Do I have to Pay Taxes On My Earnings?
Please not that I am not a tax professional, so please understand that this in not tax advice, and may not be accurate. I recommend consulting an accountant. Also, TurboTax is very helpful in walking you through filing your taxes.
Yes — you are required to report all of the money that you receive as a mystery shopper to the IRS. This means that you report all of your fees AND your reimbursements.
As a mystery shopper, you are considered an ‘independent contractor.’ Which basically means you are running your own business, and the mystery shopping companies are your clients.
That means you will do your taxes as though you were a ’sole proprietor’ of a business. Effectively, you will end up paying taxes on the total profit you earned during the year. This is actually very good news, because it means you are open to a whole new world of deductions that AREN’T otherwise available.
This means that any money that was necessary to spend as part of completing your assignment, you will be able to deduct from your earnings. You will also be able to deduct your driving mileage, which is around Fifty Cents a mile. In essence your expenses as a mystery shopper are deductible.
Be sure to keep an accurate record. This is important when it becomes time to file, or in case you get audited.
How do I Find Companies in My Area?
It is actually quite easy to find companies that DO have shops in your area, whether you live in the middle of nowhere Nebraska, or in a giant city like New York.
In the past two years I’ve talked to hundreds of mystery shoppers, and I’ve experimented with dozens of ways of finding companies with assignments in a specific area….all with the goal of making it as quick and easy as possible.
There are several good options. If you want to have the most assignments offered to you with the least amount of effort, I recommend doing all of them.
First, sign up for ShadowShopper. Yes, I know some people hate that they are a ‘for-profit’ company, but they also have a very comprehensive scheduling service. That means they automatically connect you with companies that have assignments in your area.
Second, register with Kern Scheduling. They are another big scheduling company. They’ll be pretty likely to find assignments in your area.
Third, scour the job boards. The biggest job board is run by the Mystery Shopping Providers Association. They’re the trade organization that represents 200+ mystery shopping companies. You can easily search for assignments in your area. Don’t worry if the assignments you find are out of date — register with the companies anyways. It’s likely they’ll have assignments for you next month.
Fourth, read the forums. I own and operate MysteryShopForum.com, and it has turned into a great community of active mystery shoppers. It is also a great source for finding new mystery shopping companies. You can get feedback about the good ones, the bad ones, and the ones that have assignments in your area.
What Kinds of Assignments are Available?
Wherever there is a customer service interaction, there is likely to be an opportunity for mystery shopping.
The list of businesses that get shopped by mystery shoppers…and includes nearly every category you can think of.
- All kinds of department stores, grocery stores, and clothing stores do mystery shopping.
- Nearly every chain restaurant, fast food restaurant’s, and fine-dining restaurant has mystery shoppers.
- Banks, insurance agencies, financial advisors — all use mystery shoppers. Even tax-return companies use them.
- Resorts, golf clubs, spas, and hotels. These kinds of assignments are usually available only to established shoppers. They are out there…but don’t expect to get them right away.
- Apartment viewings are also a common mystery shopping assignment.
How Much Can I Earn as a Mystery Shopper?
Don’t expect to get rich with mystery shopping. However, it is possible to earn a decent amount of money, depending on a number of factors. As a general rule, most shoppers who spend an afternoon or two a week at it can expect to earn a few hundred dollars a month.
If you decide to work at mystery shopping full time, it is not uncommon to earn as much as $100 a day. For example, five shops a day that pay $20 each is worth $100. The amount of shops you can find depends on how many companies you register with, the distance you are willing to travel, the raw number of stores around you, and the amount of other shoppers in your area who are looking for the same assignment.
The amount you get paid also depends on your level of experience. Once you establish a good reputation with the companies you work with, they will be more willing to offer you more money and better paying assignments.
Yes, it is possible to earn a full time income with mystery shopping. However, most new shoppers should expect to earn a side income.