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 Where exactly do I report "expenses" reimbursed?
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KathyTX
Member

Austin, TX
USA
19 Posts

Posted - 03/26/2006 :  12:27:34 PM  Reply  Reply with Quote
Under which category on Schedule C do my reimbursed expenses go? I am talking about all the required purchases (meals, etc.) for my assignments. Does it go under Miscellaneous Expenses?

I am using TurboTax and it is great... but I want to make sure I list my reimbursed expenses in the the correct place since it's a large amount.

Thanks!

Kathy
MSPA Gold Certified

Pat S
Valued Contributor

San Ramon, CA
USA
142 Posts

Posted - 03/26/2006 :  12:49:11 PM  Reply  Reply with Quote
If it is a reimbursed expense you can't use it on your taxes. Expenses are for monies you spent beyond the reimbursed amount.
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LindJorg
Star Contributor

Tacoma, WA
USA
921 Posts

Posted - 03/26/2006 :  12:53:07 PM  Reply  Reply with Quote
On Sch C you list all monies received...then you deduct your expenses and yes!! I listed it under Misc expenses......I titled it REQUIRED PURCHASES. Don't forget to deduct operating expenses such as % of internet access charges and supplies such as ink, paper, pens, etc, and of course, mileage. After all that is deducted you will end up with loss or profit...THAT is the figure you list on your 1040.
I also used Turbo tax and loved it. Last year, I used H & R and they charged me $220 and I received $130 refund.

This year I paid 19.95 for Turbo tax premier and received $1300 refund. HA



Linda
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LolaKelly
Member

Burbank, CA
USA
25 Posts

Posted - 03/26/2006 :  9:35:08 PM  Visit LolaKelly's Homepage  Reply  Reply with Quote
A reimbursed expense is part of a shop requirement that you are paid back for and is not part of your income.
When you receive a Misc 1099, reimbursements for a shop are not included, so you do not declare them as income and there is no expense against them.

Schedule C is for all monies received, then you list your expenses, advertisement – business cards, flyers, etc…Offices Expense – paper, cartridges, clip boards, pens, pencil’s, post office box, any supplies for Mystery Shopping or Merchandising, etc….Depression of your computer, printer, desk, chair, phone, etc…Meals that you purchased while working as independent contractor, etc….Travel for work or seminars, etc…. Misc Expenses along with work clothes, shoes, Business Bank Accounts monthly charges, etc….Plus all your mileage, car expenses, and depression of your vehicle.

Lola
Tax Preparer

Lola
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LindJorg
Star Contributor

Tacoma, WA
USA
921 Posts

Posted - 03/26/2006 :  10:23:01 PM  Reply  Reply with Quote
Sorry to disagree BUT unfortunately some companies do not separate the reimbursement amount from the labor amount. Some do and some only list the labor amount. You must keep very detailed records.
This is from another post explaining how a 1099 can have everything lumped together:

quote"I received a 1099 from one firm which I only did reimbursement jobs for. A couple of the jobs paid a small fee, perhaps $10 in addition to the reimbursement. The reimbursements were large amounts. Along with the 1099 which included the reimbursements and the small fees, they informed me that it was my responsibility to divide the reimbursement amounts from the fee amount. The amount of my fees (maybe a total of $50) was easily used up in gas and parking to get to these jobs. Yet the 1099 is for a pretty big number. So, in some cases, the 1099 does include the reimbursement amount (even though I provided copies of my receipts to the ms firm and accounted for my expenses)."quote

Realize that MS companies do taxes and have to show the money they spent and that is why some do not send 1099s with only your labor pay.

So you cannot simply rely on those 1099s besides you have to report all monies not just monies from the 1099. You only received the 1099 when you earn more than $599 from an MS company. You could receive $100 from 10 different companies. You still need to report those monies on SCH C.
IT IS NOT REPORTING THESE REIMBURSED PURCHASES AS INCOME, it is listing it on SCH C which in turn determines your reportable income or loss for your 1040. That is why on SCH C, you should list your gross receipts....meaning all monies that you received and THEN you should deduct those required purchases that you were reimbursed for along with all those other items you suggested.
Of course, it is not income as it will wash on the SCH C.........you will not be putting it on your 1040. The end result of your SCH C is what is listed on your 1040.

All those paypal, bank deposits, etc. should come close to that figure on your SCH C.

Note that shoppers that do lots of REIMBURSE only shops will have a hard time justifying the mileage if they don't enter $$$ amounts on the SCH C and then the REQUIRED PURCHASE to wash that amount out.

I have talked with two shoppers that were audited about this and that is what the IRS wants to see on SCH C. I have talked with 5 different IRS employees and they agree. I have discussed this with 3 different accountants and they agree.

The book "Mystery Shopping Made Simple" by Dr. Ilisha S. Newhouse also states:
"The last category is reimbursed business expenses, and it is the most confusing to new shoppers or recovering accountants."
The book goes on to explain just as I did. Here would be a sample SCH C:

Gross receipts $15,000
Reimbursed business expenses $7000
Mileage $3400
Office Expenses $2000

NET $2600-----this amount would be on your 1040.


This subject has been covered so many times on many forums.
Sorry so lengthy.
OF COURSE, CONSULT A TAX PRO if you aren't sure but I feel confident in the way I prepare my taxes.

