WORKING FROM HOME

I am looking into mystery shopping as some additional income. I currently work from home doing language assessments.We often incur "hiatus periods" which are times that test work is not available. the company does not pay federal tax from our check all the time, but yes I do pay S.S.. Would shopping and this work be included together so that I would have more than 400 in the month

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I would run them as separate Schedule C businesses and frankly I don't know whether the self-employment incomes would function cumulatively. I suspect that they would. And it is a net income of $400 per year that gets you to the level of paying the 'self-employment tax'.

Some things to consider . . . are you paying your own health insurance? It can be an offset against the net income of your business. What are you claiming or not claiming with your other business that might be allowed as a deduction for mystery shopping? I would suggest that you commune a bit with your Schedule C from last year for those answers.

As for mystery shopping, like any other Schedule C business it needs to show a profit 3 out of 5 of the 'past 5 years'. Failure to meet that 'test' after a couple of years could result in IRS determination that it was a 'hobby' and disallow past deductions such as mileage. Because there is both a fee component and a reimbursement component (non taxable) to mystery shopping, it is possible to strike a balance where you are working primarily for reimbursements that are useful to you and have the fees offset by the mileage to show little bottom line 'profit' while still being in the black.
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