In the light of the new “$600 threshold” reporting rule, I’m expecting 1099-K form from PayPal in January 2022.
It is my first year of mystery shopping and I haven’t had the pleasure of filing business (I did register one member LLC in January 2022) tax return yet. Any word of advice?
Would especially appreciate guidance on how to lower my taxable income. What can be claimed as an expense? How about all these dining shops, are they considered business meals (with a 100% deduction) or income?

Oh, boy.

The FEE only is taxable income; the reimbursement is for a required purchase, and does not result in taxable income. In fact, if the reimbursement is $100 and you spend $125, you have $25 in deductible expense.

Go to IRS.gov and print out a schedule C, and the instructions therewith. It will basically list your deductible expenses.

For me, in a rural area with lots of travel, my biggest deduction is for miles.

Mileage is a big one. You could get into more deductions, like cost of cell phone, phone plan, any other equipment you may normally use for shops - like if you have to print out Letters of Authorization - printer ink and paper costs, etc.
If you're not working with a CPA or an otherwise qualified tax preparer for taxes, I would probably not go crazy with trying to deduct things.

Get yourself a good accountant... if you aren't willing do educate yourself (ie, read IRS tax law NOT take the word of random internet people) then you need to hire a professional.
1. You have to claim EVERY SINGLE PENNY of income, doesn't matter what PayPal does or does not do. Seriously people!

2. Yes, there are a lot of deductions. Keep insanely detailed records.

To clarify how I would interpret what Ceasesmith said ...
" the reimbursement is for a required purchase, and does not result in taxable income. In fact, if the reimbursement is $100 and you spend $125, you have $25 in deductible expense."
The key phrase here is "required purchase". So if your required purchase at, let's say a restaurant, and is any one entree and a drink with reimbursement up to $25. You decide that rather than buying the chicken and a soda which would cost $24.95 within the reimbursement you want the steak with bacon wrapped potato entree with a cocktail. The cost for that is $50. You cannot deduct the difference of $25 as you could have stayed within the reimbursement. But if you get to the restaurant and find they no longer carry that $24,95 meal and now the least expensive meal with a drink is $40. Yes , as you have no opportunity to stay within the reimbursement amount , you can deduct the difference of $15 as an expense.
This $600 reporting rule is not new, however third parties payment systems such as paypal have only been reporting earnings over $600 to the IRS for a few years. This reporting rule does not mean YOU do not have to report earnings under $600. It simply means the company you received the payments from only needs to send you and the IRS a 1099 if you earned at least $600. YOU are required to report all earnings to the IRS even if you did not receive a 1099.

The MSPA is mostly unnecessary, but they do have some stuff on setting up everything the right way (tracking expenses, etc. for tax purposes).

That said, you COULD deduct the cost of the tax preparation which would erase a ton of your profit if you're only at $600 from PayPal.

Thank you, appreciate your responses! Going to the IRS website right now.

All of my receipts and documents are in an online boot box. I take everything to Tax Dude (whom I found on a shop) during tax season. He makes sure I get a fat refund.

"Online boot box". That's a new one for me, LOL!

But I do believe in "tax dudes".

Bigger than a shoe box and nothing fades!