View Full Version : Camming And Taxes
xxtinamariexx
10-24-2012, 07:06 PM
I am trying to follow all of this and my head is spinning! lol I thought I had signed up with PJ for weekly pay, but I got a check from SM.. Not fun to cash at banks were everyone knows who you are. no 2% came out. So I went through payoneer debit card. So my question is, since it is going through payoneer, do I still get that 1099 from SM? Or should I switch to daily pay? PJ did switch me to weekly pay. BUt I guess that it really didn't go through PJ since I was getting a check.. Now that I'm switched over to Payoneer, now is it going to go through them??
I'm sure it's not as confusing as I am making it.. but I just wanted to do what is best so I don't get that 1099.. (I am picturing my accountants face right now lol)
Thanks for any insight!!
Melonie
10-25-2012, 07:22 AM
I'll try to clear up some distinctions. If you are working directly for SM or any other webcam host, then SM will be making 'business to business' payments between themselves and your own independent business. If you are a US citizen, that imposes a requirement on SM to issue a 1099. Involving third party financial service companies to facilitate the tranfer money between SM and your own independent business ( i.e. payoneer ) does not change this basic relationship.
However, if you are working indirectly for SM or any other webcam host via a 'studio' ( i.e. DailyPay ), then technically speaking SM will be making 'business to business' payments between themselves and the studio. This removes the 1099 requirement from SM's shoulders since they are technically not making payments directly to US citizen camgirls. However, technically speaking, it shifts the burden of issuing 1099's to US citizen camglrls one step down the 'line' ... meaning that a second 'business to business' transaction also takes place between the studio and the camgirl's independent business, thus 1099 reporting requirements for payments made to US citizen camgirls are shifted to the studio.
As to whether or not a non-US based studio will be adversely affected if they choose not to issue 1099's to US citizen camgirls, this depends on a whole bunch of question marks ... which involve such things as where the studio actually does their banking, how the studio routes the money across the US border etc. However, since the studio is not actually operating a website, unlike webcam hosts, studios are not at potential future risk of having an IP blocked for US customers or having future webcam customer MasterCard and Visa transactions blocked for US customers as the result of potential future IRS or anti-money laundering 'enforcement' measures for failures to issue 1099's to US citizen camgirls.
annabellz
10-25-2012, 07:31 AM
^ Were you signed up to SM first as a model and then switched over to Daily pay?
Lets say you signed up to SM yourself and broadcasted as model "Tina". Anything you earn under Tina will be paid to you however you select it to, ( a check, payoneer, etc) and a 1099 will be sent for those earnings. To switch over to daily pay requires you to close the "tina' account and open a new account through daily pay. Did you create a new account through daily pay or did you simply create another account on your own?
From your post it seems like youre not a member of DP, when you seem to think you signed up and should be, if thats the case you should contact DP and have them look into it and advise you of the steps to take to correct it.
(however anything you have already earned and been paid for will be on a 1099 now and theres nothing you can do about it)
xxtinamariexx
10-25-2012, 08:52 AM
^ Were you signed up to SM first as a model and then switched over to Daily pay?
Lets say you signed up to SM yourself and broadcasted as model "Tina". Anything you earn under Tina will be paid to you however you select it to, ( a check, payoneer, etc) and a 1099 will be sent for those earnings. To switch over to daily pay requires you to close the "tina' account and open a new account through daily pay. Did you create a new account through daily pay or did you simply create another account on your own?
From your post it seems like youre not a member of DP, when you seem to think you signed up and should be, if thats the case you should contact DP and have them look into it and advise you of the steps to take to correct it.
