My husband recently lost his job and has been working day labor which has been off and on. So I've been mystery shopping a lot more than I used to. I'm getting ready to start shopping up to full time, but I am needing to get childcare for the days my husband works.

There is a local (government) program that subsidizes childcare costs but you have to fill out financial information to see if you qualify. I am sure we qualify, but I have to report my self employment income.

Anyway... wondered if anyone else already did this and had any pointers. I plan on reporting monthly by MS company and lump payments together so I do not reveal the clients. I am thinking my only expenses are my mileage and my printing costs. I am reimbursed for other costs (meals, etc). I believe for tax purposes I can also claim expenses for non-reimbursed costs (the MS co reimburses $5 but my meal cost $6 so I can claim $1 of expenses) but I don't plan on going that far for this purpose.

How do you figure the mileage cost? I was thinking I could look up the government rate for mileage and use that. I only track the number of miles I drive.

I plan to price the paper per ream and divide out to the sheet. And check the specs for my printer/ink to determine how many sheets it prints per cartridge and then price that out per page as well.

Does this sound like I'm on the right track?

When you do your taxes on a Schedule C for your 2011 shop income, IRS will allow you to deduct 51 cents per mile for every business mile driven between 1/1/11 and 6/30/11. For 7/1/11 to 12/31/11 the deduction will be 55.5 cents per mile.

I have not been in the situation you are in so cannot tell you how that would play out. I certainly would take a Schedule C approach and also point out that my income varies a great deal per month. I would take in a spreadsheet that showed:

Total Receipts
Less reimbursements
Gross income
Less mileage
Less other business costs
---Net Income for June

It would probably not be inappropriate to just figure your printing costs at 3 or 4 cents per page and call it 'done' because in addition to ink and paper you have the electricity to run the printer, the wear and tear on the printer, etc.

If you have a cell phone and a land line, IRS would allow you to deduct some or all of your cell phone charges. I make sure I earn more in phone shops each month than the total monthly cost of my cell phone and deduct the whole thing. The first phone line to your house is not deductible as IRS anticipates 'we all need one of those anyway'. So I never deduct the land line, only the cell.

Chances are very good that unless you are doing only fee shops, your net income from mystery shopping will be very close to zero. I like it that way because I get the advantages of the reimbursements and little if any taxation.

Edited to add: I would overwhelm them with numbers and it would not bother me at all to even itemize the companies I am working with, since I suspect that shows that you are doing everything you possibly can do to be self supporting.

Edited 1 time(s). Last edit at 07/02/2011 08:52PM by Flash.

This is the first year I've done enough at mystery shopping that I will need to claim wages on my tax return. In the past I was doing probably less than $50 a month on average. I'm now up a lot higher than that.

So my "spreadsheet" looks like this:

Income Source (MS company)/Date Received/Gross Income/Mileage/Pages Printed
Company 1
Company 2
Company 3
Company 4
etc

Then at the bottom I have detailed out:

mileage rate X the miles
Ink cost X HP yield on website
Average paper cost / 500 sheets per ream

My printing cost seems high though. I have a small HP printer and the cartridge costs about $15 and HP website says the approx yield is 190 pages - that's $0.07 per page if I am figuring it right. Doesn't that seem high?

Then paper is about $0.01 a page I think.

Take a look at the number of pages printed in a month and think back about how often you have had to replace the cartridge. Are you really using 2 1/2 cartridges to one package of paper? I don't know because I use a laser printer that has a toner cartridge that costs a lot more to start with but lasts a year or more. Certainly 190 pages for $15 does work out to almost 8 cents per page.

Hello - On applying for subsidized child care, you are going to need to show a profit. If your business is like mine and you claim all the tax benefits available to you (such as standard mileage), you aren't going to show much if any profit. I drive a lot, and by claiming all deductions TO WHICH I AM LEGALLY ENTITLED, including the standard mileage deduction, I can get the net bottom line on my Schedule C down to a negative figure. I don't know how much you shop or how much you drive. If you aren't making X amount of money (and who knows what that is?) they aren't going to want to subsidize your child care.

