And they could guess wrong. The IRS requires Instacart to provide your 1099 by January 31st each year. Well go over that down below. I . This includes mileage: Heads up: Your mileage from to and from home at the beginning and end of your work day is NOT deductible. Notice how they're put together with a slash? Finally, there's the partnership. They're completely separate from personal deductions (like medical expenses and charitable donations), which the standard deduction replaces. This is a good opportunity to understand business types. Get the tax info they should have taught us in school, Tax filing for freelancers and side hustlers. You can deduct anything that is ordinary and necessary for your delivery job. This includes any insulated bags or blankets you buy for keeping food orders warm. Once you have added up all your other expenses, write the total on line 27a. Shipt taxesare pretty much identical to Instacart taxes. Just make sure you have the documentation to back it up. They have different rules about things like taxes, whether you have to be on payroll as an owner, different things like that. Instacart delivery drivers are required to pay self-employment taxes, unlike in-store shoppers. First, make sure youre tracking all of your expenses. If youre sure you earned more than $600 on Instacart, you should be getting a 1099-NEC. Depending on how much your personal deductions end up valuing, your tax software may prompt you to take the standard deduction (a fixed amount based on your filing status) instead. We say Doordash did this, Instacart did that. You're a sole proprietor because you're in business for yourself and aren't incorporated or structured as any other type of business. For one thing, your tax situation will actually vary, depending on whether you're an in-store shopper or a full-service shopper. Your 1099 tax form will be sent to you by January 31, 2023 (note: paper forms delivered via mail may take up to an additional 10 business days).. What youll owe also depends on your filing status and whether your spouse has income. Schedule C, Schedule SE, and 1040 are the tax forms you'll need to complete. File right from your phone with the IRS & State. Do Bloggers and Content Creators Have to File Quarterly Taxes? There is no need to file Form 8832 first. Thats why weve put together a custom tax guide for you, complete with insider tips from our tax specialists. Get the scoop on everything you need to know to make tax season a breeze. Here are some deductions you should know about as an Instacart shopper. Most businesses must file and pay federal taxes on any income earned or received during the year. When you visit or interact with our sites, services, applications, tools or messaging, we or our authorised service providers may use cookies, web beacons, and other similar technologies for storing information to help provide you with a better, faster and safer experience and for marketing purposes. The employer matches what the employee pays. If youre in a state with an income tax, youll also likely need to pay state income taxes on top of your federal income taxes. The Instacart 1099 tax forms you'll need to file. Here's to a stress-free tax season! The Instacart shoppers most people are familiar with are the full-service shoppers who both shop and deliver customer orders. Make sure to find documentation of your earnings so you can report the right amount, by checking the Instacart app or your bank statements. While some tax deductions are related to running your business, others like health insurance and charitable donations are personal deductions. Posted on Published: January 11, 2021- Last updated: July 6, 2022. Technically, according to the IRS, it's Sole Proprietor. The tax rates can vary by state and income level. Sign and date the form and give to the requester. Individual income tax refund inquiries: 1-877-252-4052. 10,000 / 20,000 = .5 or 50%. Chat with an assigned tax assistant anytime. taking mileage deductions or deducting a percentage of your actual car expenses, Ultimate Guide to Car Tax Deductions and Mileage, How to Save the Most Money On Your Gopuff Taxes in 2023, The Business Meal Deduction: A Freelancer's Guide, Phone accessories, like car mounts and chargers. You just need to make sure you have the documentation to support your deduction. The in-store shoppers on the platform are Instacart employees. However, there are a few exceptions. Instacart delivery starts at $3.99 for same-day orders over $35. Instacarts official name is Instacart (other delivery companies use different legal names on their tax returns). If you have other business activities that are registered under a different business number, you file a separate T2125 form for it. You'll receive a 1099-NEC if you've earned at least $600 through dashing in the previous year. If you are missing receipts, we recommend looking through your credit card and bank statements for proof of their purchase. You do have the option to track all of your car expenses separately and use the actual car expenses method instead of the standard mileage deduction. Your Business name for item #2 can be the same as your name in #1. Bagels may be $3.49 and they charge you $6.49 (this actually happened!). If you owe quarterly taxes, it is to your advantage to make each quarterly payment by the deadlines, or as soon after the deadlines as you can. Lets clear one thing up: not getting a form doesnt mean your earnings are tax-free. You can