I noticed that STN is now paying a lump sum to do grocery shops without breaking down the reimbursement portion. I assume we will now be liable for the full tax amount of both the fee and what used to be the reimbursement. Has anyone seen any notices about this change?

Regardless of how they lump it together, your reimbursement for a required purchase would not be taxed since it is not income. That is where detailed record keeping is key.

Thanks Lisa. If this is the case, I suppose they will not list the reimbursement on the 1099 or at least separate it. No great shakes either way. Just wondered if I'd missed a memo from them.

The 1099 will not list reiumbursements, only actual earnings.

I do a grocery store shop that has a required purchase and pays in a lump fee. My understanding is that the fee counts as income and the purchase counts as an expense which would then be a deduction. So based on that, the whole fee would show on a 1099, but you write off the expense.

richraynor Wrote:
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>I noticed that STN is now paying a lump sum to do grocery shops without breaking down the >reimbursement portion. I assume we will now be liable for the full tax amount of both the fee and >what used to be the reimbursement. Has anyone seen any notices about this change?

With STN's release of January shops, one of the grocery scenarios posted the Payment Amount of $22. This amount is greater than the combined amount for fee and reimbursement of the past, with no stated difference in shop requirements. The Produce/Meat scenario quickly disappeared from the board by observant shoppers, who are undoubtedly waiting for payday.

Regardless, reimbursement for a required purchase is not taxable. Job postings, requirements, confirmations, reports, and payments are part of record keeping.


jschilz Wrote:
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> I do a grocery store shop that has a required
> purchase and pays in a lump fee. My understanding
> is that the fee counts as income and the purchase
> counts as an expense which would then be a
> deduction. So based on that, the whole fee would
> show on a 1099, but you write off the expense.

STN's 1099s have been only the fee amount. If there's a difference, the taxpayer's record keeping must be supportive.

> STN's 1099s have been only the fee amount. If
> there's a difference, the taxpayer's record
> keeping must be supportive.


---
I get that, but from the sounds of what the OP said, the fee and the reimbursement have now been combined into just a fee, but the shop still requires a purchase. Therefore, I stand by what I said, the whole fee should show on a 1099, and you deduct your expenses.

I haven't yet received an email from STN, but others who have, have clued me in. The email states that an error was made, and it should be a flat rate. The grocery shop has always been fee and reimbursement. No doubt, the MSP will receive inquiries.

jschilz Wrote:
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> > STN's 1099s have been only the fee amount. If
> > there's a difference, the taxpayer's record
> > keeping must be supportive.
>
>
> ---
> I get that, but from the sounds of what the OP
> said, the fee and the reimbursement have now been
> combined into just a fee, but the shop still
> requires a purchase. Therefore, I stand by what I
> said, the whole fee should show on a 1099, and you
> deduct your expenses.


jschilz, it would seem that's exactly what will occur. I received an email with clarification indicating that the 2013 shops will be flat rate, not fee plus reimbursement.

I think it would be very dangerous to only report the taxable part of what we received. It would be nice if the 1099 would show "$750 compensation" and "$152.79 reimbursements". Maybe they do? I guess I'll find out next month. I'm pretty sure I'm over the $600 threshold on at least one or two of the MSC's I've shopped. (And I'm pretty sure if they allowed up to $12 reimbursement and we went over, that we can deduct the full amount we spent even if not reimbursed. Some people have done shops with a $2 reimbursement only to find there was nothing in the store for less than $5.)

And keep in mind, Paypal is supposed to be reporting stuff on 1099's too -- and they aren't going to know what was a reimbursement or not.

I don't like when MSC's quote a lump sum for fee and reimbursement and I've run onto a couple that do. There's a bowling shop I was interested in that quoted $50 as long as you spend at least $38 on food, shoes, and bowling fees. So that's a $12 shop fee, right? No, because what is the chance you are going to spend EXACTLY $38? Probably non-existent. So I spend $39.53 and now my fee is reduced to $10.47. And if I spend less than $38, as I read it, I only get the amount I spent -- NO shop fee.

I might still do it for the free bowling but I found it a very disturbing and convoluted arrangement.

I don't know if this helps to clarify matters regarding what is on the 1099s, but this is how another MSC explains it on their website...