(however anything you have already earned and been paid for will be on a 1099 now and theres nothing you can do about it)
Yep, I did sign up with the link he/she sent me for weekly pay, and I sent them a help ticket last night. so I guess we will get it sorted out. I just dont want to have to hand over the 1099 to my accountant and have the trail. thats all. I don't care about the taxes or paying them part, I have no issues with that lol
I did close the account I started with and then signed up with the DP link that I was sent, when I finished pj stated that I was all set and ready to work after switching me to weekly pay. I aslo didnt wait 3 weeks for my first check. I ll just wait to hear back from them I guess
takiaya
10-30-2012, 05:24 PM
I was calculating earlier today how much I think I will have made this year based on what Ive already earned so far and what I think I will earn between now and time to file taxes, I'm going to make a little under $15,000 at most, I was saving for taxes but I have a child, bought a vehicle, am not married, paying rent, bills, etc and my savings account just didn't hold up. I know that calculating what will be owed will depend on alot of factors that I will have to talk to a tax person about. Did not file taxes last year (no income). My state charges state tax and all that good stuff, so I'm thinking I'm looking at around 40% without deductions and I honestly will not have even close to that. I only have about $500 in savings right now XD. What are options for paying taxes? I mean theres no way I will have the amount that I'm going to owe. What will the irs do when I don't have the amount owed? Will I have so long to pay it? Have to pay it in payments? Just wondering...
annabellz
10-30-2012, 05:41 PM
^when you dont have enough to pay the best thing to do imo is to wait until the very last minute to file (this gives you more time to save) The IRS will contact you about the balance due- or you can contact them first if youd like and set up payment arrangements. As long as your amount due is less then 10k they have to set up payment arrangements. They have specific rate tables based on your income and family size and balance due for calculating how much of a payment youre required to send each month- but I have heard of people negotiating with them for lower amounts then they demanded and getting it. (for example the rep demanded the payment needed to be 200 and the taxpayer insisted they could only afford to send 125, after talking a while and hearing the taxpayers reasons, the rep agreeded and accepted the 125), whatever agreement you come to with the IRS, it is important you have the rep mail you something in writing stating it. You will get a bill each month and if you fail to pay it, your payment arrangement becomes void and the balance due becomes due immediately.
takiaya
10-30-2012, 05:44 PM
^when you dont have enough to pay the best thing to do imo is to wait until the very last minute to file (this gives you more time to save) The IRS will contact you about the balance due- or you can contact them first if youd like and set up payment arrangements. As long as your amount due is less then 10k they have to set up payment arrangements. They have specific rate tables based on your income and family size and balance due for calculating how much of a payment youre required to send each month- but I have heard of people negotiating with them for lower amounts then they demanded and getting it. (for example the rep demanded the payment needed to be 200 and the taxpayer insisted they could only afford to send 125, after talking a while and hearing the taxpayers reasons, the rep agreeded and accepted the 125), whatever agreement you come to with the IRS, it is important you have the rep mail you something in writing stating it. You will get a bill each month and if you fail to pay it, your payment arrangement becomes void and the balance due becomes due immediately.
Ok thanks
Melonie
10-30-2012, 08:48 PM
I'm going to make a little under $15,000 at most, I was saving for taxes but I have a child, bought a vehicle, am not married, paying rent, bills, etc and my savings account just didn't hold up. I know that calculating what will be owed will depend on alot of factors that I will have to talk to a tax person about. Did not file taxes last year (no income). My state charges state tax and all that good stuff, so I'm thinking I'm looking at around 40% without deductions and I honestly will not have even close to that
actually, since you will be able to file using 'head of household' status because of your child, since you will be able to claim two personal exemptions, and since your $15k income will allow you to qualify for the 'low income' and 'child care' tax credits, i'm thinking that your tax liability will fall at something less than 15% ... maybe a LOT less than 15%.
^when you dont have enough to pay the best thing to do imo is to wait until the very last minute to file (this gives you more time to save) The IRS will contact you about the balance due- or you can contact them first if youd like and set up payment arrangements. As long as your amount due is less then 10k they have to set up payment arrangements
While IRS monthly payment arrangements are relatively easy to file for and enter into, please be aware that the total amount of tax money which must eventually be repaid will also included embedded interest charges, embedded penalty charges etc. As such, in many cases, it's actually 'cheaper' to put your tax bill on a credit card than to enter into an IRS payment arrangement.
