Hi!
I am looking through some tax information, and I was just wondering how everybody handles their taxes from mystery shopping. I know if one company you make $600 or more, you have to report it, right? But is that from each individual company or altogether combined? Do all the companies send out the tax form if you make that much or more? Any advice would be greatly appreciated!

You have to report ALL of your MS income, regardless of whether or not you receive a 1099 and/or make more than $600 (in total or from multiple MSCs). That $600 threshold only refers to the payor, not the payee. If a company or sole proprietor pays a person $600 or more in a single year, they have to issue a 1099. Some don't, but you still have to report the income.

Don't forget to also claim every single deduction you're legally entitled to.



Edited 1 time(s). Last edit at 04/16/2023 09:07PM by BirdyC.

Deleted; duplicate post.



Edited 1 time(s). Last edit at 04/16/2023 09:06PM by BirdyC.

All income must be reported.

Work with a tax pro, or a tax software.

I was able to deduct things that most people wouldn't think of.

It is surprising how often that little detail is misinterpreted.

I sell my products in a retail chain (I rent booths) and in our vendor discussion boards someone who claims to be a tax preparer was actually telling people that this year if you made less than 10,000 in your crafting field you were considered a "hobbyist" and didn't have to claim it. WTH was she thinking.
I set the record straight asap so no other hapless makers would believe that it was true because a tax preparer said it.

Incredible misinformation out there.

Throwing in another tax question - how detailed does your schedule C need to be? Can I say I earned $x,xxx mystery shopping and say I had $x,xxx in mystery shopping expenses? I was beneath the threshold to receive any 1099s from any company (yes, I am reporting everything). Or, is it better if I list MSC 1 $xxx, MSC 2 $xxx, etc. in a list.

Thank you!

You don't list each MSC and amount received from each. You'll list your total gross income, then your expenses, which should be broken down into categories per Part II on Schedule C. You can add categories if you have expenses that don't fit into the standard ones. Your mileage will be separate from the rest. If you purchased a computer, printer, camera, cell phone, etc., in 2022, you need to figure out what you should deduct in full and what to depreciate, how much of the cost to expense against your business, and so on.

Have you looked at the Schedule C? That should answer most of your questions. If this is the first time you've done your business taxes, I highly recommend using a tax preparer. Chances are you'll owe less in taxes by doing so.

@BirdyC wrote:

You don't list each MSC and amount received from each. You'll list your total gross income, then your expenses, which should be broken down into categories per Part II on Schedule C. You can add categories if you have expenses that don't fit into the standard ones. Your mileage will be separate from the rest. If you purchased a computer, printer, camera, cell phone, etc., in 2022, you need to figure out what you should deduct in full and what to depreciate, how much of the cost to expense against your business, and so on.

Have you looked at the Schedule C? That should answer most of your questions. If this is the first time you've done your business taxes, I highly recommend using a tax preparer. Chances are you'll owe less in taxes by doing so.

Thanks SO much for writing. My better half thought it was really bad for me to add everything in a lump for income. Neither of us has been self employed before.

If I understand correctly, you're saying to lump everything. So, let's say I received $1000 from ten MSCs I'd put $10,000 for income. Then if $7000 of the money receive was for reimbursements, I would put the $7000 of reimbursements under expenses. Is this further broken out by category? Would I detail $1000 in groceries, $1000 in fast food, $1000 in fine dining, etc?

I did add in things like mileage, cell phone, internet, calendar/planner, health insurace, etc. I guess I'm confused about how to treat the purchases required for shops.

I originally did the gross amount received and added mystery shopping reimbursements under expenses as a lump sum. I'm such a newbie at this, I really appreciate it.

Edited 2 time(s). Last edit at 04/19/2023 01:57PM by olympia tennenbaum.

@olympia tennenbaum wrote:

Thanks SO much for writing. My better half thought it was really bad for me to add everything in a lump for income. Neither of us has been self employeed before.

You're welcome, and that's why I suggest having a pro do your taxes, at least for this first time around. I've been self-employed for around 40+ years and have never done my own taxes. Nor would I attempt them!

@olympia tennenbaum wrote:

If I understand correctly, you're saying to lump everything. So, let's say I received $1000 from ten MSCs I'd put $10,000 for income. Then if $7000 of the money receive was for reimbursements, I would put the $7000 of reimbursements under expenses. Is this further broken out by category? Would I detail $1000 in groceries, $1000 in fast food, $1000 in fine dining, etc?

