I will try to explain this as easy as I can. I have been working on my taxes this weekend. I work a full-time job that as of June 1, 2012 cancelled usage of the company fleet card for gas. I work out in the field on a daily basis; I only visit the office once every two weeks for payroll. I also mystery shop as a part-time job and you all know how that goes.

I have kept track of my mileage on a daily basis but I am finding it very hard to figure out the mileage totals for my FT job and MS'ing when both are intertwined all throughout the day/night. I have starting and ending mileage per day and 90% - 95% of the time, recorded the individual mileage from Point A to Point B to Point C, etc. But there is a big gray area. And I just have the numbers written in a binder; I never transferred all the numbers to an Excel spreadsheet. And it would take too much time to do it now.

I guess my main question is...Does it really matter? Mileage is mileage, right? Since my company stopped the gas cards in the middle of a calendar year and I was already MS'ing during that time period, shouldn't I be able to just give a grand total for business mileage (whether FT or PT) starting from June 1, 2012? Or is it necessary to have every single mile separated?

It is getting so confusing and time-consuming, I am about to give up the whole mileage thing and not even claim it! I know, I know. That is money down the drain. What are your thoughts?

I would think mileage for your FT job and mileage for Msing is just that mileage. Claiming them all for a total deduction. However, I would think, in the case of audit, after your taxes are done I would separate out Msing mileage and FT mileage.

I am a not a pro, and not positive, but that is how I would do it. Hopefully some others here have something to say about it too.

You need to know your total mileage overall and depending on
how you do your taxes, total mileage for regular business
and your total mystery mileage. Not individual trip breakouts,
though if you ever were audited, having that separated would
make things go smoother, but not necessary.

There is also a quesiton on the tax form that says, do you have
written proof of this mileage deduction? You can check the "no" box.

Also make sure you know your personal and commuter miles...

Does your employer reimburse you for mileage you report to them? If so, I would figure out how much I reported to the employer first since the IRS won't allow you to take the deduction on employer-reimbursed mileage. I would also subtract my 1/1/12 odometer reading from my 12/31/12 reading. Estimate how much of the mileage was personal. Whatever is left, deduct for mystery shopping.

You do need to have a log for the IRS if you are audited (I know from experience), so best to start now moving forward if you haven't already. If you do get audited for 2012, only then would I spend the time to allocate the mileage I reported for mystery shopping to a daily log for what has happened in the past.

Mileage deduction is too valuable to not report. I suspect most shoppers report very little real income from mystery shopping once they deduct their mileage.



Edited 1 time(s). Last edit at 04/08/2013 12:45AM by jonk.

You need to consult a tax professional on this or go to IRS.gov and read up. My opinion is that the mystery shopping mileage must be claimed on a Schedule C for that business. The mileage in connection with your regular full time job must be claimed as an employee business expense, which is a whole different thing.

How I wish our industry had a tax professional specializing in preparing our kinds of returns. There's a suggestion for the IMSC - let's get someone trained and educated to do just that. Whoever took it upon themselves to fulfill this niche could turn a nice profit.

The IMSC has a tax professional who is at every confereence, makes presentations there and has many entries on the IMSC site.

Seriously, Wales? Is this individual looking to pick up more clients?

Mileage for your day job is reported on Schedule A. Mileage for mystery shopping is on your schedule C.

You really need to talk to a tax professional about this. I've read the rules and it's very complicated. If you go to a tax pro, and you get audited, and he did it wrong, usually they will pay any penalties involved. The way I read it, it is really complex when you have both a day job and self-employment because travel between two job locations is only deductible if they are to job locations in the same industry -- such as two locations for your day job OR two mystery shop locations, but travel from day job to mystery shop may not be deductible, and some of it depends on the home office status -- going from your mystery shop home office to your day job may not be deductible; going from home office to mystery shop is. Going from day job to mystery shop isn't. Going from mystery shop to home office is.

Makes my head spin. If you're running errands for the day job, as opposed to simply commuting to and from it, and mystery shopping at the same time, you've got a real can of worms.

