Hello,
I have just finished my first year of Mystery Shopping. I made almost 7000 dollars. After deducting all of my expenses and mileage my income came out to 64 dollars. Is this normal?
Thanks

Some shoppers show losses in the beginning. Are you unsure of some of your deductions?

I just finished doing my taxes and actually ended up with a loss for the year. This has happened almost every year that I have worked as a shopper. I take the deduction for the actual number of miles driven, which pays me more than my little Toyota actually costs. Mystery shopping pays for my car! I don't make much money shopping, but I get a free car and lots of free food.

I am sure of my deductions, just wondered if this was normal. I also take actual miles. Mystery shoppers drive a lot . Thanks for the feedback everyone .

it could happen...personally i don't deduct mileage for any shops that are reimbursement only --as that money is not being taxed.

if you did a lot or reimbursement shops...that doesn't count toward the 7000 income

Edited 1 time(s). Last edit at 02/11/2016 04:04AM by jmitw.

I have a question for the forum regarding the calculation of mileage. How do you calculate the mileage when your doing a route? Do you use one mileage figure for all the shops you completed that day? Or, do you use the mileage as you go from one shop to the next? In other words, mileage from home to first shop (applied to 1st shop), then mileage to 2nd shop (applied to 2nd shop), mileage to 3rd shop (applied to 3rd shop)?

Do you keep track of your actual mileage as you shop OR do you run the locations through Mapquest (or some other mapping tool) to find your mileage?

Also, when you close the year out at a loss or even a near loss, does the IRS still require you make estimated tax payments?

And one more, does anyone know if the loss incurred from mystery shopping can actually reduce your tax liability from your regular job?

This will be my first year filing. I kept my work under $600 until 2015. I've since become addicted to this thing called mystery shopping.

Just be aware that if you file consistent tax losses from MS the IRS may decide that you are not in business to make money (profit motive) and deny all of your deductions for several years. Please read the IRS publications (free on line) and/or consult a tx professional who specializes in small, sole proprietor, businesses. NOT just a tax preparer!



Edited 1 time(s). Last edit at 02/11/2016 03:18PM by walesmaven.

While this is the first year you have filed, it may not be the first year you should have filed. That $600 threshold is only the point where individual MSCs are required to send you a 1099.

I personally used MapQuest and record the distances in a spreadsheet. What matters is the total miles for each day, For various reasons, I either record mileages to the first stop and then to each stop and back home, or I take the day total and allocate equally to each shop. But that is internal record keeping. In the end, you need to be able to justify the total miles to the IRS.

I have decided that if more than 1/3 of my gross fees is the deductible mileage, that I am driving too much. Miles eventually means time in the car and that means time not shopping. I have other deductible expenses such as home business office, internet, printer, paper, boxes, non-reimbursed required purchases. They typically amount to another 1/3 of my expenses but may be lower for last year.

I don't think that I have seen this mentioned before, so here goes. You are entitled to open a SEP (Simplified Employee Pension) account for self-employment income. You can put 25% (generally) of your "profit" into a SEP and it then becomes tax-sheltered and the investment grows tax free until you withdraw it. Because I am interested in the tax deferral of x% (x = your marginal tax rate), I don't care too much about the rate of return on the SEP account. I have been opening SEP accounts at TD Bank because a CD there can be opened for any amount over $250. Even if I have $1000, I open 4 x $250 CDs in order to permit future flexibility. I believe that the minimum at Bank of America is $500. Not all banks open SEP accounts. There are not commonly requested, so some banks don't bother. At TD Bank, it comes down to the CSR checking one additional box on their standard IRA account opening form, but I have to watch to make sure that they do it because they typically aren't used to it.

I'm glad you asked this question, @COMystery!

Here's how I do it:
Note the mileage start on January 1st
During the year, I map out all my shops on a map program. I map the round trip for all shops that I'm conducting at once in the order I expect to do them (usually the order that makes the most sense in terms of minimizing miles and not doubling back if I can help it. That assumes, though, that it works with the time constraints of each shop). Then back home. I add up all the mileage for the roundtrip and then divide by the number of shops. So a 25 mile roundtrip divided by 5 shops would be 5 miles attributed to each one. This is just for my recordkeeping, and it helps me determine whether shops are generally profitable for me or not based on what I'm actually driving.
Then note the mileage again on Jan 1st of the next year.

Calculating business mileage: add all the mileage attributed to each shop for the year (my spreadsheet automatically adds these up for me). Then, I use the January 1st mileage to figure my total mileage for the year so that Turbo Tax can figure out what percentage of my mileage is business mileage vs. personal mileage (or whatever it needs that information for).

That's how I do it. It works pretty well for me, but if anyone has suggestions, I'd be glad to hear them.

Maybe this is a past requirement and not true any longer, but I thought the IRS required actual mileage, as in a record of your odometer reading. That was the requirement when I first became self-employed.

There was a time when odometer readings were the only thing available. Times and technology have changed.

I like keeping just enough taxable work to offset the little shopping I still do. As an independent contractor, you're basically getting taxed twice. It's easy to lose.