Upshot of this discussion: They need to understand that you are actually providing support to your family from this activity. The Schedule C information is what goes into making up your presentation, but this is a whole different ball game from filing a tax return. If you need the child care (which you do) and they won't subsidize it unless your Schedule C each year reflects a profit, then you have to figure out which way to go here.

If you don't have much income and you have children involved, you can make quite a bit of money before you will have to pay income taxes. Also, earned income with minor children involved could possibly result in thousands of dollars in refundable tax credits (which means the government sends you a check).

HOWEVER, if you are reporting Schedule C business income, you could still get hit for self employment taxes on the business income. In other words, if you report $10,000 in Schedule C net income, this might not be enough you would owe income tax depending on your family's situation, but you would definitely owe the government self employment tax (social security and medicare) in the amount of 15% ($1500.00) of your reported profits, less an insignifcant credit adjustment you would get on page 1.

Regarding your comment on tax purposes and unreimbursed meals, IRS rules require you be away from home overnight on business for any tax benefits on meals. Then you are allowed only a portion, with the IRS reasoning based on the fact you have eating costs whether you're home or not.

You're on the right track by using the government figure for mileage as far as taxes go, but you need to be able to break mileage down per job and date for tax purposes. The IRS requires you to keep a log of destinations and mileage by job and date. If you don't have this mileage log, you are allowed to recreate it at any time needed from notes if you have them (for example, from your job records).

You indicate the subsidized child care is based on income, and income is based on profit from your business, so basically the Schedule C information for your business should be what you're looking to work up on a part year basis to make this application. I'm not understanding why you would need to break down ink and paper per job. The Schedule C allows you to report office expense as a total item. Of course, you would need receipts to back up the expense amount claimed. Breaking it down by job might be nice to know, but it won't help on your taxes and is not required by the IRS.

You may need to find out more about how to report your income for this purpose. If the people who handle your request and monitor your account are going to required a copy of your Tax Return each year (betcha they will), then you will need to show ongoing profit to get the child care. And if that is the case and you show only a loss or little income, they're not going to be able to furnish you child care to subsidize a job which is apparently not contributing income to the family.

You may need to make arrangements to not use the standardized mileage if it is going to wipe you out on profit, because it may wipe you out on child care, too.
There's a lot to be considered here. You can enjoy a profit from your business up to a certain level and still not be required to pay much income tax. AND, at certain income levels with minor children you would be eligible for refundable tax credits which would be paid to you when you file your return. These refundable tax credits, which are designed to assist lower income families with minor children who report earned income, can amount to a great deal of money and can mean the difference between deprivation and moderate comfort to your children.



Edited 1 time(s). Last edit at 07/02/2011 09:56PM by MDAVISNOWELL.

Of course the meals being mentioned here were reimbursed, so evidently were a part of a shop purchase requirements. In that case they are not taxable at all. Meals that are purchased and NOT reimbursed because they are NOT part of a shop's requirements are indeed subject to a whole different set of rules.

My mom has worked for IRS for 30 years - so not worried about the tax ramifications and can do the comparison to figure that part out.

Just wondered if anyone else had to any similar breakdown for this purpose and didn't have a Schedule C from prior years.

I use my printer for non-work purposes, so by IRS rules - I can not deduct all the printer costs for my business. Breaking it down by job/month/etc was so I could determine how much of these costs were due to my business.

Yes, I have a mileage breakdown for each shop. I keep that on my working spreadsheet, along with the printing costs. At this point, I am still turning a profit after the standard deduction for mileage and printing (with the rate I came up with)

I do use a refill kit for my printer, but not sure how many prints I get out of one honestly. That's why I was trying to go with a standard mfr estimate. That refill lasts me for a few months, so another reason I think that estimate is off. I may just not even factor in the printing, since I think it is not correct. Will make my income look better for this purpose and won't hurt me on IRS end either I don't think.

