@littless2 wrote:

A brief comparison:

Company 123 pays a shoppers fee of $5 plus max reimbursement of $20 for dinner.
Company XXX has a max reimbursement of $25 for dinner.

Please explain to me why one would be preferred over the other....They both pay the same! The only difference is in the wording and how it is presented.

Thank you for allowing me to share.
littless2

Hi littless2! Thanks for your perspective from both sides of the topic.
I agree with STL_Shopper. Consider these two scenarios:

1. I go alone on a Company 123 shop and order $18 in food and beverages after tax and tip. I am paid $23
2. I go alone on a Company XXX shop and order $18 in food and beverages after tax and tip. I am paid $18

I think this thread has morphed into a treatise on the value of Reimbursement Only shops. I've previously made clear my appreciation for these shops, so I won't do so again here, but just know: I like 'em.
I think, though, that the original post was about the use of the word "free" in the email advertising the shop. Some shoppers feel that it devalues the work they do to say that an MSC is offering them "free food". We work hard for that reimbursement, it doesn't feel free to us. That's my perspective anyway. It doesn't actually bother me much when I see "free lunch" or "free pizza" or something like that, but I can appreciate the opinion of those who are annoyed.



Edited 1 time(s). Last edit at 02/04/2016 06:55PM by CaliGirl925.

Exactly - if you're spending minimum $25, then, yes, there's no difference. But I do most dining shops alone, unless I have to bring a guest, as I like to do them during lunch. So if I'm only spending $15 on food, then Company ABC is paying for my whole meal, plus $5, and Company XXX is only paying for my meal.

Thank you CaliGirl925 and NTALAN.
I appreciate your input. I usually do restaurant dates with my husband or family and had not thought of it from that point of view. BTW- I do not put "free" anything in my emails or texts. I am rather straight forward and just say what the shop is and where.

Thank you

@littless2 wrote:

BTW- I do not put "free" anything in my emails or texts. I am rather straight forward and just say what the shop is and where.

Example: Definition of "FREE": I had a Kohl's $10 off purchase so I bought $9.87 worth of merchandise and it was free.

I think it is misleading for a scheduler to offer "up to a $25" reimbursement when the one or two topping pizza they mandate you order is essentially an $8 pizza. By the time you take all the pictures required of the shop, the pizza is cold and not at all appetizing...

Jodojet, there are only 2 top photos required. My pizza is never cold when I am done taking pics. And as far as $8 goes, it depends on the area in which you live. One location in my area charges a little over $17 for a 2-topping pizza without a coupon. That being said, I don't eat the pizza from that chain because I don't really like it. I only do them for a fee. I am doing 2 next week as carryout shops for $20 each. Near the end of the month, there are locations that I can make $25 or $30 to do. A few years ago, I was able to get as much as $40 to $45 for those locations, but a new rash of shoppers in my area that take the shops for less decreased my ability to negotiate higher bonuses, unfortunately. I only get $18 for the one that delivers to my house, but that's okay since I don't have to leave home. I have hungry college kids who live next door who are grateful recipients of the pizzas.

The reimbursement shops confuse me.
1.) The msc gets paid from the company and yet will not pay us? If the company paid only reimbursement to the MSC would they do the work? I don't think so.
2.) The reimbursement amount provided usually doesn't cover the full amount or an adequate tip. When was the last time $1 tip was acceptable to any of us.
2.) If they pay you reimbursement then you have to pay taxes on it. So that free pizza just cost you money. So it seems so unfair.
Admittedly I have done my fair share of reimbursement only shops and every time I do one I kick myself the next day.

No, you do not have to pay taxes on reimbursed items. That is a deduction. You have to buy the product to evaluate it, therefore it is a business expense. And you are right about only tipping $1. That one is screwed up. I always tip my delivery driver at least $2, especially if the weather is bad my tip increases. But that's part of the reason I only do shops for a fee, so I can take the extra tip out of my own money. The MSC should be reimbursing more than $1, that's for sure.

But there are some reimbursement only shops I will do for really, really good food.

@jodojet wrote:

I think it is misleading for a scheduler to offer "up to a $25" reimbursement when the one or two topping pizza they mandate you order is essentially an $8 pizza. By the time you take all the pictures required of the shop, the pizza is cold and not at all appetizing...

Are you making a daguerrotype? How long does it take you to snap 2 pictures? These aren't like the old pizza surgery shops with mandated angles and box cutters.

I was laughing because the pizza is never appetizing

While I am new to the MS world, our family does have a good bit of experience with reimbursements and "per diem" pay. Reimbursement payments are not really a "deduction." They're actually just not factored into your taxable income at all. Of course you need to keep records of them in case of an in-depth audit that looks at every check ever deposited, but you should not be paying taxes on them at all because they should never be included in your income. This can make a substantial difference to those who don't itemize deductions. If you count reimbursements as income, then you would end up paying more than necessary in taxes.

