All this talk about reporting income and complying with the 10,000 amendments to the tax code. If you make a mistake you can go to jail or be audited randomly even though you did nothing wrong which will require a taxpayer to spend time and money. I was audited and the IRS found I paid too much. That does not happen often. I was afraid to take items I was entitled to and I kept very good records.

It would be so much simpler if we did not pay a federal income tax. Criminals do not pay income tax as the 5th amendment protects the criminals from reporting income from criminal activity. Illegal aliens are not asked to contribute to operating our government but they do use public services. The wealthy sends lobbyists to their elected officials who have passed over 10,000 amendments to the tax code giving the wealthy legal exemptions the middle class and poor can not benefit from. Tourists come from many countries and are served by federal, state and local agencies that are supported by taxpayers.

All of these groups, criminals, Illegal aliens and tourists pay state taxes when they spend the income they earned. You cannot say the concept of taxing money spent will never work as sales taxes are collected by all but a few states. In those states it does not matter how they earned the money. The wealthy, criminals and others not presently taxed at the federal level do pay taxes when they spend their money.

The merchant does not ask where the money came from. The merchant does not give the customer complicated forms. If you do not pay the tax the merchant will not sell you the merchandise or service or they may hide the sales tax in the cost of the item and claim they paid the sales tax for you.

When you pay a sales tax you do not need to go to an accountant and pay an accountant to prepare your taxes. You can use that money to buy more Christmas presents or go out to dinner and a movie. You do not get scam artists offering to help you with your sales tax issues because it is "pay as you go". You are not surprised at "tax time" that you owe an amount you can not afford.

When the middle class has more money to spend because the wealthy, Criminals, Illegal Aliens and Tourists are contributing when they purchase items merchants will make increased sales. Employers may need to hire more employees. Restaurants and hair dressers and other services will see more customers and will increase their staff. Entrepreneurs will open businesses and hire people. All of these new employees will pay sales taxes when they spend their money. They will not be on welfare or unemployment. The government will have more money to repair roads and other projects. Those construction people hired to repair and build new infrastructure will pay sales taxes when they spend their money. The economy will prosper as local services and businesses serving local people can not be exported out of the country.

Because the wealthy have more money to spend they buy more expensive homes, cars, clothing, vacations and other items. They go to high end malls and eat at fine restaurants. The middle and poverty class buy less expensive items. With the Wealthy, criminals and others paying a sales tax when they spend money the middle and poverty class will pay less to support our federal government.

This is an idea worth writing your Senators and Congressmen and women about. We should not be bullied by the IRS who will still have jobs monitoring the businesses and comparing the invoices of suppliers with the invoices of the merchants. Unless a business that offer services is keeping a dual set of books merchants would have to collect sales taxes on the services they offer and report them reasonably.

Dave,
By consensus, this forum is a politics-free zone. I realize that,as a relative new-comer, this may not have been evident. It's not one of th owner's few rules, but it has been calmly debated several times, and agreed that we wil not be engaging in politics or discussions of governement policy. Major changes to the tax code would seem to fall into that category. Just thought you would like to know.

Remember that you have to show a profit 2 years out of the last 5 years or it is considered a hobby and then it is all fully taxable. No business deductions allowed! Then you get dinged for back taxes and penalties. They got me on that back in the eighties, when I was just a young pup.

Thanks for the heads up. Does anyone ever have expenses that are higher than income? Can we claim office space?

I have occasionally had expenses higher than income due to buying equipment, phone usage, internet usage, mileage (of course), and other things. If you qualify under the IRS rules for a home office, you can deduct those expenses.

*Everybody* has to pay taxes!- Even businessmen, that rob and steal and cheat from people everyday, even *they* have to pay *taxes*!

Jonathan Winters as Lennie Pike in "It's a Mad, Mad, Mad, Mad World"

I can't even come close to staying under $400 profit after business expenses have been accounted. I don't know how you guys do it.