Also keep in mind that entering into an IRS payment arrangement will automatically place you higher on IRS 'radar' in regard to future tax compliance, since it represents incontrovertable proof of non-compliance during the previous year. This means that not only will the IRS expect you to make the monthly payments to cover last year's tax bill like clockwork, but that they will also expect you to make current year quarterly estimated tax payments to cover your current year tax bill like clockwork. If the current year estimated tax payments amount to some 25% of your current income, and the IRS payment arrangement for last year's tax bill consumes another 10% of your current income, that's a fairly heavy economic 'burden'. Also, being higher on the IRS 'radar' screen will significantly increase your chances for being audited in future years.
And, as annabellz already pointed out, if you skip a payment the IRS can void the monthly payment arrangement and immediately try to collect the unpaid amount still due for last year's tax bill by whatever means available. This can mean freezing / seizing any money you have already deposited in a bank account, seizing ( a portion of ) any future 'gov't payments' being made to you by a different federal / state agency ( like a state tax refund ), potentially seizing any assets you own ( like your car ) etc. Thus in terms of my personal opinion at least, IRS monthly payment arrangements should thus viewed as a last resort !!!
takiaya
10-30-2012, 09:19 PM
actually, since you will be able to file using 'head of household' status because of your child, since you will be able to claim two personal exemptions, and since your $15k income will allow you to qualify for the 'low income' and 'child care' tax credits, i'm thinking that your tax liability will fall at something less than 15% ... maybe a LOT less than 15%.
While IRS monthly payment arrangements are relatively easy to file for and enter into, please be aware that the total amount of tax money which must eventually be repaid will also included embedded interest charges, embedded penalty charges etc. As such, in many cases, it's actually 'cheaper' to put your tax bill on a credit card than to enter into an IRS payment arrangement.
Also keep in mind that entering into an IRS payment arrangement will automatically place you higher on IRS 'radar' in regard to future tax compliance, since it represents incontrovertable proof of non-compliance during the previous year. This means that not only will the IRS expect you to make the monthly payments to cover last year's tax bill like clockwork, but that they will also expect you to make current year quarterly estimated tax payments to cover your current year tax bill like clockwork. If the current year estimated tax payments amount to some 25% of your current income, and the IRS payment arrangement for last year's tax bill consumes another 10% of your current income, that's a fairly heavy economic 'burden'. Also, being higher on the IRS 'radar' screen will significantly increase your chances for being audited in future years.
And, as annabellz already pointed out, if you skip a payment the IRS can void the monthly payment arrangement and immediately try to collect the unpaid amount still due for last year's tax bill by whatever means available. This can mean freezing / seizing any money you have already deposited in a bank account, seizing ( a portion of ) any future 'gov't payments' being made to you by a different federal / state agency ( like a state tax refund ), potentially seizing any assets you own ( like your car ) etc. Thus in terms of my personal opinion at least, IRS monthly payment arrangements should thus viewed as a last resort !!!
XD taxes and tax laws give me a headache.
Sexy Shana
11-02-2012, 11:26 AM
At $15,000, and a child your taxes should be almost nothing except for FICA and the medicare tax, which everyone has to pay. In fact, you can probably get a check from the gov't as a low income earner with a dependent.
There are a ton of deductions you can take as a cam model....toys, some lingerie, bedroom heels, some makeup, lube, partial internet, web cam and.......(U get the idea?).
Hopefully you can make more then $15K....
RaineyLane
11-10-2012, 12:21 PM
Do the Schedule C and deduct your expenses to lower the amount of "Income." You can deduct ANYTHING you use for your business. So cam, computer, internet, phone, lights, bedroom decor, costumes, hair, makeup, nails, ect... All of these can be deducted. Also if you work from home, you can deduct a portion of your rent and utilities. Just don't go overboard and you should be fine and save THOUSANDS of dollars every year. If you go through your bank statements and highlight all your "expenses" it's easier when tax time comes. Or just go online and some banks will let you categorize your purchases. It's worth paying someone if you don't want to do it, just bring your expense records with you. Hope this helps.
SarahTime
11-10-2012, 04:47 PM
Do the Schedule C and deduct your expenses to lower the amount of "Income." You can deduct ANYTHING you use for your business. So cam, computer, internet, phone, lights, bedroom decor, costumes, hair, makeup, nails, ect... All of these can be deducted. Also if you work from home, you can deduct a portion of your rent and utilities. Just don't go overboard and you should be fine and save THOUSANDS of dollars every year. If you go through your bank statements and highlight all your "expenses" it's easier when tax time comes. Or just go online and some banks will let you categorize your purchases. It's worth paying someone if you don't want to do it, just bring your expense records with you. Hope this helps.