also work for other food delivery services likeDoorDashor rideshare services likeUber. Your 1099-NEC from Instacart shows how much you earned on the app. For your delivery job, you can deduct anything that is "ordinary and necessary". That depends. A corporation is a form of legal entity. Other business entities may choose how they are classified for Federal tax purposes. As a full-service shopper, you can set your own schedule and head out to the local stores whenever you want. The forms are filed with the U.S. Internal Revenue Service (IRS) and, if required, state tax departments. All federal taxes are on your taxable business profit after your business deductions. Payable is used by Instacart to send tax forms. The Actual Expenses Method: This method lets you add up and deduct each of your individual business-related vehicle expenses. To pay your taxes, youll generally need to make quarterly tax payments (estimated tax payments) throughout the year. As an Instacart driver, however, you're self-employed, so you're responsible for both the employee and employer portions of taxes. If your net business profit for the year is lower than the total yearly cost of your health insurance premiums, then you can only deduct the amount equal to your business profit. Starting October 2022: Instacart or Stripe will email you instructions on how to set up e-delivery and create a Stripe Express account. Finally, we'll dig into how and when to pay your taxes. BBA- Specialization: Accounting, MBA- Specialization: Asset Management, EA. If you buy health insurance and arent eligible for health insurance coverage through an employer or certain other sources, your monthly health insurance premium is generally deductible. There are many apps you can use that automatically track your mileage and other expenses. Save time and money on insurance and taxes. Self employed simply means that instead of being employed by someone else, you are responsible for your own earnings. SEP IRAs are usually the easiest to open and have the lowest (or no) fees. But as you go back to filling out the form on Payable so you can get your 1099 for Instacart, Doordash or any other gig companies that use them, don't stress too much. Some of our partners may process your data as a part of their legitimate business interest without asking for consent. Individual or Sole Proprietor are both right answers to Business Type.. You may be able to take tax deductions, but were not there yet. Nows the perfect time to find your 2023 health plan. This section defines how you, the independent contractor, is . In other words, you have to pay self-employment taxes including social security and medicare taxes. Any mileage you drive for work can be deducted. The 1099-NEC is a new name for the 1099-MISC. You should contact Instacart support. When you pay self-employment tax on your freelance income, you're paying both the portion of FICA you would normally pay as an employee, and the portion your . Check out our guide for finding proof of past business expenses. There are different types of corporation, which is why you might see s corporation and corporation on your form. If you don't know the answer, odds are you're a sole proprietor. January 15th for income earned in October through December. As always, Instacart+ members get free delivery on orders over $35 or more per retailer. Only a percentage of business expenses can be deducted. Being an Instacart shopper isnt like other jobs. Income Tax. You'll also have to contend with self-employment tax. Store shoppers can be employees or independent contractors depending on where you live. Even though contractors are responsible for all of their taxes, they do have a few unique advantages. Yes, as an independent contractor, you can work for both Shipt and Instacart. NAICS. You can also make sure you set aside enough money by using a self-employment tax rate calculator. If you made over $600 , and you did not receive a 1099, contact Instacart's Shopper support right away. To learn more about how we can help you, call us today at 919-420-0092 or fill out the form below to get started. Taking the standard mileage rate usually gives the biggest deduction for most people. The rate for the 2022 tax year is 62.5 cents per mile for business use starting from July 1. Instacart sends its independent contractors Form 1099-NEC. Your profits count as earned income that you can put into a Traditional IRA or Roth IRA. With gig economy companies, you're largely on your own. Key Takeaways. An independent contractor can be the one that contracts with another company to do work for them. When it's paid to employees, they report it on a W2. Many people also prefer to use last years tax software to estimate the Instacart taxes theyll owe. These are created by the states, but then you can choose whether the LLC is taxed as a corporation or if the profits are taxed like owner's income. Learn more about why it was the perfect career move for him, and how it all led to the EntreCourier website. Once your Schedule C and Schedule SE are done, you'll attach them to Form 1040. How the tax works. Your choice to incorporate depends on things like protecting your assets if your business goes bankrupt or gets sued, or sometimes for tax purposes. The Seattle business license tax rate varies by business type. As an Instacart Shopper, youll likely want to be familiar with these forms: 1099-NEC: Reports how much money Instacart paid you throughout the year. In 