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1099 Question

April 17, 2011 11:39AM
I am wondering how this is calculated for companies which offer a flat fee which includes reimbursement for all their shops. I sometimes have overage and sometimes underage so will the company calculate that or will I receive a 1099 when I reach $600 based on the total flat fees which does not sound fair to me and I will be doing a lot less shops with this MS company. I know another MS company is very clear and states that a 1099 will be generated when shop fees total up to $600 and that excludes reimbursement which is separately totaled. It's tax time so it got me thinking to prepare for next year. Thanks.
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More About Mystery Shopping Taxes
April 17, 2011 01:13PM
G3B,
Regardless of how they are SUPPOSED to report this, some include actual amounts paid as reimbursements in the 1099, and some do not. For those that pay a flat fee but requires a purchase that is not "reimbursed", you must have records of what you spent, and then claim that as a business expense on your Schedule C, just like you claim your auto expenses, office supplies, etc. I find it easiest to maintain a credit card that I use exclusively for shop expenses (reimbursed or not). Then I download the cc statement directly into Quicken, code the expenses to match the specific lines on the Schedule C (Quicken supplies the codes), and at tax time, just import the results directly into Turbo tax.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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April 17, 2011 02:37PM
Some shops require cash and I use a variety of credit cards, payments come in by direct deposit, paypal and check. Thus I find a spreadsheet works best with columns for fee, bonus, reimbursed expenses, unreimbursed expenses (such as from a flat fee shop) and mileage. A recap sheet gathers all monthly totals so all income and expenses are ready to put into a Schedule C, with the majority of the data entry done when I accepted and reported the shop. And of course some shops are fee only, some are reimbursement only, some are flat fee and some are a combination of fee and reimbursement, so you have stuff coming from all varieties and being paid you by all varieties. To your original question, indeed flat fee jobs are reported towards the 1099 as the full amount paid you for the shop.
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April 17, 2011 03:39PM
Re: 1099s, there's only one company from whom I received one, and they did include reimbursements.

I'm still working out how I'm going to deal with this (and thank you, Flash and walesmaven for your responses to my post about taxes). I'm now on extension, so I have some time. Part of my thought process is likening it to companies for whom I've worked as an employee. When you submit an expense report and are reimbursed, it's the company that takes the deduction. So, technically, it seems like if the MSC does NOT include reimbursements in the income total, the shopper would be able to claim it as an expense, but if they DO include it, the deduction would actually be one for the company to take. The wild card, of course, is that without checking with each MSC, there's no way to know how they're calculating it (unless you've received a 1099).
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April 17, 2011 04:33PM
As far as IRS is concerned, the money that came to you as a reimbursement is just that and is not taxable to you. The company is just wrong to claim it as income to you (yes, they are being greedy and ignorant). This is where it is handy to be claiming ALL of every payment and then deducting ALL reimbursements and unreimbursed expenses.

Lets say I have $10,000 in total receipts and $1000 is from the company with the flaky 1099 and $1000 is a 1099 from a company that did it right. I list the 2 1099s for a total of $2000, just as shown on the 1099s. Now I put in all other receipts as a single item, so there is the other $8000.

I happily go on down the form listing equipment, supplies, mileage, yadda yadda, and when I get to Part V of the form, "Other Expenses", that is where I deduct all reimbursed business expenses as a single line item titled "Reimbursed business expenses claimed as income" and on the line below pull out all of the flat fee and other unreimbursed business expense as "Unreimbursed business expenses".

You do not submit copies of the 1099s with your return, you are appropriately claiming EVERYTHING and then subtracting out what you are entitled to subtract out. The numbers all eventually work and you should be golden.
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April 17, 2011 08:37PM
What Flash said!

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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