I only managed to "lose" money in one year. All the other years, I make several thousand dollars after expenses and I pay my taxes (income and self-employed FICA and state income taxes).

I also earn income from online writing. I did very well this past year and I will claim a profit as I did last year. However, two of my online writing sites closed and the site I'm at which I'm presently writing has decreased earnings by at least 3/4 of what I earned last year. I hope mystery shopping will make up for lost income earned my writing sites that are now defunct.

I have a home office that I use 99% of the time for my writing and now, mystery shopping. Does anyone know the guidelines for claiming a home office? I have never claimed it before. My accountant recently passed away, or I would be asking her.

Lorrie - others will probably chime in, but here is my opinion. go for it. 99% rounds off quite well to 100%.

This is a link to an IRS explanation which is actually written in reasonably clear English: [www.irs.gov]

Thanks for the link. I will check it out!

I spoke with my former employer and it's .56 a mile for 2014.

He did say if they don't split out the money for special expenses and expenses...take it all. In other words, find every thing you can to use as a deduction on your Schedule C.

Theoretically, reimbursed expenses and gas expenses should be separate. Legally, they should be separate.

Without seeing my 1099's, I can take the money for silver certification and my new GPS. If it all comes as one lump sum, I can also take mileage. He also said office supplies. As a former tax preparer I wouldn't recommend trying to write off part of the house. It's iffy at best and a sure fire trigger for the IRS to come looking for you.

As far as reimbursed expenses, I wouldn't go there and he didn't think it was a good idea either.

NO way am I an expert at taxes anymore, so please do not trust me and find a professional.

One thing I will definitely not recommend is getting an immediate refund from certain tax preparation companies. If they do it wrong and they do. You're stuck with the grief, even if you purchase their 'insurance'. If you have a checking account your refund will come within 10 days usually. 9 times out of 10, the IRS will not hunt you down 2 years later if it was wrong.

One thing I will say is this...if you didn't keep accurate records this last year.

DO IT FOR 2015!

If you don't...please save all your receipts by the month. Do not try to organize.
As a former tax preparer, I'd rather see shoe boxes of receipts than tell you; that you owe money. Honestly, it took me all of 3 hours to go through the most unorganized receipts. If I was left alone, I could help save money that year or at least tell my clients how to save money the next year.

I'm thinking about buying new Bluetooth headphones for my computer, but I'm not sure if the IRS will allow that as a legitimate business expense. My old headphones are falling apart!

Good news for mileage reimbursement. It's going back up to 57.5 cents a mile in 2015.

If you use the Bluetooth headphones for your business, you can take it as a deduction, but like all your other computer-related expenses, you will take the percentage based on the ratio of business and personal use.


I'm about ready to bang my head against the wall here.

P-L-E-A-S-E .... if you are not a currently active professional tax preparer ... please do not give tax advice here.

I spend about a fourth of my time on the forum correcting misinformation that is given out by people who understand a little of the law, but not enough to be giving advice to others. Whatever your accountant, CPA, or tax preparer told you about *your* tax return was based on *your* circumstances and is unlikely to be applicable to the random shopper who comes here with a question.

2stepps: "Remember that you have to show a profit 2 years out of the last 5 years or it is considered a hobby and then it is all fully taxable. No business deductions allowed! Then you get dinged for back taxes and penalties. They got me on that back in the eighties, when I was just a young pup." Now, this might sound like you know what you're talking about, since you got "dinged" for this thirty years ago, but nobody today gets dinged *just* for not showing a profit. They get dinged for not operating their "business" in a businesslike manner, not for trying but failing to make a profit despite their best efforts (sometimes the economy just sucks). A lot of these "rules of thumb" are just that. They are not "one size fits all" information.