Linda
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KathyTX
Member

Austin, TX
USA
19 Posts

Posted - 03/27/2006 :  2:24:08 PM  Reply  Reply with Quote
Thank you, LindJorg. I knew I was on the right track and appreciate your help!

Kathy
MSPA Gold Certified
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Angela P.
Member

CA
USA
18 Posts

Posted - 03/30/2006 :  10:43:24 AM  Reply  Reply with Quote
Someone posted somewhere that for required purchases, even if you go above the payment amount, or purchase an item that is not minimal you can write that off. My question is I do shops where I am required to purchase, and my fee is based on my purchasing at least $15 of groceries. Often, I just do my grocery shopping, and end up with a receipt for $50. Should I just write off the $15, as that is the reimbursable portion as it is required? The $50, even though that exceeds the fee? I figure the $15 is acceptable. What about others, what do you do?
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LindJorg
Star Contributor

Tacoma, WA
USA
921 Posts

Posted - 03/30/2006 :  9:40:25 PM  Reply  Reply with Quote
I do lots of grocery shops and like you, I always spend a lot more than the reimbursement amount.
The requirements are buy 3 or more items and one large item. Well, I could buy pop for $3 and 3 other items for under $12 but I choose to buy more items.
Since, you technically could complete the shop by ONLY spending the reimbursement amount, I would only claim the $15 amount.

When could you claim MORE than the reimbursement amount? Well, let's say you do a restaurant shop and the requirements are order 1 appetizer, two entrees, two drinks and 1 dessert. Reimbursement is $30. Say, there is no way you could order the required items and stay at the $30 amount. You spend $42..........I would claim the $42. Of course, you wouldn't want to order lobster dinners and go $50 over the reimbursement but a reasonable amount would be acceptable.

Linda
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S Wollenberg
Contributor

Texas
USA
58 Posts

Posted - 04/16/2006 :  8:07:35 PM  Reply  Reply with Quote
Lola/Tax Preparer,

What is "depression of your computer, printer, desk", etc.??

Did you mean to say "depreciation" of these items?

Susan
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KimBie
Star Contributor

USA
607 Posts

Posted - 04/26/2006 :  8:19:57 PM  Reply  Reply with Quote
quote:
Originally posted by LolaKelly

Misc Expenses along with work clothes, shoes, Business Bank Accounts monthly charges, etc….Plus all your mileage, car expenses, and depression of your vehicle.
Our work clothes and shoes would to be deductible unless they were a specific type of clothing item or shoe that you COULD NOT.. (NOT WOULD not) wear in day to day life. For example, if a restaurant worker needs to wear a tuxedo, he would not wear it in every day life, but he could and therefore, it is not deductible. Examples of deductible items are safety glasses and protective clothing.

Also, all car expenses are deductible only to the extent they are deemed for business use.

Kim
MSPA Silver Certified
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TWeiler
Member

Roanoke, VA
USA
17 Posts

Posted - 08/03/2006 :  06:46:20 AM  Reply  Reply with Quote
An easy way to track your expenses and income is to make a simple Excel file. I have many but one sheet is only for tax purposes. categories are - DATE, MS COMPANY, ASSIGNMENT #, FEE, REIMBURSEMENT, OTHER EXPENSE, RECEIPT. FOr receipt, I just mark if I do have the receipt for that job. I also list any other expenses, such as clipboard, under MS Company and leave assignment # blank.

I have a large manila envelope for receipts. All receipts fo rmisc items purchased outside of an assignent are placed into the folder right off the bat. As the required timeframe to hold an old report for a particular company passes, I take the receipt off the report and put it into the manila envelope. I also have a seperate bank account for all deposits and PayPal transfers.
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Sue Br.
Star Contributor

Oklahoma
USA
660 Posts

Posted - 08/20/2006 :  04:35:05 AM  Reply  Reply with Quote
How would I separate the busness gas use from the just "running around" use? When I fill my tank I go off and do some shops then don't fill again till needed and I might have made several unrelated tips on that tank.

Thanks

Sue
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.Dawn DE
Inactive

DE
USA
518 Posts

Posted - 08/20/2006 :  06:12:58 AM  Reply  Reply with Quote
There are two ways to take car/truck expenses, but both require tracking mileage, to some extent.

Option one: standard mileage
In this case, you would simply track how many business miles you use and take the IRS standard deduction for that year. Normally, it's around 35 to 40 cents per mile. Either keep a notebook in your car, or use your trip odometer and transfer the number to your records when you get home. Some people use mapquest or other mapping system to figure mileage for each job.

Option two: actual expenses
To use this method, you must also know approximately how many business miles you traveled in a year. Then, you figure a ratio between business miles and total miles you went in your car. For example, if you put 20000 miles on your car this year and 5000 was for business, then business use is 25%. Now, add up all your receipts related to your vehicle. Gas, oil changes, repairs, etc, and multiply it by the business use. In this case, 25%. You will also need to use a chart (or computer program) to figure depreciation on your car. When you use standard mileage, the IRS figures depreciation in to the number.

Believe me, standard mileage is much easier. If you didn't keep track all year, it can be approximated with a map or mileage program (like mapquest).

Dawn
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Sue Br.
Star Contributor

Oklahoma
USA
660 Posts

Posted - 08/20/2006 :  07:57:22 AM  Reply  Reply with Quote
Thanks for the mileage tips. I am now enlightened. I haven't kept great mileage records but I will in the future.

Sue

Sue
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