Temaire, I'm not understanding the significance of what happens after you make $400. Although I could be misunderstanding, it sounds as though you believe the first $400 you earn is not taxable. Actually, ALL earnings should be reported and taxes are owed. After you earn $600 in a year, a company will send you a 1099, but regardless of whether or not one is received, you are required to report all income and pay taxes.
As far as not having mileage as a deduction, I believe it would still be beneficial to mystery shop. Taking the deduction when a shopper uses a personal vehicle offsets the costs of the vehicle. If you are not using a personal vehicle, you would not have the costs associated with the vehicle (purchase, gas, maintenance, insurance). By taking the bus, the only carfare expenses you must deduct from what you are paid are the bus cost. Those who drive a personal car must figure the cost of their vehicle before determining the net pay for each shop. And then we all payultaxes.
Wish I could use public transportation to shop. - in fact, I wish we had a public transportation in my area that I could use at all.