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 Mystery Shopping, Merchandising & Demo
 Independent Contractor Taxes
 Records for tax purposes
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Cindy1948
Member

Utica, NY
USA
29 Posts

Posted - 01/01/2012 :  02:42:43 AM  Reply  Reply with Quote
I just finished my first year of MS (actually six months). I did not make over $600 with any company I am assigned. I need some help in knowing what I need for next year's tax purposes. What do I need to keep records of. I believe I need to keep mileage, receipts etc. for each company. How do you keep mileage when some days you are working for two or three different companies? Please advise. Thank you.

Cindy Shepherd

Cilla
Star Contributor

MD
USA
1424 Posts

Posted - 01/01/2012 :  05:42:55 AM  Reply  Reply with Quote
Cindy,
You mileage does not need to be allocated to specific companies. When you leave home for a shop, note the mileage. When you return from that and several other shops record the ending mileage. As long as you do not stray from your route to do personal business by more than a very few miles, you can sandwich in some personal errands without changing the status of the entire trip from "business" to "personal."

BTW, you must report all of your shopper fess, not just the fees that are reported on 1099 forms to the IRS.

My advice is to buy Turbo Tax and use it to fill out a Schedule C for 2011. It will walk you thruough questions about your shopping business. This will help you better understand what records you will need in future.

Cilla
MSPA Gold Certified 2005
IMSC Certified 2009
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JuanitaJ
Star Contributor

Houston, TX
USA
1014 Posts

Posted - 01/01/2012 :  07:25:20 AM  Reply  Reply with Quote
Cindy, I print a map to every mystery shop I do. I attach the map to the paperwork for the shop and write the mileage at the top of the report page. I keep a running list of all my shops and off to the left I record the mileage. At the end of the year, I add it up. The list also includes the names of the companies, the dates, and the amounts paid. I also keep a separate file for each of the companies I shop for and this also has a list in each file. At the end of the year, when I make up my list of income, I have the mileage separated out for each company, along with the amount I earned, etc. This is mainly for my records. I like to see it separated out. Doing the maps is no problem for me at all because I need maps to get around the large territory I cover, most of Houston and way out in the outlying areas.

This way, if I do have errands to run in between, I do not need to keep track of the miles because I have my miles accurately recorded on my maps.

I also keep a record of my beginning mileage and ending mileage for the year. You will need to know your total mileage as well as the mileage for your business so that you can come up with the percentage that is used for your business. If your car is being financed, you will be able to claim a portion of the interest you are paying each year based on the percent you use the car for business.

And, as Cilla said, you need to keep track of all your income, not just what you will receive 1099s for. The 1099s are so that companies can report earnings of $600 or over and that the IRS will receive a 1099 from the companies although you do not need to turn in the 1099s to the IRS. It helps the IRS to keep track of some of the higher earnings. If they had a tax return for which 1099s had been turned in and the person did not claim the income, the IRS might audit that person for reasons the income was not claimed.


Juanita
MSPA Gold Certified
Happily shopping the Houston, TX area.
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Cindy1948
Member

Utica, NY
USA
29 Posts

Posted - 01/01/2012 :  2:40:28 PM  Reply  Reply with Quote
Thank you Cilla and Juanita for your help. I see I am going to have to start developing a way to record all necessary items. I didn't really think it would be this complicated. Maybe once I figure out a system, it won't be so bad. Again, thank you.

Cindy Shepherd
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KariK
Contributor

Minneapolis, MN
USA
86 Posts

Posted - 01/01/2012 :  3:42:04 PM  Reply  Reply with Quote
I've only been doing this since 8/1 so don't have a lot of shops under my belt (maybe 200). I keep track using an excel spreadsheet. I record the shop, date, location, MSC, mileage and when paid.
Not sure what I'll do for 2012 since I except I'll be doing a lot more shops.
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NancyG
Contributor

Arlington, TX
USA
90 Posts

Posted - 01/01/2012 :  6:37:16 PM  Reply  Reply with Quote
Kari, I've been doing this ten years and still use my excel spread sheet that my son created for me. It keeps track of the jobs, the identifying information for each one with a separate sheet for my expenses. The cover page is my summary with all the results tallied so I know how I'm doing each month and the cumulative total for the year as it progresses. I know there are probably a lot more programs available but if you are comfortable with your spread sheet, then stay with it. I just start a fresh file each year.
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SharonC
Member

Jacksonville, FL
USA
30 Posts

Posted - 01/03/2012 :  1:53:24 PM  Reply  Reply with Quote
Wow...when are you people going to realize that you ARE NOT Independent Contractors ? Do you have a CLUE that the companies who hire merchandisers, mystery shoppers, demonstrators etc as ICs are doing so ILLEGALLY ???

Yes... GET A CLUE. Go to the IRS website and see the RULES that dictate who IS and ISN'T an IC. These companies are illegally classifying you as ICs so they can avoid paying Payroll taxes, Workman's Comp, Unemployment Benefits, Overtime and other benefits. They AND you will get caught eventually. Many of the companies I worked for got caught and fined and had to rehire us as W-2 Employees.