Thanks for all the suggestions and thoughts! Some of those things I never would have thought of!

The meals may be a foggy area. I haven't been able to find much on IRS rulings on mystery shopping. It may be useful to consider that if a meal is required and subject to be reimbursed at $5.00, the purchase of a $7.00 meal might be considered discretionary.

My thinking is that the additional unrequired $2.00 outlay might be considered a regular business meal, since it was specified that $5.00 would be reimbursed but not required that $7.00 be spent. In that case, it would not qualify for a tax benefit unless a night away from home could be documented.

The likelihood this issue would arise is remote, and I have this minute realized I have far too much idle time if I am concerning myself with a $2.00 meal charge in a grey area. I have nit picked this to death and I need to get a new monkey. Y'all please excuse me. I'm going to log out and have a drink and see if I can find a job somewhere.

I do a sort of pragmatic seat of the pants on that. I see two situations: One is that you are required to purchase specific menu items (a Happy Meal and a small soda). There is no option in what you are to purchase for the shop to be valid. If that purchase is not 100% covered by the reimbursement, I will claim the excess as an "Unreimbursed business expense." The other situation is where it would be possible to meet the requirements within the reimbursement amount but I choose to not purchase the cheapest items but rather what would taste good to me. In that situation I would make no claims about any excess spent.

When IRS talks about "business meals" they are not talking about shops. They are talking about business entertaining or meals on the road when you are away from home for a day or more. I don't remember the specific rules, but they are there under "business meals". Shoppers should rarely have "business meals" because they generally go home every night. Those who are road warriors need to be aware of the "business meals" requirements, but heck, most of us grab meal shops along the road so the question wouldn't arise anyway.

I wouldn't list my occupation as mystery shopper. It might cause problems, such as too much curiosity, and it might also get out. Merchandising or marketing are better terms for me. I think my husband put my job title as worker on our last tax return. He thinks we were audited three times by the IRS specifically because we looked suspicious as self-employed people.

I haven't had your child care situation, cyberjf, but I have been in your situation financially so I'll comment on that. In order to use a public health clinic, you have to register ahead of time (before you or your family is sick). They pre-qualify you financially. Some of the clinics also have dentists. I don't know if any have nurse-administered pharmacies. Ours used to. I wouldn't recommend government health care to anyone except someone who has to use it. It is very, very frustrating to be a patient at one. When I tried to pre-qualify, I didn't have a current tax form handy so I walked in with a bunch of check stubs. I told them I also got bank and PayPal deposits. Their eyes glazed over. I suspect their eyes will glaze over with any kind of spreadsheet, too. They are used to dealing with people who didn't finish high school and have "traditional" income. Anyway, they absolutely refused to consider any income that wasn't on a check. They wanted to know how often I got the payments. I told them that a certain number of merchandising companies considered me an employee but the pay wasn't the same each pay period, and that the others were sporadic. Their eyes really glazed over. Anyway, they came up with an amount that was pleasing to them. (The new person doing that job there probably has a better grasp on dealing with other people's finances than the one I had to deal with.) By the way, when I got priced out of the discounted medicine system after the tax form of a few years later showed I made too much, they forgot to tell me I was paying full price until I owed several hundred dollars. I thought I owed less than a hundred.

Public health clinics have a WIC (Women-Infants-Children) program, too. If you are on prescription medicines, the public health center can advise you on how to get free medicines from the pharmaceutical manufacturer.

You probably already know about clinical trials. They are sometimes hard to qualify for, but you, not your entire family, can get free checkups and medicines, as well as usually paid mileage to and from the center. All you do in one is show up and keep a diary of your medical situation. Start to look for them in the metropolitan newspaper's display ads or call a research or teaching hospital and ask. After you have the phone numbers of several research centers, you can call them periodically or they will call you when something comes up that it appears you qualify for.

