How do I classify reimbursements I’ve received for mystery shopping?

Forum|Forum|5 years ago
March 12, 2021
5 replies
54 views

I’ve been doing mystery shopping as a side job. They have you go to a variety of places, check out the business, purchase something (which they reimburse up to a certain amount), and write up a report about the service provided. For example, if I get an assignment to go to a restaurant, get paid $5, and get reimbursed up to $10 for the meal I’m required to purchase to review, how is that supposed to be reported on my taxes? I didn’t make enough for them to send me a 1099, so I’m not sure how it breaks down. Is it reported as $15 income with a $10 deduction? Or is all $15 income and none of it is deductible? If the $10 reimbursement for the required meal purchase is deductible, what do I put it down as? I know there are categories for meal expenses that are 50% and 100% deductible, would it be one of those (if so which one?) or neither? If I also made required purchases that were reimbursed at a different type of store that’s not food, do I need put those down in a different category? I just want to put it down the way I’m supposed to, I’ve tried checking different places and have no idea what to do, thank you for your help.

TurboTax Self Employed Online

AmyC

Level 15

Reimbursement is not income. Only the actual income above what you spent, the amount paid to create the event and report. In your example, they paid you $5 for the meal experience and report.

You will report all the income on a business sch C. See:

Small Business and Self-Employed Tax Center - complete guide

About Schedule C (Form 1040), Profit or Loss from Business
Publication 535, Business Expenses
What is the self-employment tax? video

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Bria1Author

Level 2

@AmyC Thank you. So just to make sure I’m understanding correctly, even though the payment they sent me will be for $15 in that scenario, only $5 is counted as income then? Do I put the $10 spent on the meal anywhere on my taxes at all? I’d tried talking to someone from TurboTax on the phone and they seemed to think I did (since I got stuff out of it even though it’s not really monetary) and they said I should classify it as a 50% deductible meal, but they also gave me other tax advice that was incorrect (that’s a different matter, submitted a review to the company so they could be aware of it), but anyways I wasn’t very confident in their reply. Sorry, I get confused on tax issues, clearly, thanks for your help.

AmyC

Level 15

Sometimes there are gray areas. The IRS has the 50% deductible on meals as that helps to force people to make reasonable meal choices that are more affordable to their lifestyle. In your case, you are being told where you have to eat and being reimbursed in full.

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