Omggggggg all these things CANNOT be deducted. How many times do we need to go over this on this forum? lol
Please, anyone wanting to deduct ANYTHING please check with the IRS on very specific guidelines for doing so. Hair, makeup, nails..... these and many things C A N N O T be written off!!!
Also, be SUPER careful deducting anything like internet, phone, computer, and especially office space! If you deduct these things you can only AT MOST deduct a percentage of the cost, unless it can be shown that the deduction is 100% for business and nothing else. Example, you cannot deduct 100% of your internet or phone because you most likely do not use the internet and phone 100% for business. Same for office deduction, you can only deduct it if you use it SOLEY for work. So a bedroom would not qualify. A computer, you can only deduct 100% of it IF you use it SOLELY for work and have another computer you use for personal use.
There is just so much BAD "advice" on this forum regarding taxes. Please, everyone take the time to check the official website of the IRS before you go getting yourself audited by listening to stripper web tax advice. With the exception of whatever Melonie says, listen to her over anyone else on this forum, even me! :)
SarahTime
11-10-2012, 04:51 PM
It's also worth mentioning that when you go and get yourself audited for all these unallowed deductions, be prepared to show RECEIPTS and proof of expenses, not just banks statements with highlights. This is a BUSINESS. You absolutely must keep precise and accurate records of anything you plan to deduct, and a highlight on a bank statement will absolutely not qualify as legitimate proof of an expense.
AureliaC
11-12-2012, 03:30 AM
Which camming companies operate outside the US?
I bet clips4sale doesn't right? :(
I'm in the process of applying for my Canadian citizenship since my father is a citizen and am kinda in the mood to renounce my American and move south... the phrase "hell in a handbasket" springs to mind.
So any girl, working in any country for an American based company has to pay US taxes?
And I'm not sure if anyone knows but is it where the servers are based that determines which country the site works out of?
Melonie
11-12-2012, 04:22 AM
^^^ actually, any American citizen camgirl working for either an American based OR foreign based company must pay US income taxes on her earnings. If she is residing within the USA, or if she is residing ourside the USA but being paid by a US based company, she must pay taxes on the 'full shot' of her earnings. If she is residing outside the USA, and all of her earnings come from non US based companies, the first $106,000 of her earnings is not taxed as income by the USA under the IRS 'foreign income exclusion' rule.
Depending on how the 'fiscal cliff' negotiations turn out in Washington DC, there's no absolute guarantee that the IRS 'foreign income exclusion' rule will remain as-is in 2013 and future years. There has also been discussion of enacting a 30% 'exit tax' where a US citizen permanently leaving the country would have to pay 30% of the value of all 'assets' she wishes to move outside the USA to the IRS as a de-facto 'estimated tax payment' against potential US tax obligations. This certainly 'muddies the waters' for any American considering a future ex-pat move. Admittedly nothing has changed so far. [ however, I'm currently in the process of selling the NY house I retained ownership to before the end of 2012, to avoid the potential complications of the 30% 'exit tax' being applied to the money I receive from that sale ]
The only way for a US citizen living outside the USA to legally side-step having to pay US taxes altogether is to renounce her citizenship. However, to avoid placing oneself in 'legal limbo' of not being a citizen of ANY country ( thus unable to travel internationally ), this first requires obtaining citizenship from another country. And that is a lengthy process.
Also, becoming a permanent resident of another country, or a citizen of another country, makes you subject to the tax laws of that foreign country. This isn't much of an issue in countries like my adopted country 'way south of the border' which levees zero taxes on any income earned from any source outside my adopted country itself.
However, much like the USA, Canada also levees a personal income tax on income earned by Canadian citizens from foreign sources. Thus, from a purely dollars and cents standpoint, becoming a Canadian ex-pat and reporting all of your income might actually subject you to an even higher effective tax rate than if you remained in the USA. However, while the USA has already managed to impose international banking regulations which force both US based and non-US based businesses to report payments made to US citizens to the IRS, Canada has no such automatic income reporting in place at the moment ... and thus relies on the 'honesty' of Canadian citizens to report and pay taxes on non-Canadian income, for the moment at least.
