Tax season gives workers from every industry a headache, especially independent contractors like mystery shoppers. Have no fear! The process can be confusing, but there are resources and tips available to make it less painful, including these four:
1. Keep all of your receipts and pay stubs!
Throughout the year, keep receipts from everything you do as a secret shopper. You'll need these later to calculate your business expenses. Even if you aren't sure if a transaction qualifies as a work expenditure, keep the receipt anyway, just in case. Mystery Shop Maven encourages organizing these papers before you sit down to actually complete your taxes. That way, if you notice a missing pay stub you'll have time to find it before tax deadline (April 15).
2. Visit the IRS website
The Internal Revenue Service lists answers to tons of questions for the self-employed. For instance, even if mystery shopping is a hobby, if your profit for the year is over $400, you must file income taxes. Find your profit by subtracting the money you spent on your mystery shopping business from the amount you earned. This is why keeping receipts is so important! You will likely also have to file self-employment taxes. Both of these are filed with different forms, which can be found on the IRS website, along with detailed instructions.
3. Exercise all your deductions
Deductions are expenses you can subtract from your total income to reduce the amount you will likely have to pay. According to Mystery Shopper Magazine, home offices, cell phones and printers can all be considered tax deductible within certain limitations. You will have to determine the percentage of each of these items you have devoted solely to your business in order to claim your deduction.
4. Save money for tax day
This might sound obvious, but saving money is always a good idea. However, pinching pennies specifically for tax season is not as fun as say, building up your bank account to buy a plane ticket to Hawaii. By saving money throughout the year to be used exclusively on your taxes, you'll feel more prepared to pay what you owe.
When in doubt, asking your mystery shopping company for resources is a good idea. They'll likely have more in depth information or be able to better explain some of the more intricate components of filing independent contractor taxes than the IRS website. Whatever you do, don't fret and be sure to file on time!