MA Smith: "If it all comes as one lump sum, I can also take mileage. He also said office supplies. As a former tax preparer I wouldn't recommend trying to write off part of the house. It's iffy at best and a sure fire trigger for the IRS to come looking for you. " "IF" it all comes as one lump sum, you can take mileage? You can take mileage, period, because you drove it for your business. It doesn't matter what is on your 1099; everything on the 1099 is your gross income, it doesn't matter if they called that bonus a bonus or travel pay and included it on the 1099 or not. You declare all of your income, whether on a 1099 or not, and then deduct what you paid out that you were reimbursed for, and you deduct your mileage and other expenses.

Yes, it used to be common to tell clients a home office was an audit magnet, but that's not the case any more. I've been claiming one since 1997 and they haven't said Boo about it.

Qualified home office = a designated space (it does not have to be a room, or be partitioned off. It can be a desk in a corner) that is used "regularly" and "exclusively" for business.

I believe it used to require a separate room, and few people could qualify. But as more people started to telecommute, they relaxed the rules. As of last year, you don't even have to add up your utility bills and other expenses any more; you can take a flat $5 (I think) per square foot, up to (I think) 300 square feet.


So ... please ... if you are not *currently* a tax preparer, and up on the recent tax laws, please please please do not try to explain things to people looking for advice. There are several qualified tax preparers on the forum who will tackle the questions that come up. But it's hard to have to keep correcting old or incorrect information.

And even though I *am* currently a tax preparer, and up on the recent laws, I urge everyone to talk to your own tax preparer about these things, because your own personal situation will have a bearing on what you should or shouldn't be doing. Use what I have said here as a starting point for a conversation, not as a bible to follow for doing your return. There are many things that can be done more than one way (you may get a bigger deduction by claiming actual expenses than taking the 56 cents a mile) and only someone who is working with *all* of your tax situation can tell you what is best for *you.*

I think dspeakes should teach tax classes. I would pay, and I will tell you why. Some people get taxes and some people just don't. I am intelligent in many areas in the game of life, but when it comes to taxes, I really don't know what the heck I am doing. It can be so confusing. I always have this feeling that I am missing important deductions, not tracking things right, or not maximizing my expenses properly. This forum has helped immensely, and for that I am greatly appreciative, but I still feel like I don't have the whole 'tax thing' down pat.

Edited 2 time(s). Last edit at 12/30/2014 04:06AM by Mbrookes.

And, I for one, am actually looking forward to seeing my tax consultant this year. I have a list of questions ready for her so I can attempt to better understand IC taxes and how it effects my existing portfolio.

Edited 1 time(s). Last edit at 12/30/2014 04:08AM by Mbrookes.

walesmaven Wrote:
-------------------------------------------------------
> Dave,
> By consensus, this forum is a politics-free zone.
> I realize that,as a relative new-comer, this may
> not have been evident. It's not one of the owner's
> few rules, but it has been calmly debated several
> times, and agreed that we wil not be engaging in
> politics or discussions of government policy.
> Major changes to the tax code would seem to fall
> into that category. Just thought you would like
> to know.

My comments were not intended to be political. This subject is talking about taxes. I was talking about taxes. The tax code is neither republican or democrat, it is finance. My first job was as a bookkeeper. I did not feel like a politician and I was not a politician as bookkeeping is not a political profession.

Read the posts. You have people offering advice. You have intelligent people fearful that they may do something wrong and face penalties. You have other posters trying to play the "game of chance". If I do this will the IRS penalize me? Am I entitled to this or that deduction or expense?

When I called the IRS for advice I stumped the IRS employee. I was told, Some examiners will give you that others may not." I did not take the expense fearful that the coin may not flip to by benefit. The taxpayer should not find at the end of the year that they owe more taxes than they can afford. They should not be scammed by companies that will "go to the IRS and apply for a program for those who owe over $10,000 in back taxes." People should not lose there houses or businesses because they were ignorant of the confusing tax laws". Movie stars and sports stars relied on their staff to handle their taxes, but in the end they were responsible when taxes were not paid properly.