RaineyLane
11-12-2012, 12:40 PM
Omggggggg all these things CANNOT be deducted. How many times do we need to go over this on this forum? lol
Please, anyone wanting to deduct ANYTHING please check with the IRS on very specific guidelines for doing so. Hair, makeup, nails..... these and many things C A N N O T be written off!!!
Also, be SUPER careful deducting anything like internet, phone, computer, and especially office space! If you deduct these things you can only AT MOST deduct a percentage of the cost, unless it can be shown that the deduction is 100% for business and nothing else. Example, you cannot deduct 100% of your internet or phone because you most likely do not use the internet and phone 100% for business. Same for office deduction, you can only deduct it if you use it SOLEY for work. So a bedroom would not qualify. A computer, you can only deduct 100% of it IF you use it SOLELY for work and have another computer you use for personal use.
There is just so much BAD "advice" on this forum regarding taxes. Please, everyone take the time to check the official website of the IRS before you go getting yourself audited by listening to stripper web tax advice. With the exception of whatever Melonie says, listen to her over anyone else on this forum, even me! :)
I didn't say you can deduct 100% of those items, but you can deduct them. Sorry for being vague. Let me clarify... If you use the computer 50% of the time for work, then you can deduct up to 50% of your computer. If your workroom occupies 20% of your home, you can deduct 20% of your rent, utilities, ect. If you are on the internet 70% of the time for work, you can deduct 70% of your annual internet. Hope this helps. As far as your beauty stuff, you should be able to deduct ALL of it. I do my taxes this way with freetaxusa.com and am able to expense a good chunk of my income! :)
PS-I'm also a licensed Realtor, so this is how I learned to do taxes for 1099 income. Not by stripping... ;)
SarahTime
11-12-2012, 03:07 PM
As far as your beauty stuff, you should be able to deduct ALL of it.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Business-Expenses---Entertainment-Tax-Tips
"No deduction is allowed for wardrobe, general make-up, or hair styles for auditions, job interviews, or "to maintain an image"."
Also, I'm not saying that you don't know what you are talking about. If learning how to do your taxes from being a realtor is somehow more "legit" than learning how to do it from camming.... then whatever. Either way, there is so much BAD information on this forum regarding taxes and many girls on here have never run a "vanilla" business before, let alone treat camming/stripping as the business that it is. So then they read stuff like this and run out and do their own taxes, and deduct a ton of things they are actually not allowed to deduct, and/or deduct it incorrectly. There is very specific guidelines as to HOW you can calculate what percentage to deduct for an item, and especially for the "home office" deduction.
I'm just saying, unless you are going to be very specific so that girls can actually understand what the situation is, it's kind of hazardous to just blurt out "Oh you can deduct ALL THESE THINGS!" Because it's not entirely accurate and could very well land some girls into trouble with the IRS.
RaineyLane
11-12-2012, 03:33 PM
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Business-Expenses---Entertainment-Tax-Tips
"No deduction is allowed for wardrobe, general make-up, or hair styles for auditions, job interviews, or "to maintain an image"."
Also, I'm not saying that you don't know what you are talking about. If learning how to do your taxes from being a realtor is somehow more "legit" than learning how to do it from camming.... then whatever. Either way, there is so much BAD information on this forum regarding taxes and many girls on here have never run a "vanilla" business before, let alone treat camming/stripping as the business that it is. So then they read stuff like this and run out and do their own taxes, and deduct a ton of things they are actually not allowed to deduct, and/or deduct it incorrectly. There is very specific guidelines as to HOW you can calculate what percentage to deduct for an item, and especially for the "home office" deduction.
I'm just saying, unless you are going to be very specific so that girls can actually understand what the situation is, it's kind of hazardous to just blurt out "Oh you can deduct ALL THESE THINGS!" Because it's not entirely accurate and could very well land some girls into trouble with the IRS.