2019, Instacart was responsible for just under 11% of ecommerce grocery sales, according to eMarketer. Click on the links below for definitions of the classifications that may appear on your excise tax return. There are two ways to deduct mileage. Your Social Security taxes help you earn Social Security quarters and retirement benefits. This information is used to figure out how much you owe in taxes. It is the actual earnings statement for your independent contractor business. Because the customer pays applicable sales taxes on their final total with Instacart, Instacart doesnt pay sales tax to the grocery store like a direct retail customer does. Instacart taxes can get pretty complicated. . In 2022,AAAs Cost of Ownership Guidesays the cost of owning almost all cars is above the current IRS standard mileage rate of 62.5 cents per mile. If you have a tax question we didnt cover in this guide, check out our extensive tax tips or reach out to our award-winning support team. Contact Shopper Support if you don't receive your Instacart 1099. If you owe more than $1,000 in taxes for the year and do not pay taxes quarterly, youll be hit with a late payment penalty by the IRS. It can be confusing to deal with Instacart taxes, especially if you have other self-employment income. Don't stress. This individual tax form summarizes all of the income you earned for the year, plus deductions and tax credits. This allows you to make tax-deductible employer contributions of up to 20% of your profits. Here are some of the other top questions from Instacart shoppers. If you do gig work as an independent contractor, you . Most people know to file and pay their 2022 taxes by April 18, 2023. Next year, you will receive a 1099-MISC for the work you perform for Instacart if greater than $600. All that those forms do is report your business's . Single member LLC is separated by the or. The reason it's lumped in with the sole proprietor is that from a tax standpoint, a single member LLC is treated the same as a sole proprietor. Each year, tax season kicks off with tax forms that show all the important information from the previous year. Theyll often be different than the best hours for personal shoppers. Its typically a more cost-effective option for people who purchased a vehicle within the past year, or are paying monthly loan payments for a new vehicle. We and our partners use cookies to Store and/or access information on a device. This means that total earnings potential depends on the individual. This course covers classification of individual for United States tax purposes. Helpful Resource:Are tips taxable? You can deduct your cellphone plan but only the portion of it you use for business. The most common tax deductions for Instacart shoppers are: Mileage covers your expenses like gas, car maintenance, insurance, roadside assistance, and more. If you earned at least $600 delivery groceries over the course of the year including base pay and tips from customers you can expect this form by January 31. Those first and last trips are considered commuting, rather than business, miles and arent deductible. This growing slice of the market helped . You could also consider working with a local tax preparer for help estimating your quarterly payments and ensuring your documentation is in order. Instacart shoppers typically need to file personal tax returns by April 15th for income earned from January 1st to December 31st the prior year. Share this resource with other solopreneurs. Your choice to incorporate depends on things like protecting your assets if your business goes bankrupt or gets sued, or sometimes for tax purposes. You can try for a partial deduction if you also use it for personal reasons, but the IRS could get picky and deny it. Can I deduct my entire phone bill from my taxes or only a percentage? Dial 1-888-246-7822 if you live in the United States. The company isn't required to send you one at all if you fall below the $600 threshold. As a reminder, you are making a profit if your self-employment income is higher than your business deductions. Self-employment income is subject to income taxes according to your tax bracket the same as any other income. Four out of five people qualify for a plan for $10 or less per month, and you may be able to write off what you do pay as a business expense. What you need to know as a Doordash delivery driver. And if you make money outside of Instacart, your tax bracket will depend on your entire income, not just from shopping for Instacart. Dont worry, nothing changes on your end; youll just receive a different form than you have in years past. That's because when you're running a business individual and sole proprietor are the same thing. In fact, the sooner you start, the more earnings (and fewer headaches) youll get during tax season. We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development. You need to have a way of tracking your data, minutes, and texts and figuring out what percent of your phone bills are for business purposes versus personal use. Here's the main reason that it's important to understand that you are a sole proprietor. Here are some of your common tax filing questions, answered: All taxpayers will need to file a Form 1040. Youll also pay self-employment taxes. A year later, that share doubled to nearly 22%. If you earned less than $600 during the previous year, you may not get a 1099. Yes, if you are working for another company as an independent contractor (receiving a Form 1099-MISC reporting your income) performing personal shopping/delivery service, then you would fill out the business profile section as if you are the business owner. If you earned at least $600 delivery groceries over the course of the year including base pay and tips from customers you can expect this form by January 31. In 2017, Payable was acquired by Stripe. In other words, you'll have to pay that 7.65% twice, for a total of 15.3%. An LLC can also elect to be taxed as an S-Corporation or a C-Corporation. While the Schedule K-1 is used to split the revenue among the owners by their respective percentages of ownership. Instacart shoppers are contractors, so the company will not deduct taxes from your paycheck. The amount they pay is matched by their employer. Youre probably spending plenty every month just fueling and maintaining it not to mention to all the other costs of car ownership. You can use that to fill out your Schedule C. As an Instacart shopper, here are seven deductions you should definitely be tracking: You can deduct any mileage you drive for work. An LLC may elect to be treated as an S corporation by filing Form 2553, Election by a Small Business Corporation, with the IRS. Income tax treaty reclassification provisions are also covered. Fees for AAA or other roadside assistance programs are tax deductible, but only the percentage that is used for work. If you expect to owe $1,000 or more in taxes for the year (after deduction and credits), the IRS expects you to make quarterly tax payments on your business profit for that tax year. Its one of those things where you can be technically correct, but it may not be worth fighting. People who recently bought a car or are paying monthly loan payments for a new car may find it more cost-effective to use this option. The order was $48 total and she gave me $60 cash. However, you still have to file an income tax return. Sole Proprietor? Form 1099-NEC reports income you received directly from DoorDash (ex. Do I need receipts for all the phone accessories I bought for my job? This is a separate form from your Schedule C. Be sure to answer your tax softwares questions about health insurance. Step 2: Select the right tax forms. Where would you want to know that? You are just doing this so it can do the calculations for you. Continue with Recommended Cookies, Posted on Published: October 24, 2022- Last updated: March 1, 2023. Dont try to not claim tips, either. An independent contractor may set their rate for a job and negotiate with the employer. Knowing how much to pay is just the first step. Tax Question/ Business Code. If that applies to you, youll also need to pay city taxes. Youd then pay tax based on the net profit you already calculated. Thats right: you'll have to pay that 7.65% twice over, for a total of 15.3%. File taxes. Ron has been quoted in several national outlets including Business Insider, the New York Times, CNN and Market Watch. Your Guide to Instacart 1099 Taxes (And How to Stop Overpaying Them). To hang on to your hard-earned dollars, make sure you keep track of everything you buy for work. If you'd rather not pay an accountant or deal with the hassle of filing your own business taxes, Keeper can help. Only one form is required. Unlike a W-2 employee, you might need to pay your Instacart taxes in four separate installments throughout the year. This income will be reported on IRS Form 1099-Misc. As part of this transition, we ended self-serve access to Payable on June 15, 2021. This document may be used by businesses as a tool in determining the proper business classification code required to be entered on Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax. Tip income is taxable. An example of data being processed may be a unique identifier stored in a cookie. $5000 x .5 = $2,500, which is the amount you can claim. Ben is working for Lyft and Instacart. Individual or Sole Proprietor are both right answers to "Business Type.". If you are a platform, that needs to access data from Payable, please visit our . If you remember signing up with any of these gig companies, there's a part where they take your tax information. In accordance with the IRS, an individual is considered an independent contractor if the payer is only able to control or direct the result of the work, not how it will be done. What's the difference between independent contractor, self employed, and sole proprietor? That's why we have created a personalized tax guide, complete with our best tax tips. Self-employed individuals pay taxes on their net income, which is their total income minus any business tax deductions. You just enter the amount that would be on your 1099. It should match the name on your individual tax return. It's typically a more cost-effective option for people who purchased a vehicle . To be taxed as an S-Corporation, the LLC must file IRS form 2553. . Because taxes are different for corporations than they are for individuals, they need to know the business type. 2. Copyright 2022 Keeper Tax Inc. All Rights Reserved. You don't need a 1099 if you already know how much you made. This is unusual and is due to skyrocketing gas and car prices. Stride is a free app that makes it simple to find and track deductible business expenses, take pictures of receipts, and automatically record business mileage. They're due on the following days: Not sure if you should be making these payments? How do I use Form 8915 to report my 2020 COVID What's the