Other things you can consider are free lunches from various organizations. Schools sometimes offer summer lunches, I think for a fee. Here, a Methodist church has a free lunch on Thursdays. Some people just go there to eat to give donations for others. Also consider a program called Angel Food. You can get a large box of excellent food for as little as $25. It varies by month, but can include apples, steaks, etc. Churches have it. In my experience, they are Baptist churches. You can ask around. One local church orders extra and if they don't sell, they give them to people who can't afford the boxes. If you need something unusual, such as a wheelchair ramp, ask around to local organizations. A local Catholic church builds them for free.

Your husband has probably already filed for unemployment. In my state the rules are so byzantine that it is virtually impossible for a contract person to qualify or to feel honest about charging a specific company. Everyone knows about the resale shops, flea markets, Salvation Army, Goodwill, etc. We have a Christian Assistance Ministry (CAM) that all the churches support so they can send anyone who asks for something there for help. You might find someone, perhaps through the daycare centers, who will hand down children's clothing. If you need eyeglasses, check with the Lion's Club before you see the eye doctor. The glasses might not be fashionable but they won't be expensive, either. In this age of cell phones, do get all your friends to call you when they find sales in the local grocery stores.

Blood plasma centers pay for your "donations". If you happen to find one that is also mystery shopped, you will be paid for the shop and for the donation. They also have "special population" donations. At first, I thought that was for drug addicts or something like that. It isn't. They give you free shots periodically, such as for tetanus or hepatitis, and then pay you extra for participating in that program. There is at least one near us that pays the donor by volume and the way to give more volume is to weigh more. Really. There are age limits and health limits. For example, most will not take anyone who is an insulin diabetic. I have no idea why. I started donating blood to get over a fear of needles caused by the power of suggestion over a chance comment by a nurse. The first time I showed up, I read about the side effects and went blind in the waiting room. I didn't feel the fear emotionally but my body did physically. They had to take me to a couch to lie down until I could see and go home. I went back the next time and donated probably about 60 times after that. After every 20th donation, they paid an extra $20. I didn't get in on the special population program because I didn't know about it fast enough. I quit because my husband thought I was donating too much and might hurt my health.

If you live in a large city, you may qualify for Legal Aid. A lawyer might help you maneuver through the child care situation by eliminating any problems ahead of time. The rumor around here is don't contact any government agency without having a lawyer or you'll probably get nowhere.

My printer runs out of toner at about four reams of paper.

Flash, thanks for the financial information. I had a question but when I went back over your comment, I couldn't find the part I didn't understand.

Sandra Sue - thanks for your reply. We are really well set on everything but childcare. If we had childcare we could be making more money.

My kids are already under Kidcare, and even though it's a pain to recertify on the paperwork, our pediatrician accepts the plan and we don't have to run around for their care. We always go to pediatrician office and we are taken care of. I know about WIC - went that route when my oldest and I couldn't get breastfeeding down very well. WIC paid for his formula which was such a relief.

I shop with coupons and spend about $100 a MONTH on groceries, household supplies, dog food - everything! And I stockpile when things are free or very cheap so we have been able to get by on only buying milk, fresh produce, and necessities. I make bread from scratch, so no expense there. I have a large freezer full of meat and other items. We have a garden for vegetables, and trade with other for some of our fruit.

I am the only on daily Rx and I have gotten samples from my Dr and gotten help from the mfr of the drugs with coupons and various free health Rx programs online.

Unemployment is ridiculous, I agree. If you work any fair amount of hours you "make too much" to get payments. Then when your hours are reduced you have to wait to get payments. It's crazy, but you do what you gotta do, ya know?

I have my occupation listed at marketing and self-employed. I don't bring "mystery shopping" into it at all. I keep meticulous records, so am not exactly worried - but just trying to get my act together so I don't have to keep going back and forth with them, ya know?