Ok, I agree with that. Go to a tax service and it can save you lots of money if you are claiming your full income and not taking any deductions. Is that better? ;)
Melonie
11-12-2012, 11:14 PM
^^^ in fairness, the IRS 'announcement' regarding the non-deductibility of expenses related to maintaining an image is very recent. And indeed that IRS 'announcement' now makes extremely questionable the future ability of dancers and camgirls to deduct such things as health club memberships, tanning / nail / hair salon expenditures, street legal costumes / clothing, etc. as business expenses. In the way of a reason for this recent IRS 'announcement', some say that it is an attempt to exercise administrative authority / interpretation powers to increase taxes on 'the rich' - which appears to make sense since the IRS announcement also denies tax deductions for personal security etc. Unfortunately, when the IRS states that expenditure X is no longer deductible as a business expense, that applies to celebrities earning millions but also applies to dancers and camgirls earning thousands.
Trying to stick with a purely factual statement, with Obamacare now being 'here to stay', the IRS is also in the process of hiring some 16,000 new IRS auditors that were authorized under the Obamacare law - which will just about double the number of total IRS auditors and significantly increase the chances of being audited in 2013. And, as noted above, changes are already being implemented which will have an effect on 2012 tax return filings. While the 'professional' US tax preparers always go through a year end 'update' regarding what's new and different in the way of IRS rules, this year's 'update' is likely to be extensive. The US tax 'professionals' should start publishing their conclusions next month, and i'll make an effort to try and keep you updated as best I can.
So far at least, I haven't seen any changes affecting the Home Office tax deduction ... which essentially allows a business person to deduct a percentage of their rent / mortgage, a percentage of their utility bills, etc. as a legitimate business expense for a 100% dedicated to business portion of their residence ( based on relative square footage ). However, there has been discussion that claiming the Home Office tax deduction will significantly increase the odds of being audited ... with increased chances of the deduction being disallowed if an auditor discovers 'dual use' ( i.e. you probably can't get away with claiming a bedroom as a cam studio if someone sleeps in that bedroom ! ).
Along similar lines, it's still possible to deduct 100% of the cost of a computer, a high speed internet connection, a cell phone etc. which are used exclusively for business purposes. But to avoid potential controversy in the event of an audit, this also requires that the business person have a second computer, a second internet connection, a second phone line etc. available for personal use. Once you get into the issue of 'dual use' of the same single computer, high speed internet connection, phone etc., the validity of the deduction ( and the percentage of business versus personal use affecting the amount of the deduction ) becomes subject to interpretation by the auditor.
annabellz
11-13-2012, 09:46 AM
Along similar lines, it's still possible to deduct 100% of the cost of a computer, a high speed internet connection, a cell phone etc. which are used exclusively for business purposes. But to avoid potential controversy in the event of an audit, this also requires that the business person have a second computer, a second internet connection, a second phone line etc. available for personal use. Once you get into the issue of 'dual use' of the same single computer, high speed internet connection, phone etc., the validity of the deduction ( and the percentage of business versus personal use affecting the amount of the deduction ) becomes subject to interpretation by the auditor.
IMO if you fall into this ^^^ where you are considering taking a deduction for 'dual use' of something like a computer/internet/phone etc. You should run your numbers both ways and see how much of a savings that deduction is actually going to give you. Because like Melonie just explained its not an iron clad deduction. If audited "it will be subject to interpretation by the auditor". So if the deduction ends up only saving you a minimal amount and could cause you a potential audit it may be better to pass on it. If its significant, then at least you were educated going in to it and took a risk for a decent sized amount sized savings.
Melonie
11-13-2012, 02:19 PM
So if the deduction ends up only saving you a minimal amount and could cause you a potential audit it may be better to pass on it. If its significant, then at least you were educated going in to it and took a risk for a decent sized amount sized savings.
Yup you've touched on the 'bottom line'. Every IRS audit is essentially guaranteed to cost you time and money in one way or another. It could be as little as having to pay for gasoline to travel to the nearest IRS office. Or it could be 'big bucks' if the IRS auditor questions the validity of your total reported income. And yes every business expense deduction does have an 'equivalent cash value' as AnnaBellz pointed out. Indeed, some business expense tax deductions trigger much higher audit risks than others ... with 'dual use' tax deductions and especially the home office tax deduction being near the top of the list. So it might make very little economic sense to attempt to claim a 'dual use' tax deduction that is worth $200 in tax savings, but trigger an audit in the process.
