IRS Request

Just got a letter from the IRS disallowing my mileage for my shops from a few years back. The first year that I shopped. Now they want to know why I drove all of those miles. They seem to think that it was my spouse that had done all of the driving and that they are tied to a W2 job, not to any 1099 jobs. So I guess misc. does not actually work when you claim what you do. I could just put down domestic spying for an occupation.

Edited 1 time(s). Last edit at 11/02/2018 07:50PM by 2stepps.

Create an Account or Log In

Membership is free. Simply choose your username, type in your email address, and choose a password. You immediately get full access to the forum.

More About Mystery Shopping Taxes

I don't know, I file separately for that very reason, because my husband is an employee and I am both an employee and an IC. It's just easier to do it this way.

Did you file using a Schedule C or just add your income and expenses to your 1040 ?

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

@walesmaven wrote:

Did you file using a Schedule C or just add your income and expenses to your 1040 ?

This is correct advice. Fully itemized schedule c is required. So is all income, not just 1099 income. If you made $250 from an MSC, you are required to list it.

Oh yeah, I just assumed that they filed a schedule C and SE tax form. Never occurred to me that an IC wouldn't do that.

Did you document all the different shops and the mileage necessary to do each shop? If you have this documentation, they should allow it.

Crickets...2stepps, you asked, we posted, what say you?

This will be my first tme filing as a mystery shopper. Do you actually list mystery shopper. Also maybe I'm misinterpreting but how exactly do you prove your mileage. Is it just a matter of keeping your receipts for a few years to prove it?

Shopping Idaho and Oregon/Idaho border region.

I use "consultant".

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

I use Consultant also. If they ask I'm a Customer Service Consultant.

Well this sucks, looks like we can't deduct it in 2018. From the Turbo Tax Blog:

'Business Mileage

With business mileage, your commute to your regular place of business cannot be deducted when you’re an employee. If you are self-employed any driving you do directly related to your business, like meeting with a client or going to a networking event, may be deductible business mileage. If you were an employee in 2017 and had unreimbursed expenses for driving somewhere for work outside of your regular office, then you can take the standard mileage deduction on your 2017 taxes. However, for 2018 under the new tax law, miscellaneous expenses like unreimbursed mileage cannot be deducted for tax year 2018 (the taxes you file in 2018) through Dec. 31, 2025."

[blog.turbotax.intuit.com]

Oooops! That last sentence pertains to driving you do outside of your commute for you W-2 JOB, NOT to your self-employment work.

This misunderstanding has been going the rounds for almost as long as the new tax law has been being debated. SE mileage CAN be deducted in the future.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

Edited 1 time(s). Last edit at 11/04/2018 05:41PM by walesmaven.

My first year filing taxes as a MS, I usually do taxes myself but I want to try to use my expenses for ink for my printer and cell phone use on shops. Is this possible? Is this the itemized form? Do I wait for a Schedule C from each company I shopped over 250? Thanks. Sorry lots of questions. Basically do most of you go to tax specialists? Thanks in advance.

The MSCs do not send any Schedule Cs to you. The Schedule Cis an IRS for that you fill out, listing your MS income and expenses. The resulting NET SE income is then transferred to a line item on your Form 1040. Just go to the IRS web site and print out a sample Schedule C. The one for this tax year will be somewhat different, but the sample will show you proetty much what you need to know.
ETA You put all income and expenses from all MSCs that paid you on ONE Schedule C.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

Edited 1 time(s). Last edit at 11/06/2018 05:00PM by walesmaven.

@4muppets wrote:

My first year filing taxes as a MS, I usually do taxes myself but I want to try to use my expenses for ink for my printer and cell phone use on shops. Is this possible? Is this the itemized form? Do I wait for a Schedule C from each company I shopped over 250? Thanks. Sorry lots of questions. Basically do most of you go to tax specialists? Thanks in advance.