Being randomly audited is an ordeal that is time consuming and costly. In the end the IRS gave me back money because I was conservative and did not try to squeeze every dime of deductions or take a loss with questionable expenses. How much money did I give up by not taking acceptable deductions or expenses?

We can go crazy trying to figure out the arithmetic and the strategy. Then there is the nail biting as you send your return to the IRS and we have nightmares wondering if we will be audited. I would not call the IRS "bullys" but they are aggressive when the "reasonable man" has no idea of the confusing requirements of the tax code and 10,000 amendments to the tax code and gets caught short. Paying taxes should not cause that type of anxiety.

I feel I can express my opinion without being political. It is my opinion that I can not intelligently prepare my own taxes. I can do the bookkeeping, but I have to go to an accountant and spend extra money because the penalties for not fully understanding the tax code and the 10,000 amendments can change my life style and send me to jail.

The definition of REASONABLE MAN or person is: "a term used to describe a person who acts with common sense, with a good mental capacity who is stable." This reasonable man thinks the STATES that use the SALES TAX to collect money from tax payers have a system that a "reasonable man" can understand.

You walk into a store, you spend your money on goods or services. The merchant adds the SALES TAX without asking you where you got the money or asking you to fill out forms that you can tell the merchant how many dependent you have including your pet because you feed him and like a member of the family. Any person who is capable of making a purchase can contribute to the expense of operating the government. That is not political as you are not the politician spending the money you are contributing.

Paying taxes is not political. It is an obligation everyone should participate in if they have the income to make a purchase. If a person is indigent and goes dumpster diving for their food and clothes and lives in a cardboard box those people, in my opinion, can be exempt if they are happy with that lifestyle. The government and charity services will at no cost give them services. Charity should not be a deduction on your tax return but rather a compassionate gift for the unfortunate.

My comments are not political but rather the observations of a former bookkeeper who feels stupid and fearful when it comes to paying taxes. Sales Tax is just another way of paying your fair share of the government's bills and it works in the many STATES that use it. Walk in to a merchant, spend your money, do your taxes without forms. The common person can understand when the merchant adds the tax to your purchase. Pay your taxes as you go. What is political about that? I did not suggest that the readers of this forum take any action to change the system. As you point out this forum is not the place for that.

Mbrookes sums it up perfectly when Mbrookes writes;
"Some people get taxes and some people just don't. I am intelligent in many areas in the game of life, but when it comes to taxes, I really don't know what the heck I am doing. It can be so confusing. I always have this feeling that I am missing important deductions, not tracking things right, or not maximizing my expenses properly. This forum has helped immensely, and for that I am greatly appreciative, but I still feel like I don't have the whole 'tax thing' down pat."

Mbrookes and many other people never will feel they got the whole 'tax thing' down pat, myself included. Taxes should not be a contest to see if you can pay less taxes without going to jail. Paying taxes should not be beyond the intelligence of those who must pay the taxes. Paying taxes should not create situations where scammers offer to "help" you with your tax issues.

I can sleep nights when I pay my state sales tax. The state will not come knocking at my door or audit me at random like the IRS did. My intelligence is not taxed at all. My pockets are not picked by scammers that take a short course at some of the mystery shop companies we evaluate this time of year and profess to know the entire tax code and 10,000 amendments. If they do not get it right you may be in trouble. That is not fair.

dspeakes,
Many thanks for the examples of incorrect/out of date advice. I have been posting here, and elsewhere, for years, trying to dispel the myth that a home office deduction is an audit magnet under current rules. You are correct that the myth arose back in the day when the rules were so stringent that few people felt comfortable taking the deduction. With the help of a well trained tax advisor, I was able to comply with the rules, even back under the old rules and was never audited.

I have been self-employed all but three of the years since I was 20 years old. I have attended seminars for ICers every few years (and not the ones where the speaker is just trolling for clients!) and this has proved to be a good investment. It is essential that your tax advisor understand the industry in which you work. When I was a residential real estate agent, the broker for that large firm brought in a specialist who understood that business to do tax seminars for us. As a consultant on large federal and state research projects, I sought out seminars and a tax advisor who understood how subcontractors on goverment funded projects work, travel and are compensated.