Personally speaking, I actually invested extra dollars to provide a second computer, a low speed second internet connection, etc. in order to totally segregate my ( much more expensive ) primary computer and high speed internet connection as 100% business related. The topic came up during an audit, and as soon as I was able to prove that I maintained separate 'hardware' for business use versus personal use the auditor stopped questioning my deduction.
CarissaMarie
11-14-2012, 01:41 AM
Hi everybody! I've been lurking on the site for a while, and I'm so indebted to you awesome ladies for the incredible amount of information and insight I've gained just by reading the threads!
I'm a newbie who is excited to start camming soon.
My question is about payment. My husband owns a small photography business. For tax purposes, we were wondering if I could work for MFC, etc. and have them pay my husband's business, instead of paying me directly, then husband can pay me a salary as his employee.
Does anyone know if this is possible? Anyone tried it?
Thanks!
annabellz
11-14-2012, 11:48 AM
^^??? What in the world?
I wont even begin to speculate on what kind of tax scheme youre attempting with this, or what kind of benefits you think youd get-
I would think-
Your husbands company lets say its called Photo Plus with tax id # 111-22-3333 can not sign up to work on a cam site as a model, but should be able to sign up as a studio. You would then have to sign up as a model in that studio.
(I believe if you have an EIN number you can operate more then one business under it) So he would own a 'new' company- a studio, and you would subsequently be an employee of that company, not the photography one.
(however as you probably realize most studios, like small businesses, prefer to hire people as independent contractors rather then employees, because of tax withholdings, and labor laws.) But if he wants to pay you a salary as an employee of that company he can.
You however can not perform on cam and draw a paycheck from the photography company as that would be, I dunno whats the right term money laundering (?) shifting of funds (?) basically the irs wouldnt like it. The only way to do that, would be if your husband was able to incorporate the cam studio and the photography company into one company.
Melonie
11-14-2012, 12:50 PM
^^^ my accountant recommends that you be listed as a 'partner' in your husband's business ... meaning that whatever money your husband's business pays to you can be split between a 'salary' and a 'dividend'.
CarissaMarie
11-14-2012, 02:13 PM
^^^ my accountant recommends that you be listed as a 'partner' in your husband's business ... meaning that whatever money your husband's business pays to you can be split between a 'salary' and a 'dividend'.
Thanks, Melonie!
CarissaMarie
11-14-2012, 02:16 PM
^^??? What in the world?
I wont even begin to speculate on what kind of tax scheme youre attempting with this, or what kind of benefits you think youd get-
Hi Annabellz, thanks for replying and for your insight.
To quote one of our worst presidents, "I am not a crook!" LOL! We aren't trying to launder money or anything of the sort. Husband takes care of all of our finances, and he thought it would be great if all of our income could come in through one business to make things easier. He also pointed out that some equipment (lighting, for example) would be used by both of us, and it would make deductions simpler.
So maybe he should become a studio. That might be ideal, as I have a friend who is interested in this work as well and she was going to sign up with a studio because she doesn't have the privacy to cam at her home. Instead of signing up with some crooks that will take her $, she could sign up with us, use my room, and we would give her everything she earns!
SarahTime
11-14-2012, 03:04 PM
Hi Annabellz, thanks for replying and for your insight.
To quote one of our worst presidents, "I am not a crook!" LOL! We aren't trying to launder money or anything of the sort. Husband takes care of all of our finances, and he thought it would be great if all of our income could come in through one business to make things easier. He also pointed out that some equipment (lighting, for example) would be used by both of us, and it would make deductions simpler.
So maybe he should become a studio. That might be ideal, as I have a friend who is interested in this work as well and she was going to sign up with a studio because she doesn't have the privacy to cam at her home. Instead of signing up with some crooks that will take her $, she could sign up with us, use my room, and we would give her everything she earns!
