@LindaK

You are required to report all income. Only income totaling over $600 from any one MSP is required to be reported to you, and the IRS, on a 1099.

You can’t be both for the same company.

What are you talking about? Neither of those people work for mystery shopping companies, we are all independent contractors. And nearly all of us know (except for you) that you are supposed to report all of your income, even if you only make $400 for ABC mystery shopping company it's still taxable income. You need to read the tax laws, my dear.

Yes. It does not matter if you do not receive a 1099 from the MSC, you are still required by law to report all income.

@Carmel2450 wrote:

Do I need to report even $135?

Curious as to whether they except GPS tracking data.

I use an app called Everlance which allows me to categorize my various mileage deductions (currently mystery shopping and Uber)

I'm terrible about keeping a log.

Seeing as you can show proof for each completed project and can do a Google map for each day you work, is a physical log a legal requirement?

@walesmaven wrote:

I use "consultant".

My tax accountant husband lists me as "customer experience evaluator." I make sure I make at lest $600 from one company (Market Force is the easiest for me) so I get a guaranteed 1099. I keep a mileage log (date, location, beginning, arrival, and end mileage) and attach the receipt or business card to the assignment confirmation email. It is all about proof. It is up to the taxpayer to provide the proof. Too many people cheat and when they cheat they rob from the rest of us who do not. Take every allowable deduction but don't fictionalize.

I also claim a home office which means I take my electricity and heat bill and divide by the number of rooms. For example I have 8 rooms so if my electric bill for the year is $1300 I take that number divide by 8 and the amount is what I file on my taxes as a deduction. I have my taxes done by a professional and I have done this for the past 15 years and have not had a problem.

ALL income means all income.

Looking at the second sentence under "Business Mileage" I think we can deduct mileage without any problems. I have never really deducted millage in my taxes. I guess I have to take a critical look at this for next year's taxes. In the past, I did not make enough from Mystery shopping top reportable levels. However, this year has been different from previous years as I have been getting high paying jobs lately and not just the $7-$10-$12 jobs. So thanks for having this discussion going. It would help the likes like me and other first time mystery shoppers.

@wrosie wrote:

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]

This is true kmrobe01, because I was told same thing by a tax prepare. I might have to report a few of mine this year though.....that's what I get for seeking high paying assignments. My question however is whether reimbursements counts as income. Any advice on this?

@kmrobe01 wrote:

@LindaK

You are required to report all income. Only income totaling over $600 from any one MSP is required to be reported to you, and the IRS, on a 1099.

You do not report reimbursements

Reimbursements are not reported

Thanks, I was wondering this same thing! The only mystery shopping I'm doing is paying for food upfront, and then getting reimbursed what I spent by the company. So, no worries or dealing with taxes then? Yay!

Yes, you do not report reimbursements. That is not counted as EARNED income. Don't believe it when someone says all income. I get Social Security. I don't report that.

Let me restate: ALL earned income, no matter the amount, MUST be reported by an individual to the IRS. In our case, Independent Contractors, we would report ALL of our income on a Schedule C. Any one MSP that we earned MORE THAN $600 from MUST issue US and the IRS a 1099. So for example, I did work for ABC and earned $110 for the year. ABC does NOT have to issue ME or the IRS a 1099. I also did work for XYZ and earned $720 for the year. XYZ MUST issue ME and the IRS a 1099. If this was my only income for the year, I MUST report, on Schedule C, a total earning of $830.

As far as reimbursement, this should Not be included as income. However, if it IS included as income on a 1099, you will report it in the “other expenses” section of your Schedule C, and you list it as “reimbursed expense included in 1099".

Edited 1 time(s). Last edit at 11/09/2018 10:56PM by kmrobe01.

"As far as reimbursement, this should Not be included as income. However, if it IS included as income on a 1099"...….reimbursement are NOT included on the 1099. They are NOT reportable as income. Reimbursements are not EARNED income.

@kmrobe01 wrote:

Let me restate: ALL earned income, no matter the amount, MUST be reported by an individual to the IRS. In our case, Independent Contractors, we would report ALL of our income on a Schedule C. Any one MSP that we earned MORE THAN $600 from MUST issue US and the IRS a 1099. So for example, I did work for ABC and earned $110 for the year. ABC does NOT have to issue ME or the IRS a 1099. I also did work for XYZ and earned $720 for the year. XYZ MUST issue ME and the IRS a 1099. If this was my only income for the year, I MUST report, on Schedule C, a total earning of $830.

As far as reimbursement, this should Not be included as income. However, if it IS included as income on a 1099, you will report it in the “other expenses” section of your Schedule C, and you list it as “reimbursed expense included in 1099".

Excellent post. You explained it very clearly.

From a shop I do for pizzas. The company sites says: "This is the amount you should report to the I.R.S. Base pay $150.00" I do not report the $203 in reimbursements. The $150 is EARNED INCOME. That is reported.