On the other hand, non-reimbursed business expenses ARE deductions if you chose to itemize.

For these reasons, I would prefer the the $25 reimbursement over $20 reimbursement if I'm going to end up spending $25 on the food anyways, that way there's no "loss" due to taxes if I end up taking the standard deduction rather than itemizing. It also lessens the record-keeping for the un-reimbursed business expense. But if I were only going to be spending $18 on food, then of course the up to $20 reimbursement with the $5 shop pay would be preferable.

Some companies pay a flat fee and the food cost is included in the fee. Others reimburse up to a certain amount. Many companies include the reimbursements in your 1099 at the end of the year.

@JASFLALMT wrote:

Many companies include the reimbursements in your 1099 at the end of the year.

Oh wow... I didn't know that. That's different than anything I've ever encountered. Glad to know to watch out and check for that.

Yup it sucks actually. Makes tax time quite complicated.

A reason to prefer $5 in payment and $20 in food over $25 in food is that I can't pay my electric bill in chicken wings.

@reader99 wrote:

A reason to prefer $5 in payment and $20 in food over $25 in food is that I can't pay my electric bill in chicken wings.

I once read about a case where a farmer was so annoyed with the bank that he used spray paint and wrote "Pay to the order of X" and the amount on the side of a cow and delivered it as payment in full. If I remember correctly, because he included all of the pertinent information, the spray painted cow was, in fact, legal tender.

Maybe the MSCs follow this rule when they pay us in chicken wings.

Hahaha...

@cincitycon wrote:

The reimbursement shops confuse me.
1.) The msc gets paid from the company and yet will not pay us? If the company paid only reimbursement to the MSC would they do the work? I don't think so.
2.) The reimbursement amount provided usually doesn't cover the full amount or an adequate tip. When was the last time $1 tip was acceptable to any of us.

I agree with you about the reimbursement not covering the meal cost. There is an MSC that has "Great Steakhouse" shops that require you to bring 1 guest and each must order an appetizer and entree and at least 1 alcohol beverage plus leave a minimum of 15% tip. Then you must fill out a report that goes on and on and requires you to remember everything about every single employee you saw while there. All this for a lovely $35 reimbursement.

When was the last time anyone went to a steakhouse and ordered the above and got it for anything close to $35?

So in the end it is a discounted meal with more efforts than the discount is. And although I know a lot of people out there like them "Because we were going there anyway" it is a much better deal to get a Groupon or the like and get 50+% off for doing absolutely nothing but eating and having fun.

Right, Sandman. If my husband is out of town, I will do their dinner at the bar shop, which I can do by myself, and that's a meal I didn't have to cook. I can generally come within a few dollars of the reimbursement, but I don't get a steak when I do one of those. You are right, the steakhouse dining room shop does not reimburse enough. When I go with my husband, we both like to have a cocktail or beer each, an appetizer, and two good cuts of steak (forget sirloin). We haven't done one at that chain in several years because honestly, the steaks really aren't all that great to begin with. I can get better at our local butcher and we can grill at home instead. I would rather do a fine dining shop that reimburses $150 to $200 than go to that chain, even if it is a more detailed report. Well worth it.

@katioard wrote:

While I am new to the MS world, our family does have a good bit of experience with reimbursements and "per diem" pay. Reimbursement payments are not really a "deduction." They're actually just not factored into your taxable income at all. Of course you need to keep records of them in case of an in-depth audit that looks at every check ever deposited, but you should not be paying taxes on them at all because they should never be included in your income. This can make a substantial difference to those who don't itemize deductions. If you count reimbursements as income, then you would end up paying more than necessary in taxes.

I agree with your basic premise, but totally disagree with your accounting method. "Per-diem" pay and reimbursement income for a self-employment business are different. (My husband gets per-diem pay at his job, and I've been self-employed for more than 30 years, so I, too, have experience with this.) Per-diem pay is never counted as taxable income, and you don't itemize expenses against it. If you do your accounting correctly for your self-employment business, you don't pay tax on your reimbursements. But you still count them as income, which is offset by expense.

Most people here are probably on a "cash accounting basis" for their businesses. So, we track "money in" and "money out." If an MSC includes the reimbursements on your 1099, you have to count it as income. (You should count it anyway, whether it's on a 1099 or not.) You count the money you spent as an expense.

For example, if you do a Chipotle shop, you are paid $27. That entire $27 is counted in your income. Say you spent $12 for your meal. That $12 is an expense. You aren't taxed on it. You're taxed on the net income of $15.

If you spend $18 and are reimbursed $18, you count both the income and the expense. Your net income is $0, so you're still not paying tax on it.

