Does anyone deduct mileage for traveling to shops on their taxes? Are there any other deductions?
I'm also wondering if you can deduct the cost PV500.

Meh... I'll defer to DSpeakes below.



Edited 1 time(s). Last edit at 11/26/2017 01:10PM by Hoju.

Here is an excellent answer:
[www.mysteryshopforum.com]

You can deduct the cost of equipment purchased during the year for MS work up to a limit that is higher than what you probably paid for it, so that should be good. I think that everyone deducts mileage; that is our main tax deduction in this business, after all.

@walesmaven wrote:

You can deduct the cost of equipment purchased during the year for MS work up to a limit that is higher than what you probably paid for it, so that should be good. I think that everyone deducts mileage; that is our main tax deduction in this business, after all.

I deduct the cost of my lease, not mileage. It works out better for me based on the types of cars that I drive.

So, you only use your leased car for mystery shopping? If not, how do you figure out how much of your lease is an allowable deduction?

I haven't done taxes in years, so I might not be the best for giving advice. Here goes what I would want from a client if I was still preparing taxes.


If this is your first year of mystery shopping my best advice is find a good tax preparer. The national chains can be expensive but you can interview your tax preparation expert before you start the process.

The best the thing you can do is set up a spread sheet with everything related to the business. And I mean everything. It's a royal pain for you, but may save you money in the long run. When I worked for a national chain of tax preparation professionals if you came in with a shoe box of receipts, the time I spent going through them was added to your bill. Spreadsheets, would've saved some of my clients big money. Look on IRS.gov, find the Schedule C and it will help you to determine what is allowed and what is not.

Last year my family's CPA allowed me to take the cost of my GPS unit, because my car doesn't have one. She allowed my hotel expenses which were minimal. She made me take my non-business mileage because my income didn't support the business mileage. I also wrote off my membership dues to MSPA.

She was under strict instructions to show the IRS I made a profit. Showing a profit is important. You never ever want the IRS to classify MS as a hobby for you. If the IRS classifies MS as a hobby, you will have to jump through impossible hoops to get your MS reclassified as a business. YMMV, but personally I would rather get the sting of extra $$ so I can always file the schedule C.

This year I'm going to see if my PV500 flies. I also have other expenses I haven't tried in the past.

My best advice is start interviewing people who prepare taxes and can work a Skd, C. If you decide to go with a national chain, try your best to have all your ducks in a row before the 14th of February. The company with the green logo starts raising prices on forms around 2/15 or President's day. 3/15, the prices skyrocket.



I haven't done taxes in years, I may not be the best person giving advice.

@CoolMusic wrote:

So, you only use your leased car for mystery shopping? If not, how do you figure out how much of your lease is an allowable deduction?

Correct. I don't drive unless I am shopping. I do at least one shop every single day. Usually 5 or more.
I just retired last week though. I won't be shopping daily anymore.

@MA Smith wrote:

She made me take my non-business mileage because my income didn't support the business mileage.

Can you elaborate a little? Mileage is nearly the only deduction I take. Do you mean that if you make a $10 fee and $100 reimbursement on a shop where you write off $50 in mileage [made up numbers, of course], you don't take the mileage deduction? I will often take a boonies shop where the mileage deduction is greater than the fee.

@iShop123 wrote:

@MA Smith wrote:

She made me take my non-business mileage because my income didn't support the business mileage.

Can you elaborate a little? Mileage is nearly the only deduction I take. Do you mean that if you make a $10 fee and $100 reimbursement on a shop where you write off $50 in mileage [made up numbers, of course], you don't take the mileage deduction? I will often take a boonies shop where the mileage deduction is greater than the fee.

I didn't take my business mileage because I had to show a profit. The CPA didn't like the mileage because the money I made last year didn't justify in her brain.

I live out in the sticks. Driving anywhere for a decent price on groceries is 20 miles one way. My CPA lives in San Antonio and everything is within 5 miles. She doesn't have a concept of driving farther than a few miles one way to get to the nearest shopping center.

I have a route that is 440 miles. For the ease of math I'm going to calculate my mileage at 50 cents per mile. Theoretically I get $220 off my business income. I don't take the full mileage because I must show a profit. I work this out at the end of the year.

I try to take any major expenses off when I can. Last year, I managed to write off my GPS unit. My advice is track everything on a spread sheet and see what your tax preparation person says is best.

@MA Smith wrote:

She was under strict instructions to show the IRS I made a profit. Showing a profit is important. You never ever want the IRS to classify MS as a hobby for you. If the IRS classifies MS as a hobby, you will have to jump through impossible hoops to get your MS reclassified as a business. YMMV, but personally I would rather get the sting of extra $$ so I can always file the schedule C.

This year I'm going to see if my PV500 flies. I also have other expenses I haven't tried in the past.

My best advice is start interviewing people who prepare taxes and can work a Skd, C.

This advice is spot on. I always show a profit every year.

You do NOT have to show a profit every year to be considered a business rather than a hobby. You may want to talk to other accountants.

Is showing a profit the only consideration when determining whether MS is a business or a hobby? Can someone get away with only having a profit of $50 or $100 year after year without it being questioned? I've shown a profit every single year. While the first few years the profit was modest, it grew substantially. If I was not making a profit I would be reevaluating my mystery shopping business. In all likelihood I would find another line of work and relegate mystery shopping to a hobby.

I believe you just have to show the intent to make a profit and you have to have a profit in at least one year over a certain time period.

I'm not a tax expert but it seems like that's what I remember from a couple of years back.

@walesmaven wrote:

You do NOT have to show a profit every year to be considered a business rather than a hobby. You may want to talk to other accountants.

You could probably get away with showing a loss on occasion, but I'm not in that situation. All of my big jobs pay travel and per diem. I'd have to buy a lot of stuff (new lap top and desk top, new phones, new everything) to show a loss.

The percentage of shoppers here that use a real CPA (meaning somebody that is charging over $1000 for a full return with multiple schedules) has to be very low.

Someone doesn't have to charge over $1,000 to be a real CPA. I don't pay anywhere near that much to the one I've used for the last 20 years.

@LisaSTL wrote:

Someone doesn't have to charge over $1,000 to be a real CPA. I don't pay anywhere near that much to the one I've used for the last 20 years.

Depends on where you live.
I have no less than 10 schedules to file. Mine runs around $1000.

Yes, it does depend on where you live. My point is the amount charged does not mean CPA or not a CPA. It is more important whoever we use understands taxes for independent contractors. From stories I've read here, many don't.