I'm still relatively new to mystery shopping (I started in March), but I can't get my head around the mileage question.
I know we can claim 55.5 cents per mile on our taxes for business miles driven.
What I can't figure out yet is how that translates to real life. What I'm asking, basically, is does the reinbursement really compenstate for driving extra distances? And I realize a lot depends on how expensive it is to keep your personal car on the road.
So what I'm looking for here is advice from veteran shoppers who drive a lot of miles on the job. When you drive those routes, for instance, are you taking a financial bath from doing the extra miles, breaking even, or coming out a little ahead?
> What I can't figure out yet is how that translates
> to real life. What I'm asking, basically, is does
> the reinbursement really compenstate for driving
> extra distances?
You will probably get a lot of different answers to this one. If you drive (for example) 100 miles and you made 100.00. You deduct 55.5 cents per mile. So as far as the IRS is concerned, for that trip you only made 44.50, So you pay less taxes. I am sure that we are all in different tax brackets, so some will save more than others. You can also depreciate your car over time. My problem is that if I continue to put the mileage on my car that I have been over the past 2 months (about 1,000 per month) Then I will need a new car MUCH sooner than I would if I wasn't doing this. Wear and tear on a car is a bigger issue to some than to others.
Silver certified, I shop in Cities in NM and TX that no one has ever heard of.
Mileage deduction is a definite perk to this job. If you bundle your jobs or do the shops along a route of your regular errands, you are able to deduct 55.5 cents per mile making your bottom line worth more than just your fee for those shops. For instance, if I have to make a trip 70 miles away for another reason, I add one to ten shops along the way. The 140 miles of driving that I would have done anyway now gives me $77.70 to deduct from my income for IRS plus whatever fees and reimbursements I have earned. Does it make sense to drive 50 miles for one shop for the sole purpose of that shop? That would depend on the fee, but most likely the answer would be NO, even with the mileage deduction. So, it will depend on your route, the number of shops you have and if your heading that way anyway. Mileage deduction is the largest expense I have each month and it keeps my reportable income down to almost nothing, while in reality, I am making money at this. You absolutely MUST keep track of your miles. Why pay taxes on that extra money when you can have a legitimate deduction? Just be sure to keep track of miles for each job and record it on a log sheet or whatever you use for daily/monthly tracking. It makes it much easier if you are ever audited to show the miles driven...I don't think anyone would be able to backtrack to add those kinds of miles to a log after the fact. It has become second nature to me to record the mileage on my paperwork and reset the odometer for each trip.
The more I learn about people...the more I like my dog..
You hit the nail on the head when you said it all depends on your personal situation. Case in point, for me, the only time I worry about the 55.5 cents/mile standard is during tax season. I go with my actual vehicle costs when calculating job or route profitability. For me, it works out to between 20 and 25 cents/mile in travel costs, including fuel, maintenance and tire costs. Knowing that, I can quickly calculate if a job is profitable enough for me to take.
So how do you figure the operating costs for your particular vehicle? I can figure out fuel costs, but how does one calculate the other costs? Especially the eventual vehicle replacement thing?
I'm currently driving a 2003 Dodge Caravan that gets about 20 mpg. We do oil changes every whatever miles, but usually I do them on a mystery shop so it's reimbursed. Tires? Other maintenance? Eventual replacement? How does one calculate those?
Happiness is merely life's way of keeping you off-balance.
> I'm currently driving a 2003 Dodge Caravan that
> gets about 20 mpg. We do oil changes every
> whatever miles, but usually I do them on a mystery
> shop so it's reimbursed. Tires? Other
> maintenance? Eventual replacement? How does one
> calculate those?
Just because an expense is reimbursed doesn't mean that it's not incurred. I always factor in expenses regardless of whether I find shops to offset them, because sometimes I may not get that shop. I estimate oil change expenses at $0.006/mile ($25/4000).
My primary vehicle is still under 20,000 miles, so I don't calculate wear & tear, as everything aside from maintenance is still under warranty. I still tack on $0.02/mile for fluid changes and other scheduled maintenance though.
Tires will vary per vehicle, but the way I calculate them is the price for a set of 4 divided by expected life. A set of 4 decent tires for my vehicle is roughly $900, and should last approximately 50,000 miles. So, I factor in $0.018/mile for tires.
As for vehicle replacement/depreciation costs, it's a very fuzzy science. There are so many variables such as vehicle condition to take into consideration, coupled with the fact that you're essentially trying to predict what the vehicle resale market will be at some point in the future. One thing that I may try to do in the coming year is mark the book value of my vehicle in January and the book value of my vehicle in December. I would then look up the book value of my vehicle in December, but subtract off the mileage used for shops and see the difference. I could then divide that difference by the amount of shopping miles to get a per-mile accelerated depreciation cost and add that to next year's calculations, so long as I expect to use the same amount of miles in that year.
I had no idea what the expected life of tires was, but I suppose I could have googled that. Is 50,000 a "generic" number for standard tires? Do different types of tires have different life expectancies? Oh, and aren't the other fluid changes included with oil changes? I thought they checked & re-filled several fluids. I'm probably wrong though.
I like your idea of estimating depreciation costs, too.
So far as replacement, we've only once spent more than $2500 for a vehicle. The current one was $2200 back in 2007 (or was it 2006?), and it's been running fairly well for all that time. Although there were two 'few hundred' dollar repairs over that time (damned if I can remember what for) and a couple of cheaper fixes.
The only car we paid more for, blew up in an accident. Literally. Huge fire-ball, and everything. Fortunately, right after I got out of it. Unfortunately, I was unable to get my two doggies out. :*( Another $2000 car, I accidentally forgot to set the parking brake and it rolled down-hill, and was squished into a telephone pole. Thank God no one was in it ~ human or dog. The other $2000 car, the transmission eventually practically fell out ~ after running pretty damned well for a very, very long time (I think almost 8 years). I get the cheap car thing from my Dad... I remember one car from my youth, we only paid $400 for, and it ran beautifully for several years before the engine went out. Ugly as all get out, but ran beautiful. But I've never had a car with only 20,000 miles ~ it would be a luxury to me! hee.
Happiness is merely life's way of keeping you off-balance.
can't pass the audit station test. Said I missed Questions 5-6-9 I answered 5 True, 6 pay points, pump islands & and any vehicle or lube bay areas.B. 9 pump toppers, pay points,canopy columns,perimeter poles C