I did add in things like mileage, cell phone, internet, calendar/planner, health insurace, etc. I guess I'm confused about how to treat the purchases required for shops.

Yes, you'd just enter $10,000 for income, without itemizing from whom. As to reimbursements, you'd count actual reimbursements plus anything you went out of pocket if it were required for the shop. So if you did an upscale dining shop, for which the reimbursement was $100, but you paid $125 for the bare minimum requirement, you can can also count the $25 as an expense, but only if you went over by necessity, not by choice.

Remember to deduct only the proportional amount of expenses like internet and cell phone, not 100%. If you have personal email and use the internet for stuff other than business, you can only deduct the percentage you use for business; same for cell phone, calendar/planner, etc.

Health insurance is specifically excluded as a deductible expense unless you're providing it for employees.

Download a copy of Schedule C from the IRS site; that should help. [www.irs.gov].

But I can't stress how important it is to hire a tax professional. Contrary to popular belief, it doesn't necessarily cost a lot. My guy, whom I've used for 20 years, charges us, on average, between $250 and $275. Part of that is because I give him what he needs in a very organized way, on separate spreadsheets for income and expenses, and already broken down into categories. That's the one thing I've learned to do right in these 40 years--but I'd never attempt to do my own taxes!!!



Edited 2 time(s). Last edit at 04/18/2023 06:34PM by BirdyC.

I personally list revenue separately for each MSC that sends me a 1099 form. In my mind, that allows the IRS to match them up. Then I lump all of the rest together as revenue. If I buy a high price item (such as a computer), I list it as an expense that I Expense (a tax term for not depreciating the item). I try to put the rest of my deductions into the correct category on Schedule C (as a lump sum for each category).

@olympia tennenbaum wrote:

If I understand correctly, you're saying to lump everything. So, let's say I received $1000 from ten MSCs I'd put $10,000 for income. Then if $7000 of the money receive was for reimbursements, I would put the $7000 of reimbursements under expenses. Is this further broken out by category? Would I detail $1000 in groceries, $1000 in fast food, $1000 in fine dining, etc?

Some is free to correct me if this is wrong, but this is my general understanding re:reimbursements.

If the spending is required for the job then no, the reimbursement is not taxable income. You're taxed on the money you make. So...you would report the earnings after deducting the reimbursement from it. Or to put it another way...look at the shop log for your shops and add up the "payment/bonus" parts. That's your taxable income. And do that separately for each MSC you work for if they didn't send you a 1099. If they did they SHOULD have broken it out already, but it never hurts to check.

Yes, please hire a competent tax professional (not just anyone will do). Mine does not charge that much more than what TurboTax was charging me for the self-employed version. A few companies do include all money paid on their 1099s, even though that is not correct. Most correctly include only the fees paid, not reimbursements.

You can either report all of your income on Schedule C, then deduct the reimbursements as expenses, or deduct the reimbursements first, then report the balance as your gross income on Schedule C. In neither case is that your taxable income, since you will still have expenses against that amount.

It's not necessary to break down your revenue by MSC. There's not even a spot to do that on Schedule C. I'm curious as to how someone does this. Attach a list to your return? And why, when it's not needed. I'm literally confused because I've never heard of this. I break it down on my own spreadsheets, of course, but that itemization doesn't go on Schedule C.

You don't even have to send in your 1099s with your return.



Edited 3 time(s). Last edit at 04/18/2023 10:27AM by BirdyC.

@mjt9598 wrote:

Yes, please hire a competent tax professional (not just anyone will do). Mine does not charge that much more than what TurboTax was charging me for the self-employed version.

This! Best person to hire is someone who either specializes in small business returns or has a lot of experience with them. Contrary to popular belief,it doesn't have to be a CPA who will charge an arm and a leg! But it should be an IRA-registered/qualified one.

Mine is a CPA, but does not charge an arm and a leg. Only about $100 more than what I was paying Turbotax.

@BirdyC wrote:

@mjt9598 wrote:

Yes, please hire a competent tax professional (not just anyone will do). Mine does not charge that much more than what TurboTax was charging me for the self-employed version.

