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Tax Question

June 02, 2014 04:21PM
I didn't see this answered by the incredibly thorough tax topic that is stickied to this forum, but am trying to figure out in advance what my tax implications might be for this year, I just started mystery shopping in January. I've done several reimbursement only restaurant shops as otherwise our eating out budget would be tiny. If I spend $50 and only $35 is reimbursed, is the $15 non-reimbursed business expenses? I could have stayed under the $35, but we also wouldn't have gone to the restaurant if we hadn't been reimbursed the $35. I realize some of the time when I go over a reimbursement amount I can't claim the overage as non-reimbursed business expenses like for a gas station shop or a grocery store shop, but this is a bit different. Thanks in advance!
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June 02, 2014 06:22PM
tlin, I don't think we all agree on the answer to this question. If I could have done the shop and stayed within the required amount, I would not claim the additional spent as a business expense. If it were not possible to do the shop according to the guidelines without going over the reimbursed amount, I would deduct the additional spent as a business expense.

To make this more clear, let's consider the meal to be socks. Let's say I am doing a sock shop and I will be reimbursed $10.00 for socks. The store is having a great sale and they have some terrific socks I've been wanting to get the kids, so I spend $48.00 on socks. Is the additional $38.00 spent deductible?

You can do your taxes any way you like. Whether your taxes will pass audit or not is the question you want to ask. The expense deducted has to be business related and it has to be reasonable.

Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.
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June 02, 2014 06:29PM
Generally an overpayment where you could have successfully completed the work within the reimbursement does not categorize as an unreimbursed business expense, whether it is at a restaurant, retailer, grocery store, gas pump, etc. I intentionally do several shops where I knowingly overspend because what I want exceeds the reimbursement but because there are items I could get that would not cause me to go over the reimbursement, it is my free choice. The situation is different where you are told to purchase 1X, 2 different Y, 2Z and even going with the cheapest on the menu you still can't accomplish all requirements within the reimbursement.

The difference between the two is that in both cases you are contracted to make purchases and in the first case you could do it within the contract amount and in the second you could not. In the second case make a note of what the cheapest prices were to accomplish the job and 'unreimbursed' would be the difference between that amount and the reimbursement. So lets say the cheapest I could have accomplished the contract was $37.50 and I was only reimbursed $35. $2.50 would be my unreimbursed amount even if I actually spent $50.

Edited 1 time(s). Last edit at 06/02/2014 06:30PM by Flash.
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June 02, 2014 06:48PM
Thank you both. That is what I thought, but I just wasn't sure.
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