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 Is it completely normal to show a loss?
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.Nicole
Inactive

Burnsville, MN
USA
144 Posts

Posted - 01/31/2004 :  05:53:09 AM  Reply  Reply with Quote
I have been doing some figuring and I showed a good size loss because I went to the Gold Conference and all the reimbursment and then mileage. Is that normal? I saw some other posts about it but I just thought I would post this topic so that it would be here for me and other MS to research! Thanks for the replys!

Shopping Minnesota
Gold Certified lmfgsr

SharonInCO
Valued Contributor

Conifer, CO
USA
218 Posts

Posted - 01/31/2004 :  2:32:50 PM  Reply  Reply with Quote
I've only been shopping a bit over a year - the first year I had a loss because I took A LOT of pizza shops at the end of December - claimed the expense in '02, showed the reimbursement income for '03. Partially due to that but other factors too, I showed a profit this year.

Depending on the shops you take, I would think it's very reasonable to show a loss or just a small profit most years. I personally think that I'd want to show at least a little profit most years to hope to avoid an audit. Continually showing a loss would be a red flag imo

Sharon
MSPA GOLD Certified Shopper
Shopping the South and West suburbs of Denver
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RebekahTN
Valued Contributor

McMinnville, TN
USA
125 Posts

Posted - 02/02/2004 :  08:09:27 AM  Reply  Reply with Quote
This is my first year. I will show a loss because of mileage. I live in a small town and travel 50+ miles one way at least once a week sometimes more. I do group jobs together and normally don't go that far without 4-6 shops or bonuses.

Yesterday I did 13 shops and will be paid/reimbursed for $127.16. Total travel was 129.86 miles. Which means I have a claim of $48.70 for mileage. Two of the shops were fee with reimbursement shops so that took another $14.16 for the reimbursement portion. I came out ahead this time. I made (on paper-for tax purposes) $64.30 for a days worth of work. LOL Eleven of these were gas audits at 10-25 min each (depending on how cooperative the cashier was).

Unfortunately MOST of the time I'm not able to find THAT many jobs in another town. Normally I have 5-6 with the same mileage claim so on those days (for tax purposes) it doesn't pay. This town happens to have a NICE pet store that I get things for my saltwater fish tank at so before making the trip I always look for shops so I can count the mileage off.

Oh, about the red flag thing... I was wondering about that too. For me, and others that live in small towns or travel a lot, I don't see me making a profit most, if any years.

A question.....If you saw you were going to have a loss most years would you count less mileage although it is perfectly legal to count it all and show a profit some months or go ahead and count it all and take the auditor along on some shops if a red flag does go up and show him/her exactly what we go through?

The only way that I see I will be able to show a profit is if I start finding some much better paying shops, more places closer to home getting shopped, or a combination of the two.

That's another question why do the same stores/ff places that I shop in surrounding towns not get shopped in MY town??? I do several on a regular basis in others towns but have never seen the SAME store posted for MY town. Yes, I am a one zip code city. We need shopped too!! LOL

Rebekah Blake

Shopping and Merchandising in McMinnville, Manchester, Smithville, Tullahoma, Woodbury, Sparta, Cookeville and Murfreesboro Since April 2003.
MSPA Silver Certified # xxfuj7
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.Nicole
Inactive

Burnsville, MN
USA
144 Posts

Posted - 02/02/2004 :  08:18:21 AM  Reply  Reply with Quote
Well it is up to you about showing a loss or not. I will claim everything I can!
For your question Rebekah, those places probably do get shopped. See the problem is that most fast food resturants are franchises and they are shopped by many different companies. It is just you have to find the company that has that one. Does that make sense to you? Because it does not to me, but that is the way it works!

Shopping Minnesota
Gold Certified lmfgsr
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JJinNWIN
Contributor

Wheatfield, IN
USA
69 Posts

Posted - 02/15/2004 :  06:08:33 AM  Reply  Reply with Quote
I too live in a very rural, one zip code town, and after completing my taxes yesterday, I am showing a loss, mostly due to the mileage. I work four days a week and average 75 miles a day. I rechecked and rechecked and that is right, so I am going to go ahead and file that way. I have a daily log of my mileage and very accurate income records, so if they want to audit me, so be it.