This! Best person to hire is someone who either specializes in small business returns or has a lot of experience with them. Contrary to popular belief,it doesn't have to be a CPA who will charge an arm and a leg! But it should be an IRA-registered/qualified one.

Last minute tax filing going on? Oooh, the drama, the suspense, the intrigue.

Oh yeah, and the headache.

Maybe start earlier next year?

TurboTac asks me to individually list each 1099 that I receive, so I do. Then I report the aggregate revenue of everything that is not included in the 1099 Forms. There is no way that I know of to associate expenses with an individual 1099 Form. My expenses are all aggregated by category, the largest being the mileage deduction, but every penny helps.

@BirdyC wrote:

You can either report all of your income on Schedule C, then deduct the reimbursements as expenses, or deduct the reimbursements first, then report the balance as your gross income on Schedule C. In neither case is that your taxable income, since you will still have expenses against that amount.

It's not necessary to break down your revenue by MSC. There's not even a spot to do that on Schedule C. I'm curious as to how someone does this. Attach a list to your return? And why, when it's not needed. I'm literally confused because I've never heard of this. I break it down on my own spreadsheets, of course, but that itemization doesn't go on Schedule C.

You don't even have to send in your 1099s with your return.

@myst4au wrote:

TurboTac asks me to individually list each 1099 that I receive, so I do. Then I report the aggregate revenue of everything that is not included in the 1099 Forms. There is no way that I know of to associate expenses with an individual 1099 Form. My expenses are all aggregated by category, the largest being the mileage deduction, but every penny helps.

Oh, I didn't realize you were using Turbo Tax. I never have, so have no clue how they have you input stuff. But when the Schedule C is generated, it doesn't have the itemization on it, correct? Oh, and it wouldn't in any case be necessary to match expenses against a specific 1099. I didn't say that it is; what you're doing is the way to do it.

I was just wondering, having assumed you did your taxes yourself manually, how one would report income by individual MSC. I was confused by that. Now I'm not! Thank you for explaining that about Turbo Tax.

@mjt9598 wrote:

Mine is a CPA, but does not charge an arm and a leg. Only about $100 more than what I was paying Turbotax.

You're lucky! The first guy I used to prepare my self-employment taxes was a CPA, and he charged me almost $600 back in 1989! And he gave me wrong information. He's one of these people who said that you don't have to claim any income under $600. Whether that's really what he thought or whether he knew the rule but was trying to save his clients money, I don't know. I used him once more, then found somebody else. It did take me a long time to find a competent person; he was a CPA but not expensive. Really knew his stuff. When I moved to another state, I had to find someone else, and I've been with him since. He's not a CPA, but is a whatever-you-call-it with the IRS (certified, registered.... Not sure of the proper term, but he has an IRS number and had to take the tests and stuff).

How do you track your earnings and reimbursements? Paper pencil? Computer? Other?

google spread sheet for each company and then I paper pencil add up my totals because I don't know how to apply functions that involve different sheets (and I am old so I like paper and pencil for math)

@jazzzyjd wrote:

google spread sheet for each company and then I paper pencil add up my totals because I don't know how to apply functions that involve different sheets (and I am old so I like paper and pencil for math)

I used to use a spreadsheet somebody here posted, and it was great! But when the pandemic hit, and I was doing almost no shopping, I got out of the habit. Now that I'm doing a lot more, I need to get going with that again.

(P.S.: Sometimes I find that manual calculations are faster, but I did finally learn to use automated functions--although not across multiple sheets. The way this sheet was set up, you didn't need more than one sheet.)

@maverick1 wrote:

Last minute tax filing going on? Oooh, the drama, the suspense, the intrigue.

Oh yeah, and the headache.

Maybe start earlier next year?

LOL. My guy should already have my extension done....

I have a spreadsheet that goes by month. I list each shop, date completed, mileage, pay, reimbursement. Every month, I hit copy month and create a new sheet. Someone else created it so there are a few columns I don't use but it will total up the mileage, fees, and reimbursements. I wasn't good about tracking things in the past and it made tax time such a headache so updating after every shop is the way to go.

@Shopper797 wrote:

How do you track your earnings and reimbursements? Paper pencil? Computer? Other?