Personally, I think shoppers would be ill advised to simply ignore the income and expense associated with reimbursement shops. If you do this for your own personal "how much am I making" calculations, that's fine, but for tax purposes, you should count all income and all expenses.

I'm not a tax professional, and people here who know more about tax preparation may have different takes on or explanations of this. But, I've been doing my business accounting like this for more than 30 years, and my tax preparers have all loved the way I do my spreadsheets and my tracking of income and expenses. FWIW....

Well, she didn't know because she hasn't gotten the aforementioned 1099s. I like that Marketforce and NSS don't include reimbursements on my 1099. And it really is a pain the butt to keep track of all of the meals I ate at Chipotle over a year since I shop them between 3-5 times a month, along with reimbursements for other companies where I may or may not have received a 1099. I have another company I work for doing product retrievals. Sometimes they have us buy products to send back to the company who made them, and while they do overnight a sizeable check to cover expenses, guess what--they include the product purchases on my 1099. There were a few recalls in the past that I worked on and had to purchase a few thousand dollars worth of stuff, so by looking at my 1099 it appeared I made a lot of money with them when I really didn't. I have gotten used to all of it, though, and I do my own taxes. It does take me a few hours but I have gotten pretty good at it.

From what I recall from a tax expert or two on this forum, counting reimbursements as income then deducting the expense is not the only "correct" way. Because MSCs mistakenly include them with income just makes it the easier method.

Yes, I just do what works for me. I had to deal with this long before I cam across this forum, so I had to figure out a lot on my own. I am sort of stuck in my ways now.

@LisaSTL wrote:

From what I recall from a tax expert or two on this forum, counting reimbursements as income then deducting the expense is not the only "correct" way. Because MSCs mistakenly include them with income just makes it the easier method.

I'm sure it's not the only correct way. But it's not the same as per-diem pay, as was implied. And I don't think the advice that was given by the other poster was necessarily correct or good advice for everybody. OTH, you can't go wrong if you include everything. For me, it's the easiest way to track everything. But if the reimbursements are included on some 1099's, I don't see how else one can account for the money in and money out. I imagine different companies do things differently, but I don't see how it's incorrect for MSCs to include them on the 1099s.

In my other business, I used to buy printing for clients and include that amount on my invoices to them. I was reimbursed for it, and it was included on my 1099s. I took the cost as an expense. That was the way it was done in that field. None of my tax professionals ever said clients were mistaken in doing so. Maybe mystery shopping is different?

I've had, counting mystery shopping, four sources of self-employment income, and still have three. I've always found it, for myself, easier to just track and account for all income in and expenses out across all three businesses, instead of trying to break out and track reimbursed expenses separately. I'm sure that would make me crazy.



Edited 4 time(s). Last edit at 02/07/2016 09:07PM by BirdyC.

I wasn't responding to the part about per diem pay. Just this.

"If an MSC includes the reimbursements on your 1099, you have to count it as income. (You should count it anyway, whether it's on a 1099 or not.)"

As I said, for me it is easier to count reimbursements as income and deduct them as expenses. Whether it is the best choice for others is for them to decide. I don't know if the subject is covered in the thread on taxes in the New Mystery Shopper section. There are some other threads with contributions from folks who us both methods. When in doubt, speaking to a tax professional is recommended.

@LisaSTL wrote:

When in doubt, speaking to a tax professional is recommended.

Absolutely! I'd never even do my own taxes after all these years. I trust my tax professional far more than I trust myself!

P.S. To clarify, what I meant by counting income even if it's not on a 1099 is that folks should count all their self-employment income in general, even if a client/MSC doesn't send them a 1099. Sometimes people mistakenly think that if they don't get a 1099, they don't have to declare that income....



Edited 1 time(s). Last edit at 02/07/2016 10:12PM by BirdyC.

Most of the shops I do are reimbursement only but I only do restaurant shops. I do it because I like free food and i'm frugal so I don't feel bad about spending an half an hour doing a report for a free pizza.

@hous wrote:

... I don't feel bad about spending an half an hour doing a report for a free pizza.

But it's not free; you paid for it with your half-hour of time. That time has value.

@hous wrote:

Most of the shops I do are reimbursement only but I only do restaurant shops. I do it because I like free food and i'm frugal so I don't feel bad about spending an half an hour doing a report for a free pizza.

Hous, you are an example of a shopper who probably does not have a problem with the scheduler announcing a job with the word "free" in it. In fact you probably like to see that as it seems these are the jobs you prefer. I am open for correction if I assumed the above incorrectly.
I, for one, am used to the word free and just ignore it. What i do not like is when the job email promises all the great stuff you can get for "free" on the shop and then you find out there are so many restrictions on what you are allowed to purchase that you can not possibly purchase any of the enticing items mentioned.

Maybe this thread has come full circle. We're right back to where we started from and that is my dislike of the word "free" when I pay for it with my time and effort.