Tarantado Wrote:
-------------------------------------------------------
> Sorry, this may be the wrong thread to post in,
> but when a MSC gives distance pay, I am assuming
> this is considered as a "bonus" to your fee –
> thus, it is taxable. Does this amount of distance
> need to cancel out with the miles x IRS rate to
> avoid double-dipping in your taxes?
Your tax computation:
Take all the money you got from the MSC
Subtract all the money you paid out for reimbursements
Take a mileage deduction based on 56.5 cents per mile *or* do the actual expense thing which includes gas, oil, insurance,
depreciation, repairs based on the percentage of that vehicles total miles that you drove it for mystery shops.
You need to report everything you got from the MSC as income. There is no double dipping involved. Everything you get from them is income, and you deduct your expenses from the income to come up with the taxable amount.
(Yes, you can "not count" the reimbursements as either income or expense, but it is so much easier and cleaner to track if you just track income in one column, required paid outs in another column, and mileage in its own column. Some MSCs include the reimbursements on the 1099; some don't. Some don't actually reimburse. They give you a flat fee and you buy your own pizza. Some only reimburse; there is no fee. Keep it simple. You also need to know that if you pay for something you should be reimbursed for, and they deny the shop and don't pay you, what you paid out is still a deduction, as is your mileage. If you just figure, "I won't count the reimbursement as income" and you never get paid at all, you might forget to deduct what you paid out.)
It doesn't matter "why" they paid the bonus -- for mileage, or for desperation to get the shop done -- you are a contractor so everything they pay you to do the shop is part of your income.
Time to build a bigger bridge.