I believe you said you have 95% of the point A to point B to point C written down in a column in a binder. It sounds as though you know which of the points to points is for mystery shopping. Since you have this already done it seems a simple task to just add up the miles for the "point to point" travel you have for your mystery jobs and deduct that from the total miles you drove to get the mystery shop miles vs the full time job miles. You can highlight in yellow as you go along on the mystery shop miles. Later if you do get audited you can use this to put it into a form the IRS would be able to read. I would not do the excel spread sheet work now but wait and see if it is requested. You do have the info so you are not lying by saying you do not.
My understanding of the tax law is that you can deduct miles from home or from work, where ever you left from. If you are at work (on the road) and being reimbursed for those miles or not you cannot double dip on the miles so you would only deduct the extra miles for the detour to the mystery shop job. I am not an expert though.
Perhaps I am misreading what you said. I would be more concerned that you are possibly giving misleading info to your full time job and asking them to pay for more than they should be.
I finished my tax prep work last week and I remember how terrible it felt while I was mired in it...things will look brighter as soon as you turn it in. Now is the time to start getting ready for next April and keep better records.

everyone is making it more complicated then it is.

Figure out how much you drove for the whole year,
how much you commute each day and personal miles.

Subtract that amount from the total miles and now take
those miles and separate as you see fit between your
employee job and your mystery shopping work

Check the box no that says do you have
written proof of it.

End of work.

I think part of the problem is she does not just drive back and forth to an office for the day job, that would certainly be easy peasy. If you have a large portion documented, why not just take the deductions you can back up. Granted you would not be taking as many as might be allowed, but IMHO paying a few bucks might be preferable to trying to explain to an auditor that your record keeping was lax.

Saying No, you don't have written proof sounds to me like a good way to get the IRS knocking on your door with their hand out. My understanding is we are REQUIRED to have written proof (or some kind of proof) in order to support the deduction. And OP does have the proof and it IS written, so why would you suggest she say she doesn't? I am not understanding the logic behind that advice.

There is an option on the form asking if you have
written proof. If you mark yes, then they will ask for it.
If you mark no, they can't ask for it since you don't have
it. Instead they use the average percentage for you area
of business miles vs personal miles on your vehicle. If you
drove 30,000 miles on your vehicle last year and you say 28,000
was for business and you have no other vehicle available for
personal use, you will trigger a flag because the percentages don't
add up.

As long as your percentages are within their margin of error, they
will leave you alone.


itsasecret Wrote:
-------------------------------------------------------
> Saying No, you don't have written proof sounds to
> me like a good way to get the IRS knocking on your
> door with their hand out. My understanding is we
> are REQUIRED to have written proof (or some kind
> of proof) in order to support the deduction. And
> OP does have the proof and it IS written, so why
> would you suggest she say she doesn't? I am not
> understanding the logic behind that advice.

Lisa's got it right.
No possible way that the tax savings on the small portion of miles that you can't quite account for and might get dinged for could outweigh the peace of mind in submitting something that you know can be justified, and certainly the lost deduction of the unclaimed miles is less than what you'd lose going to and paying a tax expert at this lated date.

LisaSTL Wrote:
-------------------------------------------------------
> I think part of the problem is she does not just
> drive back and forth to an office for the day job,
> that would certainly be easy peasy. If you have a
> large portion documented, why not just take the
> deductions you can back up. Granted you would not
> be taking as many as might be allowed, but IMHO
> paying a few bucks might be preferable to trying
> to explain to an auditor that your record keeping
> was lax.

Lisa is right. I work in media so it is not an 8 to 5 job. And I go from one assignment to another assignment without going into the office except for payroll which is every two weeks.

There are times, like tomorrow, where my media job does not start until 1PM. If it wasn't for a dr.'s appt. in the morning, I would have booked up my morning with MS'ing then I would have driven to my first regular job assignment. I would not have driven back home just to record that as my starting point.

Like I said, it is confusing. And my mind does not work like a computer or a calculator like Techman01. But he has been a great source of information even though he probably gets frustrated with me at times. :-)

P.S. Before LisaSTL starts whining, she has been a great source of info also as well as many other members of this forum. (Wow, that felt good. It has been a long time since I have been a wise-a** to Lisa!)

