Tax prep
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I don't know a tax pro, but I can tell you that if it is a 'hobby' you claim all income as income and you get no benefit of deductions from mileage or other expenses allowed to a small business.
How do the food reimbursements fit into the equation, especially if they were lumped together with fees on a 1099?
I'm guessing if the OP has to include them in taxable income, it is further proof there is no such thing as a free lunch, even in mystery shopping
I'm guessing if the OP has to include them in taxable income, it is further proof there is no such thing as a free lunch, even in mystery shopping
Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
While I don't know, I would assume that a reimbursement is a reimbursement whether it is a 'hobby' or a 'business' and not taxable. If I pick up a $1 can of pop for you and you give me back a $1, that is not a taxable event. Food reimbursements are just that, a reimbursement for money spent. If it is lumped with fees on a 1099 the 1099 is incorrect.
I've found it almost impossible to get some companies to issue a 1099 without including expenses. Just today I logged into a site and the first page outline their 1099 procedures. It stated all moneys paid to the contractors, both fees and expenses would be included.
Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
Thanks for the response Flash. I guess the tug of war I'm having is whether the irs will consider this a hobby or business. I would like to be able to claim the deductions, but not sure if claiming it as a business will open up a whole barrage of other problems that are business related. Like license, additional taxes, fees, etc. Any ideas?
You can run your business under your Social Security Number and not have those potential issues, which are primarily state and local. The only 'additional taxes' you might encounter would be Self-Employment Tax if your business nets more than $500. If you claim appropriate business exemptions, such as mileage, equipment etc. you probably will have little 'net income' from shopping and very likely will not reach the stage where Self-Employment Tax comes into play. You do need to show a profit for your business I think it is 3 years out of 5 to have your 'business' not deemed a 'hobby' by IRS. A Schedule C is how you report your business and it is not 'rocket science'.
LisaSTL, I remember one MSC that the 1099s included the fees they paid to PayPal to send payments because, "That is what our accountant told us to do." That would be like a company that pays by check claiming the postage to send the check was taxable income to the recipient. Lots of bogus notions out there, which is why you pay more attention to your records than to the MSC's 1099s.
I am fairly new to mystery shopping, also. I am about three months in now. I have a couple of questions about taxes. Do I need to complete a separate Schedule C for each mystery shopping company that I earn income from, or can it all be put together? Also, am I required to pay quarterly self employment taxes? If a person were to consider this to be a hobby, how much money could be earned and it still be considered a hobby by IRS? Anyone have any ideas? Is it a good idea to actually give your mystery shopping a business name?
You will have one Schedule C for all your mystery shopping.
Self employment taxes only come into play if your net income from self employment is $500 or more. It is assessed and collected when you file your return.
I don't know that there is any limit as to how much can be claimed as hobby income. Hobby income will be reported on Line 21 of your 1040. While hobby income is not subject to self-employment tax, claiming mystery shopping income as a hobby means that you can deduct none of the business expenses that can be deducted on a Schedule C.
I can see no possible benefit of giving your mystery shopping a business name.
Self employment taxes only come into play if your net income from self employment is $500 or more. It is assessed and collected when you file your return.
I don't know that there is any limit as to how much can be claimed as hobby income. Hobby income will be reported on Line 21 of your 1040. While hobby income is not subject to self-employment tax, claiming mystery shopping income as a hobby means that you can deduct none of the business expenses that can be deducted on a Schedule C.
I can see no possible benefit of giving your mystery shopping a business name.
Thanks, so much, Flash. Regarding the self-employment tax, am I understanding correctly that I don't need to file the self-employment taxes quarterly? Only when I send in my yearly taxes? When I include all of the mystery shopping on one Schedule C, do I just include a 1099 for each company in the forms I send to the IRS? My husband is thinking that I have to file a different Schedule C for each company. That just sounds so long and tedious. I can't believe it is that difficult even if it is the IRS.
You file only one Schedule C with all of your MS income declared on it. AND that includes MS income from MSCs that do not have to provide you with a 1099 because you earned less than the amount that triggers a requirement for them to send you one. Therefore, you must be sure to record all of your fee income (and your expenses, of course) in order to file taxes. The first year, if you owe Self-employment tax when you file, there would be no penalty because there was no filing history for that business. In subsequent years there could be a penalty for not paying enough in quarterly taxes, including SE tax to meet one the the IRS's three or four tests of "enough." Those tests/criteria are quite straightforward, but I do not have access to the instructions at the moment.
I have been self-employed all but 3 years in the past 50+ years and, yes, I have had a small penalty at times that was clearly due to underpayment of SE taxes, since, in some lean years, those were the only taxes that I owed, lol.
I have been self-employed all but 3 years in the past 50+ years and, yes, I have had a small penalty at times that was clearly due to underpayment of SE taxes, since, in some lean years, those were the only taxes that I owed, lol.
Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel
Poor customer service? Don't get mad; get video.
Shopping from the Carolinas to New York
Have video cam; will travel
Poor customer service? Don't get mad; get video.
The easiest way to avoid underpayment penalties is simply to pay into the system what your tax liability was from the previous year. If you file a joint return, it doesn't matter which one of you has the withholding done. So if you and your husband had a total tax liability of $3000 for 2015, simply making sure that between the two of you there is $3000 withheld or mailed in during 2016 assures you will not be subject to penalties even if your eventual tax liability is $5000 total such that you need to send $2000 in with your return when you file it.
As usual, Flash has not just the info, but also the easiest way of accomplishing the goal!
Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel
Poor customer service? Don't get mad; get video.
Shopping from the Carolinas to New York
Have video cam; will travel
Poor customer service? Don't get mad; get video.
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