"You are responsible for your own taxes. For Independent Contractors in the United States, a Form 1099 is sent to those who earn $600 or more during the calendar year. 1099 Earnings include Shop Fees... 1099’s do NOT include travel, reimbursement or special fees."

itsasecret Wrote:
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> I think it would be very dangerous to only report
> the taxable part of what we received. It would be
> nice if the 1099 would show "$750 compensation"
> and "$152.79 reimbursements". Maybe they do? I
> guess I'll find out next month. I'm pretty sure
> I'm over the $600 threshold on at least one or two
> of the MSC's I've shopped. (And I'm pretty sure
> if they allowed up to $12 reimbursement and we
> went over, that we can deduct the full amount we
> spent even if not reimbursed. Some people have
> done shops with a $2 reimbursement only to find
> there was nothing in the store for less than $5.)
>
> And keep in mind, Paypal is supposed to be
> reporting stuff on 1099's too -- and they aren't
> going to know what was a reimbursement or not.
>
> I don't like when MSC's quote a lump sum for fee
> and reimbursement and I've run onto a couple that
> do. There's a bowling shop I was interested in
> that quoted $50 as long as you spend at least $38
> on food, shoes, and bowling fees. So that's a $12
> shop fee, right? No, because what is the chance
> you are going to spend EXACTLY $38? Probably
> non-existent. So I spend $39.53 and now my fee is
> reduced to $10.47. And if I spend less than $38,
> as I read it, I only get the amount I spent -- NO
> shop fee.
>
> I might still do it for the free bowling but I
> found it a very disturbing and convoluted
> arrangement.


---
So this one grocery store shop that I do is a $20 reimbursement plus a $7.00 fee. I spent exactly $27.00. I bought this huge pork loin, a big bag of pancake mix and hashbrowns that come out better than McDonald's if you cook them right. It was pretty wild that it came out to exactly $27.00. Anyway, totally unrelated to the topic. So on topic, just file the 1099 away someplace. Report your income based on what you actually earned. Report your expenses based on what you actually spent. Ignore the 1099. Move on with life.

Perhaps STN will take a second look at their changes and return the methods to previous accounting. Unfortunately, many shoppers will fall off due to the changes. Reporting such high expenses increase the chance of an audit. On a typical grocery shop, you spend $8 and are now paid $14. What if you buy 5 items that total $34. Does this make a legitimate $20 loss for taxes? I think the problem is the fact there is no "Ceiling" or dollar requirement on the purchases. There should be a dollar amount required to spend. If shoppers start walking in and buying 4 packs of Koolaid and a lemon and spend only $2, the staff is going to know you didn't come there to do grocery shopping, but evaluate them instead.

If the reimbursement for a required purchase is $5 and the cheapest thing in the store is $6, the extra dollar can be deducted. In this case additional groceries cannot. I appreciate protecting anonymity by making a larger purchase, but the IRS probably won't While I have no clue about grocery scenarios, it is not unusual to see people running in to pick up just a few items so maybe that would not be a big tip off.

LisaSTL Wrote:
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> If the reimbursement for a required purchase is $5
> and the cheapest thing in the store is $6, the
> extra dollar can be deducted. In this case
> additional groceries cannot. I appreciate
> protecting anonymity by making a larger purchase,
> but the IRS probably won't While I have no clue
> about grocery scenarios, it is not unusual to see
> people running in to pick up just a few items so
> maybe that would not be a big tip off.


The requirement is 5 items, not $5. % items can be from $1 to $100. That's why I say there needs to be a dollar requirement and not an item requirement. Also, if you do these stores a couple times each week, it would be obvious that you are a shopper and not a Koolaid addict! LOL! Or walk out with 5 prime ribs and write them off? Sweet!

every MSC does their 1099's differently which is what makes it more challenging and important to know how they break it down, especially if you don't keep good records.

Glad I added the caveat about being clueless regarding the scenario, lol! A dollar amount would be an easier work around.

richraynor Wrote:
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> The requirement is 5 items, not $5. % items can be
> from $1 to $100. That's why I say there needs to
> be a dollar requirement and not an item
> requirement. Also, if you do these stores a couple
> times each week, it would be obvious that you are
> a shopper and not a Koolaid addict! LOL! Or walk
> out with 5 prime ribs and write them off? Sweet!

Maybe a trend, which I've been told was client initiated. This month, another MSP, InTouch, changed from fee plus reimbursement to flat rate, on at least one of their shops. Early in the month, STN's site stated a flat fee, with a required 5 items and $5 minimum purchase required on certain shops. Recently, the $5 minimum has disappeared from requirements.

I'm actually liking this change. No more fretting about leaving reimbursement dollars on the table, overspending, or selecting purchases to equal the reimbursement. And, spreadsheet balancing will be simplified as payments come in. Also, we get to determine which is more needed, income or goods. As well, when we track our taxable income throughout the year, we can easily adjust fees and expenses as needed.