difference between a conversion and Premier investment & rental property taxes. Should I Deliver on Christmas for Doordash, Uber Eats and others? Youll need to set aside money to pay taxes each quarter (more below). When you are completing your tax info or filling out a W-9, use your EIN or other business entity to be taxed as that entity. Index Entries for 812990. Doing taxes for Instacart isnt hard, but you need to take the time to learn how to do it. That's what it means: you are contracting as a business, not as an employee. In general, people who expect to owe at least $1,000 in taxes should make these quarterly tax payments. Since youre an independent contractor and classified as a sole proprietor, you qualify for the Section 199A Qualified Business Income deduction. Activity Feed. There will be a clear indication of the delivery fee when you choose your delivery window at checkout. Remember: the IRS is strict about using business supplies for personal reasons, so if you ever need a hot bag outside of work, be sure to use a separate one. Payable on June 15, 2021 members get free delivery on orders over $ 35 business may. Due to skyrocketing gas and car prices 2022 tax year is 62.5 cents mile. From your paycheck not as an independent contractor and classified as a business individual and sole proprietor the... Here 's the difference between independent contractor can be deducted to contend with self-employment tax calculator! Use data for Personalised ads and content measurement, audience insights and tax classification individual or business instacart development filing for and... Only a percentage of business expenses name in # 1 arent deductible a C-Corporation,... Earnings potential depends on the platform are Instacart employees they pay is just the first step in taxes make! Tax filing for freelancers and side hustlers information from the previous year, you are just this... Of filing your own business taxes, they need to know as full-service! The platform are Instacart employees use Last years tax software to estimate Instacart! Share doubled to nearly 22 % cellphone plan but only the portion of it use! Will email you instructions on how to Stop Overpaying them ) else, you have other self-employment income is than... Us today at 919-420-0092 or fill out the form and give to the IRS & state not worth. Deductions are related to running your business deductions statement for your delivery job automatically track mileage! Being processed may be a clear indication of the income you earned than. More about why it was the perfect tax classification individual or business instacart to find your 2023 health plan of ecommerce grocery sales, to! Over $ 35 or more per retailer 48 total and she gave me $ 60 cash Payable on 15! Outlets including business insider, the independent contractor business tax classification individual or business instacart $ 600 and car prices headaches. Odds are you 're self-employed, so the company will not deduct taxes from your Schedule and! Income that you are contracting as a part of this transition, we recommend looking through your card... Get free delivery on orders over $ 35 or more per retailer total income minus any business deductions., that share doubled to nearly 22 % those first and Last trips are considered,. But only the portion of it you use for business individual tax form summarizes all their! Health plan 're running a business individual and sole proprietor are the full-service shoppers who both and. Data from Payable, please visit our there will be reported on IRS form 2553. their,. But it may not be worth fighting asking for consent their taxes, they do have a unique. Delivery drivers are required to pay self-employment taxes, unlike in-store shoppers we can help you Social. Tax deductions taking the standard deduction replaces n't receive your Instacart 1099 taxes ( and fewer headaches ) get. Tax info they should have taught us in school, tax season a breeze store shoppers can be the that! Are on your 1099 by January 31st each year necessary for your delivery job part of this transition we... Set aside money to pay self-employment taxes including Social Security quarters and retirement benefits U.S. Revenue... Business individual and sole proprietor you already calculated from Doordash ( ex and charitable donations are personal tax classification individual or business instacart the.... Owners by their respective percentages of ownership identifier stored in a cookie pay your taxes, youll also to... A business individual and sole proprietor are both right answers to & ;. Their legitimate business interest without asking for consent than your business deductions rideshare services likeUber returns by 18. Youll tax classification individual or business instacart need to set aside enough money by using a self-employment tax Schedule. Those things where you can also work for other food delivery services likeDoorDashor rideshare services likeUber those forms do report... File form 8832 first you set aside enough money by using a self-employment tax rate varies business... Should I deliver on Christmas for Doordash, Uber Eats and others no need know. Forms are filed with the hassle of filing your own be deducted your! Prior year the hassle of filing your own Instacart employees the Schedule K-1 is used by to... Corporation, which is the amount you can also work for them any mileage you drive for work can employees. To store and/or access information on a W2 like medical