I just recently signed up with a new MSP this week. The scheduler sends out a mass email asking if anyone is willing to travel. The email also states that if I need gas money, they would entertain reasonable offers. One of the shops is 102 miles from my home, but I travel quite a bit for my full time job, so I could do this shop along the way. I tell the scheduler that I would perform the shop, but I would like to get paid $55 for gas. I get an email back asking if I would do it for $45. I tell the scheduler that I expect to get paid the IRS mileage tax rate of $0.54 a mile. The scheduler then tells me that technically I can take the mileage off my IRS taxes, so that would be considered double dipping. Then she tells me another auditor will do it for $20. I wasn’t able to do the shop anyway because of a conflict with my full time job. What does the gas money amount have to do with how I file my taxes? Is the offer of gas considered a bonus? Is having a standard being unreasonable? I have been mystery shopping for about 6 months, but I am NOT new to how to report my mileage for tax purposes! I informed my new CPA/scheduler that I use both the actual expense and standard mileage rate when figuring my mileage, and I didn’t appreciate the unwarranted tax advice!

IRS tax rate does not pay the actual cost of gas/car expenses...it is the amount that is DEDUCTED that you don't pay tax on...so demanding the 54 cents per mile CASH is not the same as you would get from the IRS....gas costs 5-10 cents per mile right now...plus some wear on the car..

my guess is that your actual cash savings with the IRS deduction is 20-30% of 54 cents depending on your income bracket...so if you want the cash equivalent it would be 10.8-16.2 cents per mile.

but you are right, if it is reimbursed as miles, you can't then also deduct the reimbursement and the miles separately....but if it is just a general bonus, you can get away with it

but how do you use actual AND standard at the same time?

Edited 2 time(s). Last edit at 07/02/2016 03:41PM by jmitw.

On the one hand it sounds pretty ballsy of the scheduler, but on the other hand it is their job to pay as little as possible to get as much done as possible. 'Quick', 'easy', 'fun', 'another shopper will do it for less', seem to all be standard deceits of the trade. In this case there is 'a hint of helpful' because if you took the extra you are asking for as a reimbursement and still took mileage you could be double dipping, but since the company would be paying the extra as a taxable bonus, I would certainly treat it that way and take my IRS mileage deduction.

I can't believe "another shopper will do it for less" is a strategy that actually works. Really? Then why are you even bothering to talk to me? Quick! Jump on that low-bidding shopper before they change their mind! I understand that you want to get the job filled to the client's specifications at the lowest cost possible. If you think that other shopper can get it done to specs, what are you talking to me for?

And to the OP: when I travel for business, I get reimbursed at the IRS rate too... I drive 10 miles for business travel in my personal vehicle? $5.40 added to my expense report. I've never thought about it before, but none of my business travel is included on my W2. I used to travel quite a lot, so there were some years I probably had tens of thousands of dollars in reimbursed travel expenses (awesome for my rewards balances, terrible for my social life), and I never paid a lick of taxes on any of those. I wonder if I was fleecing the government? I assumed since it was reimbursements, it wasn't taxable, but now that I think about it, I'm only about 90% sure...

@CaliGirl925 wrote:

And to the OP: when I travel for business, I get reimbursed at the IRS rate too... I drive 10 miles for business travel in my personal vehicle? $5.40 added to my expense report. I've never thought about it before, but none of my business travel is included on my W2. I used to travel quite a lot, so there were some years I probably had tens of thousands of dollars in reimbursed travel expenses (awesome for my rewards balances, terrible for my social life), and I never paid a lick of taxes on any of those. I wonder if I was fleecing the government? I assumed since it was reimbursements, it wasn't taxable, but now that I think about it, I'm only about 90% sure...

When you were being reimbursed for business travel in your personal vehicle it was in lieu of your employing company providing you with, for example, a rental or company car. You were not also deducting from your income your business mileage because you were a W2 employee, not a 1099 self-employed.

I think this really varies but where you live and what you drive. Here in So Cal gas and insurance are expensive. I'm not sure how registration compares to other states but smog checks aren't cheap. Also remember that $.54 is including things like wear on the engine, tires, transmission, belts, fluids etc.

Edited 1 time(s). Last edit at 07/02/2016 07:11PM by wwin.

Yes, it is interesting that while there are variations in the per diems allowed for various areas of the country, the business miles expense is the same. California gets to pay more for their cars in the first place because of the special accommodations to California's pollution laws. New Jersey and South Carolina among other states have tax per gallon of less than 20 cents while Missouri between the price of fuel and tax tends to have the lowest price per gallon total in the country. New York gets the crown for most expensive gas in the country, with California trailing shortly behind. 40 years ago when we lived in NYC it was recommended that if we wanted to get a car we rent a garage for it in NJ because garaging the car there instead of in the city would cut our car insurance in half. Where I live I pay about $75 per year for tags but don't need to have annual inspections. My vehicle does not rust out in a couple of years due to road salt. I haven't done the calculations in a few years, but I make out like a bandit using the mileage deduction to protect income because the real cost of operating our vehicles is significantly lower than the IRS rate, even when you include depreciation, repairs, maintenance, tags, insurance and fuel.