I suggest you ALL read the IRS RULES before you file your taxes and consider REPORTING any company that is illegally mis-classifying you for tax purposes and putting theburden on YOU.


http://search.irs.gov/web/query.html?col=allirs&charset=utf-8&qp=&qs=-Wct%3A%22Internal Revenue Manual%22&qc=&qm=&rf=&oq=&qt=Independent Contractors vs Employees

Don't let them make you work for free. YOUR time is worth $$$. Demand compensation for it.
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JuanitaJ
Star Contributor

Houston, TX
USA
1014 Posts

Posted - 01/03/2012 :  2:53:17 PM  Reply  Reply with Quote
Sharon, I notice from your profile that you work as a "merchandiser." I believe that merchandisers are usually paid by the hour and are considered employees. When I worked as a merchandiser and was paid by the hour, and the companies controlled my hours, the companies withheld taxes, etc, and I received a W-2 just like any employee would.

But mystery shopping is different. The companies do not have the control over our hours, we are not paid by the hour, etc, to qualify us as employees. We contract with a company to do a job for x-number of dollars and it is our job to get it done as we see fit. It is no different than someone bidding to paint your house. They are not your employee. If any mystery shopper is in doubt as to whether they are independent contractors, they can fill out a form the IRS will supply them. They can send it to the IRS and the IRS will determine their status. Believe me, if you look at the form and read the questions, you will agree that mystery shoppers are indeed independent contractors.

I was a professional tax preparer for many years. I have friends who are Registered Agents with the IRS. Some of them have been with the IRS 35 years and longer. These very agents have audited my returns. They know I am a mystery shopper and an independent contractor.

There was one company who hired me as a mystery shopper and paid me as an employee. It was a grocery chain and they "shopped themselves." Unlike most mystery shops, this company gave me assignments, controlled my hours by telling me when the shops had to be done, paid me by the hour for every minute I spent doing the shop, the reports, and the driving. If I even spent time preparing for the jobs, they paid me by the hour. They also paid my mileage except for the first and last 10 miles. They sent a W-2 at the end of the year.

They paid me as an "employee" and withheld taxes. As an employee they would need to make sure you make the minimum wage.


Juanita
MSPA Gold Certified
Happily shopping the Houston, TX area.
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Ms.Baker
Valued Contributor

Evansville, IN
USA
135 Posts

Posted - 01/16/2012 :  4:33:36 PM  Visit Ms.Baker's Homepage  Reply  Reply with Quote
Well, I consider myself an Independent Contractor. I am not looking for benefits like insurance or paid vacations. I am retired with benefits. I am looking for work that is flexible and adds income go my retirement. I want work that I enjoy and schedulers that know what they are doing.

For Cindy... I'm working on my fourth year mystery shopping. The first three years I kept a schedule listing each shop (date, location, MCS, fees, reimbursements). My schedule included personal commitments; therefore, I could determine my business mileage. This year, I am going with the excel program so I can keep better track of monthly earnings. I can record everything that was on my "Word" schedule, but now I can get that "summary" instantly.

For tax purposes, I put all my shops in the free Intuit program, including all income. This way, I have individual invoices for each shop and the record of when I was paid. I have all the information needed for tax purposes also.

I agree with Juanita on what she said concerning the IRS and filing taxes. I work in a tax office during tax season, and I get all the "free" advice I want. One tax preparer was a retired IRS agent so I feen comfortable with the advice I have been given. If I am audited, I have all the records to validate my tax entries.
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Ms.Baker
Valued Contributor

Evansville, IN
USA
135 Posts

Posted - 01/16/2012 :  4:38:26 PM  Visit Ms.Baker's Homepage  Reply  Reply with Quote
quote:
Originally posted by SharonC
Don't let them make you work for free. YOUR time is worth $$$. Demand compensation for it.



As an Independent Contractor, I have the "choice" of accepting or rejecting work and associated payments. If I work for "free" it is because I want to!

Shopping the Tri-State area
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Nancy_WA
Member

Washington
USA
25 Posts

Posted - 02/16/2012 :  09:20:59 AM  Reply  Reply with Quote
To Ms. Baker: What free Intuit program do you use? Also, to see if I'm understanding your post, you enter each shop you do individually? Doesn't that take you about two months to enter?
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MattMS
Star Contributor

Genoa, Illinois
USA
360 Posts

Posted - 02/22/2012 :  07:23:21 AM  Send MattMS an AOL message  Reply  Reply with Quote
Cindy - and all.

You MUST claim ALL income received from mystery shopping/merchandising/etc. Even if it is only $10 from 20 companies, that $200 IS taxable income. (Well, until you deduct expenses, miles, etc...)

1099-MISC forms are only required at $600, but you provide your SS# to companies so they can report the money they pay you as an expense to them. You need to file a schedule C to claim this income. You are responsible for tracking this income yourself.

There are MANY ways to track your income and expenses. I personally use the Mystery Shopping Bible available online. You can use your own Excel file. You can use shop instructions and maps. You can use rocks and chisels! Whatever your flavor, PLEASE keep track. Every year there are stories on the forums of people getting incorrect 1099's even when they qualify for one. Your own records are VERY important!

Matthew - shopping North Central & North West Illinois
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