While the written advice in IRS publications is leaps and bounds better that it was 30 tears ago (See the flow chart about what mileage is deductible in different situations, as a great example!) don't expect an IRS employee or just any accountant to provide adequate guidance for your particular situation. This forum has seen (and actually had to remove) some tax advice that was so far off the wall, but supposedly backed up by phone calls to eight, count um 8, different accountants, and "just had to be right."

I am writing from personal experience. I am not giving advice. I am not advocating that everyone should grab a poster and picket the white house, the congress and the senate. I am not protesting. I know I can not change a thing. I am not political.

I contacted the IRS on their help line. I will not mention what office I went to for guidance. I did visit, by invitation, the IRS in a large city when I was audited. I have spoken to my tax adviser who is an attorney and was employed by the IRS. I follow like a sheep.

Bottom line, the tax code and the over 10,000 amendments are flawed and contradictory. This is not my opinion but the answers I got from IRS employees and common sense. No one can remember and apply solutions because those who evaluate the solutions can decide if the solution is applicable. The examiner and the judge you get can make a world of difference in the outcome of the issue. In any case the refund I got did not compensate me for the expense and emotional experience of preparing and presenting my records.

You will see before the start of the tax season the stories of the sports, movie and entertainment stars and yes, even politicians that had issues and face criminal prosecution. The message to intimidate you is that you better be good or the IRS will find you. Still taxpayers make mistakes out of ignorance. They do not seek "help" or they do seek help and are totally confused and pay all kinds of experts but still some pay nothing and others, frightened and confused pay the amount allegedly due. The IRS will still have a job monotoring the businesss collecting the sales tax. Accountants will still advise businesses if they are making a priofit or not.

I do not mean for this to be political. I do not think there is a political solution to the IRS issue. Just for a second, just think, This whole subject would be mute, no matter how many banks you robed or investors you embezzled or drugs you sold or if you are not legally here in the United States and a working under the radar you will pay taxes when you spend the money. When you do those who were paying will pay less. There will be no forms, no disclosures and no exemptions. The poor will pay less because they have less to spend. The middle class will pay less because those who have previously had exemption for whatever reason is like everyone else. They pay when they spend it.

Dave,

With your arguments are about taxes, taxes themselves are political in nature as they will only be changed through politics. While I think that you will get little argument about the tax code being overly cumbersome, I can see many flaws in other parts of your argument. This forum, however, is not the place to have this discussion as it is likely to get too heated.

Edited 2 time(s). Last edit at 12/30/2014 06:32PM by Shelly.

Shelly,
You have absolutely hit the nail on the head. And, that is exactly why we do not "do" politics here.

The volition forums have many people who will be happy to hear what you have to say, Dave, and some who will attack you viciously for what you say. Then your supporters will attack your detractors. Instead, forum members here have repeatedly agreed not to discuss governemnt policy issues, among many other very political topics.

OK, I am a new shopper this year and have what I assume is an extremely stupid question that should be easy to answer. When I claim my mystery shopping income (I also have a separate job), do I lump the income from all the MSCs together and then deduct collective expenses and mileage, or would I have to separate the income, reimbursement and mileage for each MSC and input that separately? I had read previous posts and thought it was the first way and prepared my spreadsheets accordingly, though I could simply reorganize them by MSC and not date. I am finishing up filing now and don't want to have to redo things when it is tax time.

I really don't understand how someone would think that a post about tax policy isn't political.

Also, not to perpetuate the discussion (against my better judgment as I'm sure it will) many time people do not realize that the higher a person's income the less % of the income they spend on taxable expenditures.

There may be some info in the new shopper section - one of the stickied threads.

On schedule C you can break it out by company. You could probably download one from the irs website so you could get familiar with it in advance.

