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Tax Deductions for Mystery Shoppers

Tuesday, May 11th

Tax Deductions for Mystery Shoppers

If you are a mystery shopper, then you are considered to be self-employed and may therefore be eligible for a number of tax deductions. In being self-employed, anything that you use in relation to your business may be deductible providing that you save your receipts and can prove how the item(s) are beneficial and necessary for your career.

Mystery shoppers can either conduct evaluations in person, by phone or via the internet. As such, the gasoline for your automobile may be deductible when used in conjunction with travel for a mystery shopping job. In order to deduct the cost of gasoline, you must save your receipts. If some or all of your mystery shopping work is done via the internet and/or telephone, you may be able to deduct part or all of the cost of your computer, internet access and/or a telephone line if used for the purpose of mystery shopping activities.

As a mystery shopper, you will work at home on occasion or at least during the completion of your questionnaire. When you accept a mystery shopping job, you will be given a set of questions that are to be answered according to your experience with the company being evaluated. As such, the cost of office supplies, including paper, pens, office furniture and possibly even a fax machine may be deductible if used in the course of business.

If you work as a mystery shopper, being an independent contractor has many obvious perks. One thing that is missing from all work at home opportunities, however, is health benefits. Every self-employed individual is faced with having to search for their own health insurance policy. Unlike a traditional employer who often provides insurance packages as an employee incentive, self-employment requires that you handle matters relating to your own coverage. As such, the cost of health insurance may be tax deductible.

In addition, if you pay any type of fees relating to mystery shopping, including travel, memberships and/or subscriptions, these too may be tax deductible. Self-employed individuals, when required, must file Schedule C with the IRS to report all income from the operation of a business. In some cases, Schedule C-EZ may be filed if certain requirements are met. When tax time rolls around, be sure to have all receipts and/or expenses organized in an orderly fashion for fast and easy reference. If possible, keep all paperwork and financial information separate from your other income to allow for simple identification.

Being self-employed and/or enjoying the ability to earn money from home is the choice of many Americans. In addition to the emotional rewards and satisfaction, the financial benefits are unmistakable. Setting your own hours, working as much or as little as you want and having more control over your income are just a few of the benefits to being a mystery shopper.

The information provided in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional legal, financial and/or tax advice relating to self-employment and/or tax deductions. For additional information relating to taxes, consult with a local tax professional or the IRS directly.

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Mystery Shopping Company FAQ

Mystery shopping, sometimes referred to as "secret shopping" , is the way that many businesses get information about how their stores, offices or locations are doing with respect to customer service. Are the employees friendly? Are the proper signs displayed for a holiday promotion? Companies contract with mystery shopping providers that send in "secret shoppers" , who pretend to be there as a regular customer but are actually taking notes on their experience. Does that sound like fun? It is!
There's really no limit to the types of "mystery shops" you might have the chance to complete. You could visit a restaurant and place a specific order, go to a movie theater and see how clean the restrooms are, or even ship a package at the post office. Some mystery shops require you to buy a product and return it later, to evaluate how well the employee handles the transaction on both ends.
You'll get a lengthy series of instructions for each mystery shop assigned to you. In order to get paid, you'll need to follow those details to the letter. Common requirements are noting the time it takes to be approached by a salesperson, how long you wait in line to ring up your purchase, or the number of customers present at a particular time of day. You might also be asked to take photos or video (as surreptitiously as possible!).
It shouldn't! Reputable mystery shopping services allow you to register as an independent contractor at no cost to you. If you see a website that asks you to pay to become a secret shopper, you'll know it's not on the up-and-up. In fact, they're probably just going to give you a list of the real mystery shopping companies that you could have signed up for without their help!
That varies widely. Some shops only pay you a small amount of money, because you get to keep the product (or eat the meal, or see the movie, etc.). If a shop is high-priority - because it's time-sensitive, or maybe another shopper cancelled at the last minute - you could get a bonus payment. It's unlikely you'll make a living as a mystery shopper, but it could put some spending money in your pockets, give you a free date night, or provide you with some fun merchandise at no cost.
Yes, most of the time. Mystery shopping is always done on a 1099 (independent contractor) basis, and most providers understand that their secret shoppers will be working with more than one service at a time. But, during the sign-up process, be sure to read all of the requirements of the company where you're applying, just to make sure there aren't any non-compete clauses that would prohibit you from working for a rival service.
You want to avoid that happening at all costs! Think of mystery shopping as an acting role: you're not really "you" , but rather someone that could be an everyday customer at the store. If you're outed as a mystery shopper before you've finished gathering the required information, it could invalidate the entire job - and you won't get paid.
While there are absolutely some scammy services and sites out there, who just want to get your money in exchange for a list of mystery shopping opportunities, the industry itself is absolutely legitimate - and used by most of the big-name corporations you know to gather insights on their many locations nationwide. There's even a certification process you can participate in, which may boost your chances of being accepted by a mystery shopping provider and then landing more shops. Check to see if a mystery shopping company is a member of the MSPA (Mystery Shopping Professionals Association) before you register: it's a good sign that you've chosen a trustworthy, established service to start your adventure as a secret shopper!
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