Techman, from what I just read, if you say "no, you do not have written evidence," they are perfectly free to disallow the deduction in its entirety and one source cited a 2009 case where a realtor's entire mileage deduction was disallowed because he "estimated" his business mileage (presumably having no written records to back up the estimate). The burden is on the taxpayer to prove ALL deductions. You are not letting yourself off the hook for producing the proof simply because you say you don't have it. I've been googling all over the internet since you posted that explanation and everything I see says that if you don't have records, they WILL disallow the deduction on audit. Once disallowed, it's up to the taxpayer to appeal the matter, maybe to get some form of "industry standard" mileage deduction reinstated although it doesn't appear that happened in the 2009 realtor case. Why go through all that -- especially if you DO have the records? Have you actually prevailed on an audit using this strategy? I would think the IRS would be more likely to audit someone who admitted they didn't have proof for their deductions, but I'm just guessing there.

I'll bet that realtor is kicking himself for not keeping that log now -- he lost an 8000 mile deduction which works out to about $4000 back then, the SE tax alone on that is about $600 and the regular tax probably another 20% or so and to get it to the tax court he probably had to pay a lawyer -- and still lost the deduction.

If you did get audited, then you show the written proof
that you do have. My accountant worked for the irs for
30 years before retiring from there. As long as your
percentages fall within the correct ranges, it will not trigger
a flag by the system and you will be left alone. If you
put down you do have written, then an automatic letter
may be generated just to see those records, not a full audit.
Just a simple inquiry as part of their sampling.

I have track of my mileage right down to the mile with in/out
each time I make a trip. Then each of those are sorted by month
and by quarter through all my excel spreadsheet linking.

Ah, okay. So you're saying it's okay to SAY you don't have records, but you still should HAVE them. Got it. Thanks. The realtor went down because she didn't have any records at all.

The other issue is, if you have a regular job, and only do
a few dozen or so shops a month, it is likely they will not
allow any deductions and consider it a hobby


itsasecret Wrote:
-------------------------------------------------------
> Ah, okay. So you're saying it's okay to SAY you
> don't have records, but you still should HAVE
> them. Got it. Thanks. The realtor went down
> because she didn't have any records at all.

I am so glad that itsasecret and Techman01 have kissed an made up. :-)

BTW, I am hiring someone to actual prepare my taxes for me but I was told to have my figures/records/paperwork in order.

In my three-ring binder, I keep my print outs of my daily schedule and my Mapquest directions. I know I am wasting a lot of paper but I like having a visual copy. And I do the same thing as Techman01... I write my arrival and departure times on that daily schedule for both my "real" job and my MS'ing job. (I am trying to work on my time management and keeping track has helped.) I just never took those figures and actually put them into an Excel worksheet. I just got lazy and I wanted to have a social like now and then.

Now back to the exciting world of numbers...ugh!

Glad they kissed and made up. Now back to us, you want any more advice and you can call my toll free number. If you don't already know what it is, just ask and I'll send you a PM

We weren't fighting, I was trying to understand why he was suggesting something that sounded to me like it would be MORE likely to draw an audit. His explanation makes sense but I just couldn't find anything on the internet saying just WHAT would happen if you marked that box "NO." All it said was if you did, your deduction would be disallowed. I've always been told by my various tax preparers over the years for a number of different businesses to mark Yes and cross your fingers that you don't get audited, or be prepared to create the records if you don't have them if they ever asked. (It hasn't been an issue for the last 15 years because I DO keep a log) So that's what I've always done, marked it Yes. The whole thing that techman was describing was counter-intuitive and I have a need to understand things.

yes you need to have all your numbers in order for
someone else to be able to do it. It takes seconds
a day to put in the mileage driven for that day into
a spreadsheet.....need to do that this year, makes
end of the year much easier

One of the qualities of being a mystery shopper is the ability to follow directions. When the IRS says, "keep a log," I keep a log.

Wait a minute. Are you saying guidelines are not just a suggestion?

techman01 Wrote:
-------------------------------------------------------
> The other issue is, if you have a regular job, and
> only do
> a few dozen or so shops a month, it is likely they
> will not
> allow any deductions and consider it a hobby

I probably average 40-50 shops per month along with my FT job. Yes, I don't sleep much. :-(

LisaSTL Wrote:
-------------------------------------------------------
> Glad they kissed and made up. Now back to us, you
> want any more advice and you can call my toll free
> number. If you don't already know what it is, just
> ask and I'll send you a PM


Is it 1-800-BITEME! :-P

Or is that the help line # for the IRS?

Did you figure that out on your own or did someone PM you? Meanwhile could you send it to mnarius, he needs my contact info in order to have his lawyer sue me.

"Help" line and "IRS" do not belong in the same sentence.