Mileage Deduction for No Fee Food Shops?

Can you still claim mileage if you don't claim the food as income and then claim the food as an expense?

Can you still deduct mileage for these food shops, like for ACL where you get the cost of the food but no fee?

I'm doing my taxes and don't know if I can claim those miles. Thanks!!

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Yes. You can also claim the mileage deduction for shops that you didn't get paid for (the place was closed, or some other reason, etc).
"A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business."
[www.irs.gov]
Just because some MS jobs do not make a fee, that does not change the fact that the mileage is a deductible expense. It is the SUM of the tasks generating net income that is the focus of the IRS rule.

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.
While I think it's probably foolish to take any tax advice from anonymous online sources, it's my understanding that the rules of what can be deducted will apply to your business as a whole...and not an individual assignment.

If you are producing income as a shopper and writing off milage, yet showing profit annually, this would seem like a reasonable deduction. If you focus entirely on reimbursement only assignment and use mileage deductions to repeatedly create a loss for your business that allows a significant personal tax deduction, I could see an argument for it being disallowed.

The easy answer is to say, "Consult a tax professional," but I think there is ultimately no black & white rule for allowing deductions. For me, I just like to make sure I have a valid argument for every deduction I take in case it ever comes up. If taking that reimbursement-only assignment can possibly open up the window to better assignment that offer a fee (and with ACL it often will), then there's a good argument for performing the assignment at a loss.
I should have an overall profit, I just was not sure if you could deduct milage for a reimbursement only shop. I was not sure if you would then need to show the reimbursement in income and then deduct it as an expense.
Niner, either way, it is a "wash" and IRS does not care which way we do 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.
But if you don't claim the reimbursement as income, and then expense it, can you still deduct the mileage? I think the answer is yes based on what everyone is saying.

I don't want to hide income!
IRS is very specific; reimbursements of business expenses do not count as income...regardless of how you treat them.

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.
@SteveSoCal wrote:

While I think it's probably foolish to take any tax advice from anonymous online sources

That's really all that needs to be said here.
I'm getting a different take on this -- if you do not claim the reimbursement as income, you can't deduct the cost of the food as a business expense.

Here's why (IGNORING mileage):

Shop fee 0
Reimbursement 10

Taxable income: 0
Deductible
expense for
purchase 0

Of course, Niner can deduct the cost of the purchase -- as long as he's counting the purchase reimbursement as income.
@SoCalMama wrote:

@SteveSoCal wrote:

While I think it's probably foolish to take any tax advice from anonymous online sources

That's really all that needs to be said here.

I think you people know more than most tax preparers since you have been doing this on a regular basis and there is a large community of people here. I am not going to a CPA and paying $1,000 for my $200 net shopper income. I have a complicated tax situation for other reasons, that I am confident handling on my own. This stuff is new. A CPA would have a party with me.

Edited 1 time(s). Last edit at 03/29/2019 06:39PM by Niner.
That's true. The other method is to simply not report the reimbursement at all. Most (but not all) MSC will not include reimbursements on the 1099. Either way the net outcome is the same. You report the reimbursement as income and deduct 100% of it, or you don't report it at all and show 0 taxable income. You will get people on this forum arguing either way, but the general consensus is either way is fine, as long as you're consistent. If the 1099 does include reimbursements, then obviously you are forced use the report method.

@ceasesmith wrote:

I'm getting a different take on this -- if you do not claim the reimbursement as income, you can't deduct the cost of the food as a business expense.

Here's why (IGNORING mileage):

Shop fee 0
Reimbursement 10

Taxable income: 0
Deductible
expense for
purchase 0

Of course, Niner can deduct the cost of the purchase -- as long as he's counting the purchase reimbursement as income.
I am planning on not listing the reimbursements. My issue was (and is), if I can still take the mileage deduction for those shops, and the answer is hopefully yes.
Yes, of course. As long as you have other shops that do show an income (so you have something to deduct the mileage from), you're fine.


@Niner wrote:

I am planning on not listing the reimbursements. My issue was (and is), if I can still take the mileage deduction for those shops, and the answer is hopefully yes.
And, the grand total for mileage to restaurants is:
2868 miles!

My total miles are something crazy.

Final total- loss of $2.80

Edited 2 time(s). Last edit at 03/29/2019 07:39PM by Niner.
@Niner wrote:

@SoCalMama wrote:

@SteveSoCal wrote:

While I think it's probably foolish to take any tax advice from anonymous online sources

That's really all that needs to be said here.