Jean
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Marcy
Valued Contributor

Terre Haute, IN
USA
191 Posts

Posted - 02/15/2004 :  08:45:54 AM  Reply  Reply with Quote
I am also showing a loss this year. It's my second full year of shopping, but kept much better track of mileage (versus for 2002) so that's why the loss. I also deducted other things this past year I hadn't previously, like long distance charges for faxes (I highlighted all the bills).

I do alot of work in smaller, surrounding towns that no one else is willing to travel to, so that is a big factor as well.

Marcy ~ mystery shopper in western Indiana.
MSPA Silver Shopper certified #ijjaaf
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Kathy_in_MI
Member

USA
39 Posts

Posted - 02/15/2004 :  5:47:57 PM  Reply  Reply with Quote
I also live in a town that has A LOT of companies that I have to drive 30-40 miles each trip. I claimed a lot of items as 03 was my first year of MSing. I clamied my faxes, they totaled over $100. I claimed my $2.95 a month that I have for my fax as a distinctive ring for it. I also claimed mileage, but not for shops that reimbursed me mileage. I had a VERY large loss for 03. I keep very accurate accounts of mileage, REImbursements and income. It took me a few days to gather all of my information, but it was well worth it. I also have a laptop that I have MSN dialup for. I only use the laptop, and dial up when I have an extended shop away from home. When I was using Turbo Tax, it said that I could write off 100% of my office equipment and new laptop. Using this I didn't have to depreciate for x number of years. Deducting my car was easy. You have to keep track of mileage by doing an odometer reading Jan 1, then again Dec 31. With each shop I use Microsoft Streets and Trips 04. This way I know exactly the number of miles for each trip. I then write this mileage down on a sheet with the pay, re etc. Then when I do my taxes I can figure out how much of my car I used for my business, and how much was personal. I did not have a single company that I made over $600 with last year. But I do know what I made with each.

Kathy
Got The Gold in Toledo in 2003!
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LisaFromJoisey
Contributor

Ocean Gate, NJ
USA
86 Posts

Posted - 02/19/2004 :  6:30:59 PM  Send LisaFromJoisey an AOL message  Reply  Reply with Quote
I've been shopping for just over a month now. I've been taking any shop I can get just to get my foot in the door with a few companies. I try to schedule the shops around things that I was planning on doing anyway, like a trip to Atlantic City, that way it really isn't costing me that much to do the shops. But, when I figure in the mileage for the shops, I'm already showing a loss of $66, and thats NOT counting supplies. On paper, I'm probably in the red for about $150, AND IT'S ONLY FEBRUARY.

My goal for the year is to be within $200 of break even, profit or loss. Now that I've gotten in with a few companies, I can try to be a little more selective with my jobs, so that the mileage won't kill my 'profit'.

One of my responsibilites at my F/T job is to review peoples tax returns to determine their income. Many sole-proprietors/independent contractors, show little, if any, profit. It's all part of the tax game. The IRS knows it, and allows it by allowing deductions. It's just the American way.
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Shasha
Valued Contributor

MS Gulf Coast
USA
241 Posts

Posted - 02/20/2004 :  9:48:32 PM  Reply  Reply with Quote
I completed my taxes a few weeks ago and I showed a loss. Mine was due mainly to miles & supplies I purchased. In my case, the business loss was a good thing. I have a full-time job where I make pretty good money. I am a single person with no dependents and taxes usually eat me up. So for me, this loss reduced my taxes owed.

ShaSha

mystery shopping along the mississippi gulf coast & mobile, al
mspa silver certified
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BobbyL
Valued Contributor

Boston, Massachusetts
USA
158 Posts

Posted - 02/23/2004 :  4:30:57 PM  Reply  Reply with Quote
I ended up with a nice loss due to the certification conference and $300+ mileage charges. Since I drive a 10 year old car, my actual car expenses aren't really 36/mile, so it is nice to end up with non-taxable income.

