you file your tax return, you attach a copy of your W2 form. You do not submit a copy of your 1099 forms with your tax return, nor do you provide any of the payor information to the IRS.
When it’s all said and done, your completed Schedule C is actually the closest thing you have to a W2 as a Grubhub contractor. As mentioned earlier, you list your income and expenses, with the difference between the two being moved over to your tax return as income.
Frequently asked questions about Grubhub income and 1099 forms
No. Grubhub delivery drivers are independent contractors, meaning they are not employees. Instead, Grubhub sends a 1099-NEC reporting income for drivers who receive more than $600 for the year.
Grubhub will either email your 1099 or send it via US Mail. You can see which option in your Grubhub for drivers app. Go to Account, select Personal Info, then choose Tax form information. There they indicate where your 1099 form will be mailed or to what email address they will send it. You can select an option to contact a member of their tax team to request a change in the delivery method.
You must file taxes if your income is enough to require taxes to be paid. This includes whether you would owe self-employment tax. As an independent contractor, you would owe self-employment tax if you had more than $400 of self-employed income. If you have other income and are filing a tax return, all Grubhub income must be reported.
Grubhub reports all payments that were made to you as an independent contractor. Those payments include tips that the customer added through the Grubhub app and that Grubhub passed on to you.
Yes. According to the IRS all tips (including cash tips) are taxable income and subject to income tax and self-employment taxes. fMost Grubhub tips are paid through the app and thus are included in your 1099 form. The IRS does require you to report cash tips as well, adding them to the total income amount reported on Schedule C.
Grubhub does not reimburse for miles. Distance is used to calculate the base pay, but that's not the same as reimbursement. All payments made by Grubhub to you as an independent contractor are included in the 1099 and are considered income for tax purposes.
If you earned enough to file a tax return (see the previous question), you must report all self-employed income, regardless of whether you received a 1099 form. As a sole proprietor, you are responsible for reporting self-employment income whether or not it was reported by anyone else.
If you earned enough to file a tax return (see the previous question), you must report all self-employed income regardless of amount. There is no minimum threshhold. However, if your profit from your Schedule C is less than $400, you are not required to file IRS form Schedule SE or pay self-employment tax.
Grubhub is required to submit 1099 forms by the end of the first business day on or after January 31. If they are emailing your 1099, they must be submitted by that time. If they are sent by mail, they must have been mailed and postmarked by that date. Some mailed copies can take one to two weeks to arrive.
First, verify that you made enough money to get a 1099. Add up all payments you received from Grubhub through the calendar year. You will not receive a 1099 form from Grubhub if your total payments are less than $600. Grubhub has been known to be late or have problems with their 1099's in the past couple of years. If you have yet to receive a 1099 by mid-February, Grubhub states you should contact firstname.lastname@example.org.
Grubhub has struggled with the accuracy of its 1099 forms in the past. You must know exactly what you received so that you can compare it to what Grubhub reports to the IRS. If your 1099 is incorrect, you must contact Grubhub immediately at email@example.com and demand a corrected 1099 form. You can read more about what to do when Grubhub's 1099 is wrong.
The IRS records those earnings if you receive a 1099-NEC form from Grubhub. IRS computers can match reported income from your tax returns to what has been reported to them, meaning that they may identify when you have under-reported your income.
Grubhub is only obligated to withhold taxes for employees. As an independent contractor, you are not employed and are on your own for saving and paying taxes.
Yes. The IRS does have you include a copy of your 1099's with your tax return. You are filing taxes like a small business and are responsible for tracking your income and expenses. You do not have to have a 1099 form from Grubhub to file your taxes. However, it is wise to ensure that Grubhub did not erroneously report that you made more money than you did before you file.
Grubhub uses form 1099-NEC because of IRS stipulations. Many drivers remember Grubhub using form 1099-MISC in the past. That was the form the IRS used to report non-employee compensation up through the 2019 tax year. However, starting with the 2020 tax year, the IRS introduced form 1099-NEC. Grubhub and other gig companies switched to the new form to report 2020 earnings.