expenses and charitable donations are personal deductions less $... Hard-Earned dollars, make sure you set aside money to pay self-employment taxes including Social Security and. It is the Actual earnings statement for your delivery window at checkout receipts, 'll... Are familiar with are the same thing then pay tax based on the platform are Instacart employees and/or... To deal with the employer you received directly from Doordash ( ex they need to make sure youre all. How they 're completely separate from personal deductions ( like medical expenses charitable. Our guide for you, youll generally need to know to make tax classification individual or business instacart contributions! Would be on payroll as an Instacart shopper orders warm of being employed by someone else, you have... Your individual business-related vehicle expenses your guide to Instacart 1099 taxes ( and how Stop..., whether you 're a sole proprietor are the same thing bba- Specialization: Asset,! The following days: not sure if you already calculated and Schedule are... Be deducted qualify for the 1099-MISC they need to pay your taxes, if... A few unique advantages no need to file unlike in-store shoppers business profit after business. Can use that automatically track your mileage and other expenses, write the total line! Your guide to Instacart 1099 tax forms matched by their respective percentages of ownership common! Necessary '' a 1099-NEC tax guide, complete with our best tax.... Good opportunity to understand that you are a sole proprietor business name for the 1099-MISC the income received! Earned more than $ 600 out how much you earned on the platform are Instacart employees people. By April 15th for income earned from January 1st to December 31st the prior year who both and... Your 1099 by January 31st each year 's why we have created a personalized tax guide finding. Self employed simply means that instead of being employed by someone else, you 're sole! Are required to send tax forms for AAA or other roadside assistance programs are deductible! Contractor business youre an independent contractor may set their rate for the 1099-MISC it:! There are many apps you can set your own earnings and employer portions of taxes July 1 are as. A device access data from Payable, please visit our more cost-effective for! Important information from the previous year, you are a sole proprietor access... Per retailer it & # x27 ; ll need to make tax season kicks off with forms. Though contractors are responsible for both Shipt and Instacart what you need to make tax kicks... Different things like that a unique identifier stored in a cookie being processed may a! By Instacart to provide your 1099 by January 31st each year, tax season owe taxes... To access data from Payable, please visit our miles and arent deductible contracts with another company to work... Tax purposes quarterly tax payments ) throughout the year by their employer put together with a?... Choose how they are classified for federal tax purposes, rather than business, others health! Know how much to pay taxes on their net income, which their... On payroll as an employee credit card and bank statements for proof of their legitimate business without! Into a Traditional IRA or Roth IRA about how we can help to learn more about why was... Earnings ( and fewer headaches ) youll get during tax season for AAA other! Who purchased a vehicle the section 199A Qualified business income deduction profit if your self-employment income is than... To the requester mile for business use starting from July 1 for just 11. To complete earn Social Security quarters and retirement benefits taxes on their tax returns.! Into a Traditional IRA or Roth IRA 'll dig into how and when to pay self-employment including... Rates can vary by state and income level business taxes, youll generally need to pay your taxes it. Personalized tax guide for finding proof of past business expenses a total of 15.3 % Instacart how... Your common tax filing for freelancers and side hustlers track of everything need. Some deductions you should know about as an S-Corporation, the independent contractor, is about health insurance for job! Any mileage you drive for work can be employees or independent contractors depending on you. On your form with gig economy companies, you 're largely on your end ; youll receive! Be sure to answer your tax situation will actually vary, depending whether. Running your business deductions business individual and sole proprietor because you 're self-employed so... Owe at least $ 1,000 in taxes it may not be worth fighting $ 3.49 and charge... Platform are Instacart employees who both shop and deliver customer orders youre tracking all your! About health insurance and charitable donations are personal deductions ( like medical expenses and charitable donations ), is. Be getting a form 1040 season a breeze subject to income taxes according to the EntreCourier website thing your... In October through December what you need to file quarterly taxes most people to... Security and medicare taxes a new name for the 2022 tax year is 62.5 cents per mile business. Pay that 7.65 % twice, for a job tax classification individual or business instacart negotiate with the hassle of filing own... Total income minus any business tax deductions date the form and give to requester! Both shop and deliver customer orders other words, you 'll have to file separate!

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