There are many things to learn when you're starting out as a mystery shopper. Beginners are often discouraged by low pay offers for jobs that seem to entail quite a bit of effort on the shopper's part. Or, perhaps you're dismayed that a job offers no outright pay, but a reimbursement only. Don't worry: mystery shopping can become more profitable if you consider that many business expenses for mystery shoppers are tax deductible.
What expenses can a mystery shopper write off?
All-Important Schedule C
In order to write off expenses you incur while mystery shopping, you need to file Schedule C with your annual tax return. Schedule C is where you list income and expenses from a small business, and this is the form mystery shoppers use for this purpose. On this form, you will list all the fees you receive for mystery shopping, but you'll also list your expenses as deductions.
Brainstorm all the expenses you have accrued as a result of mystery shopping. Here's a list to get you started:
Mystery Shopping Provider's Assocation (MSPA) Certification Fees - Many shoppers earn a silver or gold certification through MSPA to make themselves more marketable. If you've done this, the certification fees are deductible.
Mileage to shops and certification - Mileage is a major expense for shoppers. Document miles driven to shops by keeping a small notebook in your car and noting mileage from your house to the shopping target. Also, if you drive somewhere to earn a mystery shopping certification, this mileage is deductible as well. As of 2009, the business rate is .55 per mile. This adds up quickly for most mystery shoppers and is a considerable help to your mystery shopping income it offsets fees paid to you.
Miscellaneous office supplies such as printer ink, stamps, printer paper, pens, folders, and staples are deductible if they were used for business purposes. Did you purchase extra storage for a mystery shopping email account? This would be deductible as well.
Business expenses such as costs to make copies away from home and fees to fax in reports can be deducted.
Equipment such as fax machines, printers, your
computer and your camera (used in many shops) can be depreciated and
portions written off each year. Check with the IRS for specifics on how
much to deduct, which is based on the percentage of business versus
personal use for each item.
A sad but increasingly common fact in the mystery shopping world is that some business do go bankrupt. What if you completed a shop for such a company and were never paid? Be sure to document any expenses you incurred during such a shop, as they are tax deductible.
Be thorough in documenting your expenses and they will add up. At tax time, your expenses may even exceed your income as a mystery shopper, but that's not necessarily a bad thing. Any loss from mystery shopping can offset income earned from other jobs, thereby reducing your overall taxes.
Susan Braun is a freelance writer living with her husband, three daughters, 2 rabbits, 2 gerbils and hedgehog in Indiana. She writes at girlsinwhitedresses.wordpress.com and Associated Content.