Meal Reimbursements May Be Taxable. Local governments must carefully consider whether reimbursements for employee meals are taxable. For example, the Internal Revenue Service (IRS) code and regulations generally require withholding of taxes when an employee is reimbursed for meals but does not stay overnight......only for EMPLOYEES. As a mystery shopper you're NOT an employee. The tax code is different.

I use Customer Service Evaluator.

I see someone that will have to talk to the tax guys and gals in a year or two.

@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.

Yes, you can. But not at the same time. You can do IC work and then get hired as an employee. Or you can be an employee and be rifed (reduction in force) and then come back as an IC. But never at the same time or pay period. I do not think you can alternate either.

@LindaK wrote:

You can’t be both for the same company.

I started shopping this year after a 15 year break. Do the 1099's include not just the shopper pay but the reimbursement amount? Reimbursement is not pay. If the latter than do you deduct the amount you spent at the shop such as the cost of a meal as an expense?

To further explain: Tes filed a schedule C. Yes I filed an amended return they sent me a check and then a month later they asked for all of it back plus $600 in interest and penalties and Tuesday is the deadline to respond I think I will tell them to take it out of my SSI disability check. I guess the paperwork reduction act only applies to the government and not people that send them stuff.

Some MSCs pay a flat fee which includes the amount of required purchases. In those cases, I report the total amount (no choice if I earn enough to get a 1099), and then list the cost of the required purchases as reimbursed expenses / other expenses on Schedule C. That results in the reimbursed expenses being subtracted from my income. Easy to do. I use TurboTax and it walks me through the steps. I am sure that other tax preparation programs do so as well.

Other comments: The IRS requires a contemporaneous record of mileage. I record all of my trips in an Excel spreadsheet. In the same spreadsheet, I record the odometer reading on January 1 and on December 31. Averaged over 10 years, about 1/4 to 1/3 of my "income" is offset by mileage. This will vary from one person to another, but those of you who are not subtracting mileage are missing out an a large "deduction". I keep receipts for paper, ink, tape, etc.

@HelenaNOLA wrote:

I started shopping this year after a 15 year break. Do the 1099's include not just the shopper pay but the reimbursement amount? Reimbursement is not pay. If the latter than do you deduct the amount you spent at the shop such as the cost of a meal as an expense?

You should consult a tax professional.

@2stepps I can recommend several good ones in your area. The IRS makes mistakes too. Please consult a tax professional. There are free and low cost options if you can't afford one.

Hi 2stepps,
Not sure where the other half of this thread is as this one is a clarification but I had this type of thing happen to me 2 years ago when I filed an amended return. I spent 8 months with them sending me checks I knew I should not have gotten. I returned some and kept a copy and then they would send me back the same amt on a new check. I sent them back and later on would send me a similar letter asking for the money back from me and adding all sorts of fees, interest , penalties etc. At the end I had 4 or 5 checks that were returned , resent to me, returned again etc. My tax guy told me it would take about 8 months for them to straighten it all out when somehow the return section and the send out section at the IRS finally was able to put their notes and dates together. Then I got a letter from them telling me I owed nothing around 8 mos later. If you thought you were not due the $600 you should not have cashed it and might owe the penalty but if you were owed the $600 eventually the amendment dept and the regular return dept will finish up and all your files will be in one place and someone there will see what happened and let you know you owe nothing. In the meantime it would probably be a good thing to call or write them and explain what happened just to have the story from your point of view on record.
This is based on my experience and exactly what my tax guy told me is what happened in my case. I will try never to file an amended return again...The one time I did it I got this mess. The one time I filed an extension about 15 years ago was the only time I was audited. (Just a phone audit but still a nail biting experience. ) Coincidence???

Some msc's seem to include reimbursements on their 1099's and others do not. You need to keep your own good records and use those to figure out how much you earned in fees and bonuses vs reimbursements so you can report the different figures accurately to the IRS.
As for mileage I have never been questioned on my mileage figures. That does not mean that this year will not be the year they will ask for backup. So keep records. One thing which might throw up a red flag is reporting mileage which eats up all your fees...and leaves you with no income or a negative income. To report mystery shopping as a business rather than a hobby the IRS expects you will make a profit. Some of us do mostly reimbursement shops but if you consistently report you earned , for example $250 in fees, $2,500 in reimbursements and are claiming a mileage deduction of $350 leaving a loss for your "business" year after year the IRS will come knocking at your door.

Legally, the answer is yes. Income in any amount has to be reported. I think that children who earn less than $600 a year are still able to avoid reporting that income, but I admit that changes in the tax laws since my kids were "eligible" my have changed that also.As an adult tax payer, you have to report the $135 on Schedule C.

@Carmel2450 wrote:

Do I need to report even $135?