I am a relatively new mystery shopper and I do not completely understand how we are supposed to report taxes.
I mean, I understand that if you earn more than $ 600 with company X, it will send you a form to pay taxes. I also heard that if you earn less than $ 600 with a company, of course, you are STILL required to pay taxes on what you have earned.
So, let's say you work for 25 different MS companies or more... when you have to file your taxes, isn't the process VERY TIME CONSUMING if you need to keep track of every dollar you make with EACH company? How do you go about filling out your tax forms?
Can somebody explain to me how taxes are filed when you work for multiple companies? Do you rely on a professional or do you fill out the forms yourself? How confusing is it to do it by yourself?
My Schedule C is my "business" part of my 1040 return. I use my business records (a spreadsheet) to keep track of all money earned from all companies during the course of the year. (I am using my example situation but realize that I am an "accrual" business and you can choose to be a "cash" business or an "accrual" business.)
So lets say that for calendar year 2013 my spreadsheet shows that I earned $10,000. I receive only one 1099 because of the 38 companies I worked with during the year, with only one did I earn over $600 to get a 1099, and they are showing they paid me $1000. Now this is where it gets touchy for some folks. MY records show I did $900 in jobs for them in calendar 2013, but they did not get around to paying me for $100 in December 2012 jobs until January 2013. From THEIR STANDPOINT the 1099 is correct, from my standpoint it is not.
Now if I don't use tax preparation software, I can simply go to Schedule C and plunck in my $10,000 on line 1b and be done with it. If I use tax preparation software (which I do), it wants to know about any 1099s so I plug in the $1000 for the 1099 and then report the other $9000 of income on the next line of the software that is looking for other income of the business. Thus all $10,000 is reported. Other than the software showing information about who sent me a 1099, there is no record in my return as to who sent me how much. That information can all be recovered from my spreadsheets should the need or curiosity ever arise.
I have always done my return myself because the one and only time a preparer prepared a return for me I went home and reworked it. The preparer was so busy claiming things I had no right to because 'we are keeping it below the audit flags' and discouraging me from claiming things I was entitled to because 'that is likely to cause you an audit' that as far as I was concerned the return was total fiction and I could not in good faith sign it. I read the rules, take the things I feel IRS allows, don't claim the things I don't feel IRS allows and I let TurboTax then serve as a guide to getting it all done.
Learning to do your return the first time is time consuming. After that it is a piece of cake. My spreadsheet allowed me to do my Schedule C entries in a matter of minutes the other night and my entire return with various types of investments and income from various sources, etc. took under an hour and a half to prepare, proof and send.