One of the gas station mystery shop's pays a $10.00 fee. They do require you to make a gas purchase, but there is no reimbursement for the gas purchase. Can the gas purchase be used as a business deduction, since you are required to purchase the gas for the assignment? Can I fill up my tank and write it off?

Yes, and probably not. If they require a gas purchase but do not reimburse at all (very odd, haven't seen one like that), then yes, it is a business expense for tax purposes. Can you fill up your tank and write the whole thing off? IMHO, no. If the MSC specifies a minimum $5 purchase, you can buy $5. If they require $10, you can buy $10. IF they are silent on the subject, my opinion is that you have to buy a reasonable amount in the situation, keeping in mnd that you MIGHT one day have to justify "reasonable" to the IRS. I have seen MSCs which require and reimburse for $2 of gas. Except in NJ and OR, that might be reasonable, but in NJ and OR which both require full service, I personally consider $5 to be the minimum reasonable purchase.

I will be curious to read other opinions.

@johnb974 wrote:

One of the gas station mystery shop's pays a $10.00 fee. They do require you to make a gas purchase, but there is no reimbursement for the gas purchase. Can the gas purchase be used as a business deduction, since you are required to purchase the gas for the assignment? Can I fill up my tank and write it off?

I never got the message. Thank you for the response. The MSC pays $10 fee and $5 reimbursement for a store purchase. No reimbursement for the gas, no limit on how much gas. You do need a gas receipt.

If you deduct the .55/mile for mileage, your gas is already factored in. If you deduct a gas expense on top of this you are double-dipping.

I looked at the guidelines "Purchase of at least $3 of fuel. " So at least $3 is a tax write off.

@mbrasseau wrote:

If you deduct the .55/mile for mileage, your gas is already factored in. If you deduct a gas expense on top of this you are double-dipping.

Welcome to the forum.

You are, unfortunately, incorrect in this assessment.

If you are REQUIRED to purchase gas to complete your assignment, and you are NOT reimbursed for it, then it is, indeed, a deductible expense (in addition to your business mileage deduction which does, indeed, factor in the cost of running a vehicle).

It's just like this: I have to eat. Mostly, I prefer to eat every day. My $5 required inside the store purchase was food. Deductible or not?

Yeppers. Deductible. Even though I would have bought it on my own dime, because, as I said, I do like to eat every day.

Nevertheless, let me repeat the mantra: Do not accept tax advice on a public forum.

For what it is worth, Ceasesmith, I agree with you. If Mbrasseau were correct, then everyone who bought gas and was reimbursed would have to change the reimbursement for gas into revenue. It is not. It is a reimbursed expense. A required $3 gas purchase which is not reimbursed is a deductible business expense. You and I agree on that point.

@ceasesmith wrote:

@mbrasseau wrote:

If you deduct the .55/mile for mileage, your gas is already factored in. If you deduct a gas expense on top of this you are double-dipping.

Welcome to the forum.

You are, unfortunately, incorrect in this assessment.

If you are REQUIRED to purchase gas to complete your assignment, and you are NOT reimbursed for it, then it is, indeed, a deductible expense (in addition to your business mileage deduction which does, indeed, factor in the cost of running a vehicle).

It's just like this: I have to eat. Mostly, I prefer to eat every day. My $5 required inside the store purchase was food. Deductible or not?

Yeppers. Deductible. Even though I would have bought it on my own dime, because, as I said, I do like to eat every day.

Nevertheless, let me repeat the mantra: Do not accept tax advice on a public forum.

These are all just opinions. There is nothing authoritative on the matter from the IRS or the tax courts. It's a gray area. I don't count my gas reimbursements as income for the simple reason I would rather err in my favor than the other way around. Better to pay the back taxes if I'm wrong than to lose out on a potentially valid deduction. Same would go for unreimbursed required gas purchases, but common sense tells me not to write off a whole tank of gas.

So if the guidelines say $3 minimum gas purchase, but it's NOT a reimbursement, and I buy $30 worth of gas, can I write off the $30?

@mystery2me wrote:

These are all just opinions. There is nothing authoritative on the matter from the IRS or the tax courts. It's a gray area. I don't count my gas reimbursements as income for the simple reason I would rather err in my favor than the other way around. Better to pay the back taxes if I'm wrong than to lose out on a potentially valid deduction. Same would go for unreimbursed required gas purchases, but common sense tells me not to write off a whole tank of gas.

So it's a judgement call? If you're audited what's the worst that could happen?

Its not an opinion. I'm a registered tax preparer. I've had several clients, both self-employed and not, where were who get various expenses reimbursed. And the IRS has lots to say about reimbursed expenses. It is NOT a gray area.

Yes, the amount paid to you is considered revenue. And the amount you pay is the expense. And it is on that part of the Schedule C when you are 1099'd. If you are paid W2, it is input on a specific part of the 1040.