I think you people know more than most tax preparers since you have been doing this on a regular basis and there is a large community of people here. I am not going to a CPA and paying $1,000 for my $200 net shopper income. I have a complicated tax situation for other reasons, that I am confident handling on my own. This stuff is new. A CPA would have a party with me.

I think that you are highly overestimating the knowledge base here. Let me know if you feel the same way once you have: edited shops, scheduled shops, or attended a conference. There are some very bright people here. They are not the majority by any means.
This issue has been discussed by the tax attorney who has addressed several IMSC conferences. My answer, above, is based on exactly what he has said (more than once) as well as on my own experience being a sole proprietorial and filing my own taxes all but 3 of the last years.

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.
@Niner wrote:

And, the grand total for mileage to restaurants is:
2868 miles!

My total miles are something crazy.

Final total- loss of $2.80


You are kidding, right? You drove over 2800 miles for a non-fee shop? The IRS might not like that too much. If you were on a vacay or business trip, you can deduct the mileage from where you're home based to restaurant, but not the entire distance. When I travel to visit my sons and do shops there, I certainly do not deduct the miles taken to get there. You can try it, but I personally think it's a huge red flag.

*****************************************************************************
The more I learn about people...the more I like my dog..

Mark Twain
I only deducted the distance from the hotel to the restaurant. Those did not account for a lot of the miles. We often will drive to Philly for dinner, and that's 155 miles round trip.

I am not deducting the mileage to my vacation destination. Every shop I have is documented with the actual mileage. My total mileage for shops was 5968 miles from June to December.

My 2017 car that I bought new has 87,000 miles on it. I drive a lot.

Edited 2 time(s). Last edit at 03/29/2019 08:06PM by Niner.
Oh, I misunderstood. I thought it was for one restaurant. Apologies

*****************************************************************************
The more I learn about people...the more I like my dog..

Mark Twain
So, here is my argument in favor of listing the cost of a meal as a business expense, and then listing the reimbursement as income. It is indeed a wash. It shouldn't matter, But, what happens when you do a shop for a meal, just reimbursement, and for whatever reason you don't get reimbursed. Maybe you went on a wrong day. Maybe the photo was blurry. When I list expenses for meals, I list all of them. If I don't get reimbursed for one of them, it becomes a business expense. Those who do not list all meals as expenses suddenly might have to explain why this unreimbursed meal popped up if audited. IMHO, it would appear that you were only doing meals that can't be reimbursed. Since I list every meal, the occasional "problem" is just one of many meals for which I expected to be reimbursed.

Shopping Southeast Pennsylvania, Delaware above the canal, and southwestern NJ since 2008
And here is my take on asking "non professionals" for advice. I more often than not see the answer that you better consult a professional in whatever sort of question someone asks, not just mystery shopping. I see only good if someone asks a group of people what their thoughts and experiences are with the topic as long as the person asking the question then does due diligence taking all the responses they received into account including going directly to the IRS site and seeing what they have to say. I consider myself more intelligent than some of the professionals I have gotten advice from in the past. I am not only speaking of taxes. But even with taxes your personal tax preparer may be someone who has never run into the situation you present. But if you take your knowledge gleaned from your group that you consulted and then read the rules yourself and also speak with your professional if you hire one about differing interpretations of the law I find you can often come to a better conclusion for your self. Sometimes you can even do the thing yourself..horrors in my neighborhood where it seems no one does anything for themselves...everyone hires someone else rather than wash a window, mow their own lawn, prepare their own dinner etc. these days.. Now I know that does not compare to handling an IRS issue but I think many of us can read the IRS rules and together with knowledge gleaned from here can come to our own conclusions. Then if we feel unsure can consult a professional.
The point is more that it's foolish to feel "covered" based on what you read here. As Sandy mentioned, it should be a springboard for doing your own research and coming to your decision about what to deduct.

I think walesmaven and I both made the same point, just stated differently. You look at the annual profit/loss overall and work from there.
Just be sure, if you don't list the reimbursements as income, you MAY NOT deduct the meal as a business expense. Mileage is still deductible.

@Niner wrote:

I am planning on not listing the reimbursements. My issue was (and is), if I can still take the mileage deduction for those shops, and the answer is hopefully yes.
I was wondering about the mileage part if you don't list the reimbursement, since the income and reimbursement cancel. Thanks, everyone!
@Niner wrote:

Can you still claim mileage if you don't claim the food as income and then claim the food as an expense?

Can you still deduct mileage for these food shops, like for ACL where you get the cost of the food but no fee?

I'm doing my taxes and don't know if I can claim those miles. Thanks!!

I would say if you are talking about 4 or 5 shops you ate out at and were not even paid then just pretend it all never happened.
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