VickyS Wrote:
-------------------------------------------------------
> OK, I am a new shopper this year and have what I
> assume is an extremely stupid question that should
> be easy to answer. When I claim my mystery
> shopping income (I also have a separate job), do I
> lump the income from all the MSCs together and
> then deduct collective expenses and mileage, or
> would I have to separate the income, reimbursement
> and mileage for each MSC and input that
> separately? I had read previous posts and thought
> it was the first way and prepared my spreadsheets
> accordingly, though I could simply reorganize them
> by MSC and not date. I am finishing up filing now
> and don't want to have to redo things when it is
> tax time.

The IRS doesn't care about *who* you got the money from. Just add it all up and put one figure on the return. Deduct the expenses using the categories on the tax return, or the "other expenses" section where you can make any category you want. When all is said and done, your net business income goes on the front of the return and calculates in with your other income to produce your tax bill. The details only come into play if you are audited. So whatever way you want to organize them -- by date, by company, by type of audit -- are for your purposes. The IRS doesn't care. When they come for an audit they will want to see receipts, not your spreadsheet.


Re: the flat tax rate. People like the "idea" of this because it "seems" more fair. It is not.

Currently, the poorest citizens in this country pay no income tax at all, and in fact get refunds from Earned income credits and child tax credits. Under the flat tax, they will be taxed on every dime they spend. And trust me, the poorest citizens in this country spend every dime they get.

Currently, the richest citizens in this country pay the most tax -- and as someone pointed out, they spend the least. Most of their "income" gets reinvested, not spent.

So unless that flat tax was assessed on stock purchases, real estate purchases, and other investments, it would be a huge tax cut for the rich, while being a huge tax increase for the poor.

The other component is that it would turn everyone in this country who gets paid for anything into a tax collector. If it is going to replace the income tax, then any time you got any income, you would have to collect that tax from whoever was paying you. You're assuming it would only be on "stuff" we buy. It would also have to be on "services" we buy -- turning people who don't currently fill out sales tax forms into tax collectors.

So while it may be an attractive "idea" because it "seems" more fair, in reality it would create a nightmare of recordkeeping for everyone, and would penalize the people who are already struggling.

The tax code needs overhaul, for sure, but this is not the answer.



Edited 1 time(s). Last edit at 12/31/2014 09:06PM by dspeakes.

dspeakes and I have been known to disargee. However, this is a time when we are in perfect harmony, If you are to disagree with both of us at once, do so at your peril, lol.

UHOH... Now I am scared. Oh wait, I agree with you and dspeakes, so all is well.

Happy New Year Everyone!

If, for example, I took a food shop and the client paid a "fee" of $7.00 and I was reimbursed $10 for the meal I was required to evaluate I know I would have to report the $7.00 as income but the client paid for the food;
Is the food a "business tool" that should NOT be considered "income" or a "value in lieu of income" since the food must be consumed as part of the shop?

I do not think I would have to report it as income because it is a "required tool" and I do not think I can deduct it as an expense since the client paid for it. Am I correct?



There are high end restaurant shops that the client does not reimburse the full amount and does not pay a fee. Even if the shopper purchases the least expensive required items and nothing else the shopper is required to take money out of their pocket.

Is that unreimbursed money a business expense as the guidelines required the shopper to bring a guest and purchase specific items or the shop would be void and the shopper would not be paid?

Could the shopper purchase items that are NOT the least expensive fearing that if the least expensive items were purchased the staff may read it as a "signal" that the shopper is a mystery shopper and cannot afford to be in that restaurant?
Should the shopper take the money paid in excess of the reimbursed amount out of their pocket and take the loss without reporting it as an expense?

If the shopper is busted for any reason and the client does not pay the shopper for the shop can the shopper declare the out of pocket money spent a deductable loss expense?

Dave,
These very situations have been discussed, at length, a couple of times in the last month or so. If you do a search on "reimbursement" you will probably locate those threads about handling taxes on your issues and several other closely related scenarios.