But gas is different in that you are already getting the expense deducted when you take the .55 standard deduction. You cannot take the deduction there AND as a business expense. It is double dipping.

And the reimbursement must be included in your total monies received.

Edited 1 time(s). Last edit at 03/09/2019 11:45PM by mbrasseau.

@johnb974 wrote:

So if the guidelines say $3 minimum gas purchase, but it's NOT a reimbursement, and I buy $30 worth of gas, can I write off the $30?

No.

If you're audited, really really bad things can happen. If they decide you deliberately overstated expenses, or deliberately understated income, they can go back and audit previous years -- and if they decide it's fraud, I believe they can audit as far back as they want (that, or 10 years). Even if they decide it was an "honest error" on your part, you can be hit with fees/fines/penalties and interest that will make you wish you had been more conservative on your tax return.

Even worse -- jail or prison, confiscation of assets, etc., etc., etc.

You do NOT want to get on the IRS' bad side.

Believe me.

Point taken. I stand corrected.

However, I can safely posit that I used the reimbursed gas for personal mileage (due to my exquisitely detailed recordkeeping).

People without records supporting this could not.

I freely admit that I'm not one of those people who do 40 or 80 or 100 gas stations a month. Last year, I didn't even average 10 a month. So my record keeping is simpler than those road warriors who might complete 40 gas stations in a weekend.

For example, I shopped a gas station 150 miles from home. From the gas station, I then traveled an additional 100 miles to visit a friend -- totally non-business travel. Therefore, I didn't take a deduction for the gas I used (personal miles not being qualified for the deduction).

But like I said, people without records could not substantiate this.

I can.

@mbrasseau wrote:

Its not an opinion. I'm a registered tax preparer. I've had several clients, both self-employed and not, where were who get various expenses reimbursed. And the IRS has lots to say about reimbursed expenses. It is NOT a gray area.

Yes, the amount paid to you is considered revenue. And the amount you pay is the expense. And it is on that part of the Schedule C when you are 1099'd. If you are paid W2, it is input on a specific part of the 1040.

But gas is different in that you are already getting the expense deducted when you take the .55 standard deduction. You cannot take the deduction there AND as a business expense. It is double dipping.

And the reimbursement must be included in your total monies received.

Can you perform a grocery store shop that pays a flat reimbursement of $10, fill up your cart and write $300 worth of food off?

Of course not.

For the original gas question: I believe the follow up states $5 reimbursement for food and minimum $3 in gas. You can at minimum justify the $3 in gas a reimbursement as it is a required purchase, potentially the entire $10 fee is your maximum. Anything above $10 would definitely not be considered legitimate.

How you choose to run your business is very important.

@isaiah58 wrote:

Can you perform a grocery store shop that pays a flat reimbursement of $10, fill up your cart and write $300 worth of food off?

Many people have wasted a LOT of time answering his questions with logic. Add yourself to that list.

The sad part is you could call the IRS, speak to 3 different agents and get 3 different opinions.

There is no reimbursement for the gas purchase. You're required to purchase $3 at a minimum.

You can deduct "ordinary and necessary" expenses. I would say $300 of groceries when only $10 is required is not reasonable. For a $8.50 purchase at Sonic when reimbursement limit is $7.80, writing off the $0.70 overage would be reasonable in my opinion. Only evaluating the cheapest items every time you go isn't a fair evaluation.

Edited 1 time(s). Last edit at 03/23/2019 08:47PM by boridi.

I am not a tax preparer but the way I look at it is this...the 50 odd cents deduction you take for your car is based on miles driven so it is for the cost for you to get your car to and from the jobs. The gas you have to purchase for the job does not need to be used by you for work related driving. Unless you use that car 100% for mystery shopping it does not sound like it is double dipping to me. And if your car is only used for mystery shopping you might be better off taking a different sort of deduction. But in general the amount you can deduct as business expense is what you spent up to the limit of spending imposed by the guidelines you have for that job. An exception would be if you cannot make a purchase as small as their max reimbursement. So if you spent $5 for gas but could have easily purchased $3 worth to exactly meet their max reimbursement then you should not be deducting $5. the job is at a gas station that requires a $5 min purchase then you can deduct $5. It is the amount of your check from the msc that is for reimbursement that you are allowed to then back out of your total pay...not however much you decide to spend at the shop unless you are forced to spend more to meet the requirements...not by choice but because the amt reimbursed to you is too little to purchase anything.

And better yet, none of the 3 various answers you get are binding on the IRS.

Unless you can talk them into putting it in writing, in a letter, and sending it to you.

LOL!!!

@pieslapper wrote:

The sad part is you could call the IRS, speak to 3 different agents and get 3 different opinions.