I wanted to review the tax consequences of my mystery shopping trip to the beach. Since the main purpose of the trip was to generate income, the IRS is okay if I had a bit of fun on the side. There is a great article about this on MSN. I have a lot to deduct from my taxes:
Mileage is reimbursed at $.55/mile in 2009. I drove a total of 992 miles, so I can deduct $545.60 from taxable income for miles driven. At a 25% tax rate, that's $136.40 in cash money I save on taxes.
Even though I did not have a cash outlay for the hotel, I can still deduct that expense, which was $139.32. Assuming I would pay 25% in taxes on the income this offsets, the value of this deduction is $34.83.
Meals are also deductible, but only for my meals... unless I can establish a business purpose for my partner's traveling with me. Since he did help me with filing, data entry and observations, I might be able to deduct his meals as well. I need to do some digging on that. I spent $101.20 for the two of us.
Fortunately in 2009 I earned considerable income from a day job for the majority of the year. This means if I lose money at mystery shopping it can offset the income I made from my day job. This will be quite useful for 2009, but if I my wage income in 2010 isn't significant, the advantages of deducting these expenses are minimized.