You'll get a lot of different answers because I'm sure we all do it slightly differently, and even tax professionals and IRS agents (which we're not) will give different answers. I take an "office supplies" deduction of~$100/year which covers ink, paper, binders, clips, staples, etc. It's purposely on the low side. For most people, the amount of time you spend on your phone for shops relative to the total amount of time renders the savings here negligible. Out of 100% phone usage, how much can you document is used for MSing?

I think the threshold is $600 and it's for a 1099. Yes, you need to wait and some companies will wait until Jan 31 to get them out. You have to claim all income, though, not just what's on the 1099. This is to your benefit as you can deduct mileage (most MSer's biggest deduction) for each shop.

Online tax software (such as TaxAct) will walk you through it.

"Let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?” ~Walter Williams

Turbo Tax will also walk you through it.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

get a mileage book to use for your shops.

Whether you go to a tax specialist or do it yourself, the best advice is to keep track of all your shops and fees in a spreadsheet, along with mileage and other expenses, so that you do not rely on forms from the MSCs.

You never rely on forms from anyone always do your own forms. then it is only you to blame if something is wrong.

@2stepps wrote:

You never rely on forms from anyone always do your own forms. then it is only you to blame if something is wrong.

What?

Did you file a schedule c?

@2stepps wrote:

You never rely on forms from anyone always do your own forms. then it is only you to blame if something is wrong.

I think the "forms" to which she was referring were the 1099s that the MSCs send.

You should be able to provide them with the list of shops you did and mileage to and from those shops to satisfy their requirement. Technically, you should be recording beginning and ending mileage on your vehicle for each shop, but I'm not sure how picky they are with that.

I'm also a little bit confused as to why you didn't file a schedule C and claim your mileage on there so it would be pretty obvious what it's tied to? Since you are technically self employed you need to file a schedule C, not claim Misc income.

I use Google maps for my mileage and keep a spreadsheet from when I leave my house to when I get back and distance between each shop. It might be 50 pages, but I print the entire sheet and my tax preparer turns in the sheets.

I am a tax preparer as well as mystery shopper and you should be filing with a schedule C as self employed! You can deduct internet, phone, cell phone, mileage, etc! In this particular case, if you did not file a schedule C, tell them you want to amend your return and redo it with the schedule C info.

I've never gotten a letter from the IRS. I don't even make enough to get an audit. If it wasn't for mystery shopping, I wouldn't even have to file taxes, I make so little.

I have been dealing with deductions as a contractor for decades. It's very simple ... you total all the money you've earned for the year as a contractor. Then, total all your expenses ... mostly mileage, home office expenses and maybe tools (like a covert video recorder) ... and use a free program like the one available from [www.creditkarma.com] to figure it all out. Just follow the steps. There are IRS rules about how to deduct Home Office expenses, and you may find you can get more than you expect. You will, however, need to have some dedicated office space in your home. Just be sure to keep receipts and copies of your heating bill, water bill, phone bill, electric bill, etc. - they all come into play. Even portions of your rent/mortgage and insurance can qualify. Keep track of miles driven to and from shops and your home. Bottom line is, you can deduct any expense you have incurred in an effort to earn money that the government would tax as income.

You only have to report income over $600. Your 1099 will have everything you need to know. Any income elbow $600 does not have to be reported.

Edited 1 time(s). Last edit at 11/09/2018 08:46PM by LindaK.

If you are using the same vehicle throughout the year, you need to maintain a vehicle log. An IRS examiner may question it, but if you have your paperwork, they will allow it. Yep, you have to file Schedule C and Schedule SE.

@LindaK wrote:

You only have to report income over $600. Your 1099 will have everything you need to know. Any income elbow $600 does not have to be reported.

Absolutely false. You need to report all income. Companies are only required to issue 1099’s for income over $600, but you still need to report everything you earned.

Do I need to report even $135?

Sorry, only registered users may post in this forum.

Click here to login

IRS Request

Create an Account or Log In

Official List of Mystery Shopping Companies

Mystery Shopper Magazine