Why do people have these big discussions with schedulers about why you feel the need to charge what you do?
When you hire someone to cut your lawn, do you ask them what their costs are? Does the plumber detail his costs (not your parts cost) involved when quoting a job?
I have plenty of schedulers that I am on a first name basis with. We still don't talk about these things.
It's your job to tell them how much you want and their job to accept, counter, or decline.
Don't feel that you need to justify to anyone the reason you charge what you do because in the end it really doesn't matter. What matters is the number.



Edited 1 time(s). Last edit at 07/03/2016 04:45PM by Hoju.

@MiszG wrote:

I just recently signed up with a new MSP this week.

I have been mystery shopping for about 6 months, but I am NOT new to how to report my mileage for tax purposes! I informed my new CPA/scheduler that I use both the actual expense and standard mileage rate when figuring my mileage, and I didn’t appreciate the unwarranted tax advice!

great 1st impression u made w/new MSP & scheduler. congrats.

Wow. Do you pay the most you possibly can for a home contractor (for example) because they tell you how much their time and effort is worth, or do you try to go with the lowest reasonable offer for the exact same service? I don't know about you - but I do shop around. Same thing in this biz, and msc's are no different.

" One of the shops is 102 miles from my home, but I travel quite a bit for my full time job, so I could do this shop along the way."

Please be advised that if it's "on the way" to your regular job, you may NOT deduct 102 miles at $.545 on your federal taxes. And if your regular employer is paying you via expense report for that 102 mile commute, you REALLY can't deduct that mileage!

Now, if it's 25 miles outside your regular commute for the employer who reimburses expenses, then you MAY deduct that additional 25 miles.

I ask for bonuses all the time. I just tell 'em "it's 3 hours drive time, and I don't work for minimum wage". I never mention mileages or taxes, just my TIME.

Caveat: never take tax advice from a public forum.

LOL!!!!

@wwin wrote:

I think this really varies but where you live and what you drive. Here in So Cal gas and insurance are expensive. I'm not sure how registration compares to other states but smog checks aren't cheap. Also remember that $.54 is including things like wear on the engine, tires, transmission, belts, fluids etc.

but the point is that the IRS doesn't give you the 54 cents (or what ever the current rate is_ back...they give you 20-30% of that back...so claiming the IRS would give you 54 and you expect the same amount from the MSC is false...what the IRS actually gives back is based on your tax rate..and typically less than 16 cents per mile..

sure a company can choose to reward an employee with the full 54 cents....but that does not prove that is the amount a MSC should pay to equal the IRS DEDUCTION.

i am seeing gas prices of about 2.60/gallon on gas buddy for los angeles....with a typical car that is about 10 cents per gallon...that is not 'expensive' as far as gas rates go.....

average California car insurance is 150/month ...if you go 1500/miles a month that is 10 cents per mile.

Edited 2 time(s). Last edit at 07/03/2016 06:55PM by jmitw.

Indeed the only thing IRS 'gives' you is the right to shelter otherwise taxable business income. In reality every net dollar you have over $400 you are paying 15.3% of for Self-Employment tax and of course every net dollar earned is taxed in your bracket and may indeed shove you up to the next bracket. So those miles may actually have significant value to you in what is and isn't taxable.

For those in parts of the country where 'real costs' are a lot higher than the norm, it may make sense to choose actual expense rather than mileage. You need to make that decision in the first year with your vehicle. Even then if you keep a vehicle a long time the mileage may work better for you because the heavy cost is depreciation in the first few years and after that the annual expenses are fairly benign.

How I would respond to this scheduler is this: You have doubts about the $20 shopper. Otherwise they would be doing it. So your best offer for success is me. $55 is my price, take it or leave it. You will have no doubts.

@Flash wrote:

Even then if you keep a vehicle a long time the mileage may work better for you because the heavy cost is depreciation in the first few years and after that the annual expenses are fairly benign.

And buy purchasing a quality car that is 3-4 years old you can negate a lot of that depreciation.

And buying a used car that has been scrupulously maintained means you aren't buying somebody else's problem. I never had much luck with used cars, even when coming off a big name rental agency with a great service record. My first new vehicle was bought 17 years ago and is still running like a top with minimal repairs because it has been maintained like clockwork (thank you frequent oil change shops!).

I so enjoy the opinions of other people! I'm running a business, so if you're going to do business with me, you're going to have to pay me a fair price. I think $0.54 a mile is fair extremely fair. I understand some shoppers will accept a shop at almost any price. I am NOT that shopper! I have made my standards known to this MSP and scheduler. If setting high standards leaves a bad impression, that's fine by me. Afterall, I couldn't take the shop anyway and I didn't insult the scheduler. I just let them know what I will and won't accept!