Bobby
Gold certified Metrowest Boston
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SoCalColleen
Valued Contributor

Ca
USA
128 Posts

Posted - 03/04/2004 :  1:10:14 PM  Reply  Reply with Quote
When I first started, I was really concerned about the same thing, and asked LOTS of questions. I didn't want to take 1/2 the deductions, because I felt bad about showing a loss. As it was explained to me by a CPA, the IRS expects a new business to show a loss for at least the first 2-3 years due to all the expenses of opening up a business. Fax, phone, paper, ink, 10 key, computer, file cabnets, desk, scanner, cards, decoration, cameras, stock, Motel stay, food allotments ( for regular businesses, rent, gas electric water, employees)etc. Gets staggering
7 years down the road, I am still showing losses, (at times) but mileage is one factor that brings me down quick. However, I have been able to steadily show them the increase in income as well. When they allow I believe it is .36 a mile, and the trip ends up being 300 miles, well, you get the picture!

:-)
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Susan_CA
Valued Contributor

Los Angeles, CA
USA
134 Posts

Posted - 03/06/2004 :  11:05:05 AM  Reply  Reply with Quote
So, I have done a number of restaurants that are reimbursement only. I have shown a loss the last two years. My problem is that I am doing more restaurants with higher reimbursements. Now some wouldn't consider that a problem!
If I continue to show a loss at year 3, 4, 5, 6, 7 is that a problem? I am assuming I will NOT have an increasing profit as I am hoping to get more high reimbursement restaurants and I don't do many fee only mystery shops.

Any advice would be appreciated!

Shopping Los Angeles and Orange Counties
MSPA Gold Certified 8/2003
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SoCalColleen
Valued Contributor

Ca
USA
128 Posts

Posted - 03/07/2004 :  3:26:57 PM  Reply  Reply with Quote
Hi Susan. As I stated earlier, I am still showing a loss at times, after mileage deduction (2003 was one of them, 2002 I did ok, 2004 is good so far) but I had good reason,(office supplies, reimbursements etc.) and the CPA didn't think it would pose a problem. I was able to write off the differences from reimbursements VS actual on "reimbursement only", as "cost to do business" if I showed her the receipt, and criteria.(IE you must purchase --- & ---)(It may be completely different, if you say, do not have an office.)

:-)
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BeckyM
Member

Fort Worth, TX
USA
13 Posts

Posted - 04/22/2004 :  1:16:17 PM  Reply  Reply with Quote
I don't understand the part about reimbursement only shops being claimed as a loss. I have done a lot of these, and I just assumed I didn't claim gain or loss on them...Can I even write off milage on these? what portion of the bill/reimbursement can I write off? This is probably a stupid question, but I'm new at this and could really benefit from the knowledge of someone more experienced.
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.Chaz
Inactive

USA
26 Posts

Posted - 04/23/2004 :  05:57:56 AM  Reply  Reply with Quote
I am not a tax expert but you need to check out IRS publication 535.

http://www.irs.gov/publications/p535/ch01.html#d0e733

If you consistently show a loss the IRS may determined that your MS business is a "hobby" or "not for Profit." If that happens you cannot use the loss from your MS activities to offset other income. In other words, for tax purposes you can only show your MS activites as a break even if loss exceeds profit. REGARDLESS OF YOUR "INTENTION" TO MAKE A PROFIT.

Publication 535 lists a number to tests that can be applied to determine if your business is a not for profit. The simplest is that you have to show a profit 3 of the last 5 tax years.

Chaz
Gold Certified
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Marcy
Valued Contributor

Terre Haute, IN
USA
191 Posts

Posted - 04/23/2004 :  06:05:49 AM  Reply  Reply with Quote
Becky, reimbursement only shops are a wash, not a loss. You count it as income, but then expense it as "required reimbursements" or whatever catergory you chose. I was told this by someone I spoke with at the IRS this past January. You can still claim the mileage for the job (so in that case their will be a loss, since your expenses are greater than your income). Make sense???

