I just had my 2014 taxes done and declared that I did mystery shopping as an Independent Contractor and lo and behold I was surprised that I had to paya federal Self Employment tax on that income. Is there anyway to do your federal taxes without having to pay that tax?
"I did mystery shopping as an Independent Contractor"
This makes you self-employed.
You could have opted to say you do mystery shopping as a hobby and not paid the SE tax, but you also would only have been able to write off your mileage and other expenses *if you itemized.* so if you didn't itemize, you might have paid regular income taxes on all your shopping income (minus reimbursements) instead of paying SE tax and regular income tax on only your shopping profits. Mileage is usually a shopper's biggest writeoff.