Do you pay the most tax you can or do you try to minimize it? Same concept. As a scheduler id minimize expense.

I would take any comments from schedulers about taxes with a grain of salt. A scheduler once told me I didn't have to report any income from any company that paid me less than $600 during a calendar year. She was genuinely shocked to find out the truth.

@whosear wrote:

How I would respond to this scheduler is this: You have doubts about the $20 shopper. Otherwise they would be doing it. So your best offer for success is me. $55 is my price, take it or leave it. You will have no doubts.

If I was the scheduler, I would take that as rude. A simple, "I can do that for $55. If you can find someone closer, that's great. If not, ring me back after you get approval for the $55" would suffice.

Seriously?? Actually, he can do whatever he wants to do, just because there are rules, doesn't mean someone has to follow them.

Mystery Shopping Companies cannot legally compensate you for gas, lodging, tolls or any thing you shell out to do your job, other than what the client states the IC is obligated to purchase. It's illegal. You take that off on your taxes and it IS double-dipping. If they state they pay gas/lodging, they are messing with the future of mystery shopping. You are not an employee. You are solely responsible for getting the work completed on your own dime, and they can take into consideration ONLY your time. Don't explain WHY you want more, but ask for what you want. They will say yes or no.

If I was the management of a MSC, I would flip my wig if I heard that one of my employees was giving tax advice. This just opens up a can of worms in regards to liability.

I have worked for a tax firm for the past 11 years now so I know what I'm talking about and I can tell you that you CAN'T take both the standard mileage and the actual expenses. You get to pick which one will work for you and you HAVE TO STICK WITH IT for the life of your vehicle (unless you really want to create an issue and want to receive an IRS LOVE LETTER.) The IRS isn't stupid and they have lots of people employed by them who have nothing better to do during non tax season then to pick returns at random and go over them with a fine tooth comb. Sure one year you may have to put in a new transmission for $3,000 so you take that cost plus insurance, oil changes, gas, tires, cost of new windshield, your mechanic bill, etc and it all looks great that year. The next year you didn't do as many mystery shops so your business mileage is way down and all you have is the insurance, oil and gas and you are stuck taking that deduction and it would be way less then the standard. It's always better to see and think about the big picture and think ahead a few years then it is to jump on the easiest route right away. When deducting auto expenses you only get a portion of it to begin with. You put down total miles driven then business miles and everything gets divided. As for doing a mystery shop while on your way to a business mtg and your employer is paying you for your mileage you can not deduct that mileage at all. (Maybe your employer might like to know what you were doing on your way to your mtg that they were paying your mileage for) Who knows maybe your scheduler works two jobs and does taxes during tax season.

Are you new t being self-employed? It fits the context. Re-read it. Her offer begs a direct response.

@MiszG wrote:

I just recently signed up with a new MSP this week. The scheduler sends out a mass email asking if anyone is willing to travel. The email also states that if I need gas money, they would entertain reasonable offers. One of the shops is 102 miles from my home, but I travel quite a bit for my full time job, so I could do this shop along the way. I tell the scheduler that I would perform the shop, but I would like to get paid $55 for gas. I get an email back asking if I would do it for $45. I tell the scheduler that I expect to get paid the IRS mileage tax rate of $0.54 a mile. The scheduler then tells me that technically I can take the mileage off my IRS taxes, so that would be considered double dipping. Then she tells me another auditor will do it for $20. I wasn’t able to do the shop anyway because of a conflict with my full time job. What does the gas money amount have to do with how I file my taxes? Is the offer of gas considered a bonus? Is having a standard being unreasonable? I have been mystery shopping for about 6 months, but I am NOT new to how to report my mileage for tax purposes! I informed my new CPA/scheduler that I use both the actual expense and standard mileage rate when figuring my mileage, and I didn’t appreciate the unwarranted tax advice!

When doing a route I wonder how many shoppers tell the scheduler it is 102 miles away and ask for gas money but in reality it might be only a few miles away from other shops in the route because two or three other shops in the route also gave gas money. Besides that you were going there anyway and your boss paid the mileage. What they do not know will not hurt them but makes up for the low fees that give you less than minimum wage. When you figure the time preparing and performing the shop.It might be a 15 minute shop but how about the hour ride and the time it takes to report their redundant questions. I do not feel I am double dipping. I am an independent contractor and I am entitled to get a fair amount for my time and effort. Before I retried I got $250 an hour doing about the same type of work, observing and reporting

Wow, all I know is you can not do both. If you got audited by the IRS it would be shaved and penalized in late payment and interest fees plus at their discretion possibly an understatement penalty. To answer your question about what reimbursed expenses have to do with your tax return, it has as much to do with it as income. (I self-qualify myself to answer your questions because I was thickly trained and experienced in US Federal Income Tax.)