As for how much of the bill you can write off, it all depends. If the reimbursement was for $50 and you spent $60, from my understanding you can only write off the $50 amount. Atleast that's what I do. But then it gets gray when you get a flat $15 fee, but a purchase is required. Do you pick the cheapest thing and deduct it, can you deduct the full $15 if that's what the purchase cost???? In that area, I would like more clarification as well.

Marcy ~ mystery shopper in western Indiana.
MSPA Silver Shopper certified #ijjaaf
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Terra
Star Contributor

USA
443 Posts

Posted - 02/01/2005 :  08:36:02 AM  Reply  Reply with Quote
A friend of mine's mom does taxes. When I mentioned my income, and my expenses, and the fact that I was not going to show much of a profit. She said I would get audited. Another friend of mine who has done some consulting said an accountant told her not to claim all of her expenses, as she would get audited. Now, I cannot imagine the IRS wanting to audit poor me, but you never know. I figure I haved excellent records, and am trying to be as ethical as possible on my taxes... so, what do I have to lose if I don't show a lot of profit?

MSPA Silver Certified #ectp6r
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.Dawn DE
Inactive

DE
USA
518 Posts

Posted - 02/01/2005 :  08:49:11 AM  Reply  Reply with Quote
This will be my third year filing a Schedule C, and my first to show a profit. I have never been questioned on my personal taxes by the IRS, nor have the many clients that I have prepared Schedule C's for as a paid Tax Specialist. If your expenses, including mileage, are documented, and you truly do have a loss, you show the loss. Now, 5-7 years down the road, if you are showing a big loss annually, the IRS might start to wonder why you keep at it. No one can tell you that you will or won't get audited. Filing a Schedule C might be one thing that the IRS looks at more closely than say, a Schedule A, but they are not out to get every person who runs a small business. In my experience, claiming a home office is often the thing that causes the most confusion (and therefore problems). The bottom line is, if the deductons are legitimate and substantiated, go ahead and show them.

Dawn
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Marcy
Valued Contributor

Terre Haute, IN
USA
191 Posts

Posted - 02/04/2005 :  06:29:14 AM  Reply  Reply with Quote
I tentatively figured my taxes this week and am also showing a profit this year. Last year I showed a loss. My records are very detailed and I would not exclude any expenses just to make my income look larger for fear of an audit.

Does anyone know anything about previous losses carryforward? I looked it up online, but it was extremely confusing to me. Can I take my small loss from last year and use it to offset my income this year? If so, does it go on line 21? Any help would be greatly appreciated. Thanks

Marcy ~ mystery shopper in western Indiana.
MSPA Silver Shopper certified #ijjaaf
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Deanna
Contributor

Hamilton, OH
USA
94 Posts

Posted - 02/05/2005 :  8:09:38 PM  Reply  Reply with Quote
Marcy, did you have a loss on the total first page of your tax return last year? Or did you (and your spouse if filing a joint return) have other income (wages, interest, retirement income, or anything reported on page 1) that you offset with your loss last year? For most people, the second situation applies. The loss was deducted against other income last year and there is no carryforward.

If the total of the first page was a loss, I think there would be a carryforward, but I would have to look at the instructions on how to treat it.

MSPA Gold Certified #ct8cxq
Shopping Hamilton, Fairfield, West Chester and the northern Cincinnati suburbs.
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Deanna
Contributor

Hamilton, OH
USA
94 Posts

Posted - 02/05/2005 :  8:16:28 PM  Reply  Reply with Quote
I have good news and bad news on the IRS standard mileage rate quoted in this thread. The good news is it has increased from 36 cents....to 37.5 cents for 2004 and 40.5 cents for 2005.

The bad news is if you are reading this thread because you are trying to make that borderline loss into a profit, this didn't really help, did it?

(Only a would be disappointed in an increased tax deduction. )

MSPA Gold Certified #ct8cxq
Shopping Hamilton, Fairfield, West Chester and the northern Cincinnati suburbs.
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