I used Turbo tax for the first time last year. They ask a lot of very detailed questions but the tax form that you file is the same as any cpa or other tax preparer would file. They ask detail to make sure they get everything they need so their format steps through every possible scenario and that info goes to a worksheet and then fills out the schedule C. That way hopefully you do not miss an expense or earning that you had.
But they also have something called Turbo Tax live where you just send your info in and a CPA does it all for you, I think the cost was about $250. Another version gives you full access by phone to a CPA who will help you fill in the form yourself step by step. Many times when I called with the do it yourself version the phone was answered by a CPA who gave me all sorts of extra info for free. I was filing late last year so it may be that during the height of tax season you would not reach a CPA randomly. If you live in an expensive town like I do you cannot find someone to do your taxes for that much.
As far as putting detail in your schedule C...you need to have the detail yourself to figure out the total amounts to put in the schedule C boxes. They just ask for totals, total earnings, total reimbursements etc. You have the info yourself saved hopefully in your computer so that if for some reason you get audited and they ask for the detail as proof you can back up the TOTAL numbers you put down in the boxes on the form.
For the question regarding spreadsheet...I do mine by hand but I am only a part time shopper. At the end of the year I type it all into an excel spreadsheet. I personally like to do things on paper so this works for me...just quickly jot it down and do not have to open my program and figure out where I left off and see if there is anything missing I am waiting for. My hand spread sheet is sitting on my desk and I can glance at it everytime I sit down to see if there are empty boxes which means I am still awaiting something. If you do a lot of jobs it is better to type into your online spreadsheet as you go along, maybe once a month or so otherwise you will have a big job at the end of the year and will not want to do it.
And a good idea to find out how to total columns, sort columns , etc. Not that hard to do and it is a real time saver.

@sandyf wrote:

But they also have something called Turbo Tax live where you just send your info in and a CPA does it all for you, I think the cost was about $250. Another version gives you full access by phone to a CPA who will help you fill in the form yourself step by step. Many times when I called with the do it yourself version the phone was answered by a CPA who gave me all sorts of extra info for free. I was filing late last year so it may be that during the height of tax season you would not reach a CPA randomly. If you live in an expensive town like I do you cannot find someone to do your taxes for that much.

I didn't know that Turbo Tax had this feature, and for $250, that's a heckuva deal! I doubt anyone, anywhere, can hire a CPA for that little.

With all that assistance and for that price, I can't imagine anyone who's considering a total DIY return not taking advantage of this. I wouldn't leave my tax guy to go to TurboTax, but if I didn't have him, I'd definitely try the "live" route at least once.

I have known several tax preparers, including my own, who literally have small-business clients show up with their paperwork in the old shoebox. So it's not folklore, it really happens. They must pay a fortune to have their taxes done.

Please share some of the deductions "most people wouldn't think of."

@Capurato wrote:

All income must be reported.

Work with a tax pro, or a tax software.

I was able to deduct things that most people wouldn't think of.

Regarding my personal experience, certain MSC's pay what they call a "FLAT FEE" for their shops. That is your fee and whatever they require you purchase/get reimbursed for is included in that fee. That fee is totaled and determines whether you receive a 1099 or not. I will not comment on anything further.

@mjt9598 wrote:

Yes, please hire a competent tax professional (not just anyone will do). Mine does not charge that much more than what TurboTax was charging me for the self-employed version. A few companies do include all money paid on their 1099s, even though that is not correct. Most correctly include only the fees paid, not reimbursements.

Please try and understand the tax code. If you do your own taxes and use software, look at the worksheets and calculations behind the numbers and understand what is going on. I cannot stress enough to read and understand the IRS publications on the topic you are trying to get a grip on. If you cannot understand or do not want to, see a tax professional and be aware, they sometimes are not as wonderful and educated as they lead you to believe.

The company that does the recalls includes the total money paid, even for the products we are required to purchase and destroy, as non employee compensation. They include the mileage reimbursement, hotels, meals, and product purchases all as compensation.

@Madetoshop wrote:

Regarding my personal experience, certain MSC's pay what they call a "FLAT FEE" for their shops. That is your fee and whatever they require you purchase/get reimbursed for is included in that fee. That fee is totaled and determines whether you receive a 1099 or not. I will not comment on anything further.

@mjt9598 wrote:

Yes, please hire a competent tax professional (not just anyone will do). Mine does not charge that much more than what TurboTax was charging me for the self-employed version. A few companies do include all money paid on their 1099s, even though that is not correct. Most correctly include only the fees paid, not reimbursements.