Actually, this makes quite a bit of sense to do and would not be seen as any kind of laundering or anything. My husband and I actually do something similar, as he is also a photographer. It is just one business with many different avenues. As an example, our company "------- Media" has a cam studio, does photography, and webdesign. It's a "media" based company with "media" being lots of different things - totally fine for this to be that way. All using the same EIN. The most important thing is keeping business money and personal money separate.
You would want to set up a studio account on any site you want to sign up for, and make sure you list the owner of the account as the company name and receive all checks to the company name. Then you would add yourself as a model on the studio.
When the checks come (written out to the name of the business of course), deposit them into the business bank account and then "pay yourself" from that account to your own personal account via direct deposit or check.
I would probably suggest avoiding any kind of "employee/salary" type situation, it would be better if the company paid you as a contractor. That means he/the business would issue you a 1099 at the end of the year.
You mentioned adding other possible models to the studio, which would be just fine too. You would also pay them as "contractors" and issue them 1099s at the end of the year, they would not be considered "employees" either.
It is totally legitimate to do it this way, feel free to PM me if you have any more questions.
annabellz
11-14-2012, 06:47 PM
lol, of course youre not a crook. Im simply saying if you have 2 separate companies (even operating under the same EIN) you have to keep them separate. You cant have a photography company and a cam studio (2 different companies) and subsequently hire someone under the studio, have them work for the studio and then put them on payroll on the photo company. Youll cause a tremendous amount of problems for yourself.
You can however combine the 2 companies into one. A photo company with a cam studio division so to speak... It shouldnt be very hard to do. I dont know how you set up your first business, if you did it on your own or had help- if you had help you may want to contact who ever helped you and tell them about your plans to expand and see what you need to do.
As for adding a second model to the studio and paying her 100% of her earnings- well... while thats a noble idea its may not be the best idea. Its nice of you to allow her free use of your cam room/electricity/equipment etc. Not many people would do that. But if youre going to, well great. A problem you may run into though is come tax time. Your husband as the studio is going to be paid a 1099 form for everything both you and she earned. He would have to issue her a 1099 misc form showing what he paid out. (in this case, he would have paid out 100% of what she brought in) This means he profited 0%. The IRS doesnt like stuff like that. It looks suspicious. Why is the money going through him? why is he operating a business with a 0% profit?? who does that?? (they will ask) You can have her in your studio but IMO its unneccessary and could put you at risk for an audit.
Theres really no need for her to be under your studio. She can sign up on her own and log in and broadcast from your location.
Plus mixing business and your personal relationships is never a good idea.
CarissaMarie
11-15-2012, 02:07 PM
We don't have two businesses, we are only operating one. We might use a d/b/a for camming purposes, but we don't plan on operating two separate businesses.
What you pointed out about having the second model makes a lot of sense. If I do let her use my area, I'll have her do business by herself, independent of me and our business.
Melonie
11-16-2012, 12:06 AM
^^^ actually, there is some potential Section 2257 and copyright infringement 'liability' involved if your business is registered as a studio ( i.e. a producer of adult content ) and you allow a camgirl 'friend' to source a webcam stream from your IP that is not a registered client of your studio and thus listed in your studio's Section 2257 compliance file and subject to your studio's rules about copyright violations i.e. background music etc. If you're going to register as a studio you need to operate and account like a studio ... including charging the camgirl 'friend' some percentage of her raw payout dollars in exchange for the bandwidth and facilities you are providing for her, and issuing your 'friend' a 1099 for the net dollars which your studio pays out to her.
As AnnaBellz already pointed out, the IRS typically takes a very dim view of 'sweetheart' deals.
CarissaMarie
11-16-2012, 10:23 AM
Well, damn.
Better to know than to get screwed by one's own good intentions.
Sounds like the broad is on her own, LOL.
Thanks again. :)
Fridays
11-20-2012, 01:18 AM
are the chances of an audit less probable if using an accountant..?
annabellz
11-20-2012, 10:37 AM
^IMO it would depend on the accountant. If theyre familiar with current tax codes and have your best interest at heart then yes. You have to remember when theres an audit youre on the hook financially not the accountant. (They still have codes of conduct and licenses and whatnot but ultimately resulting the financial burden of the audit is going to fall on you)
Most if not all accounts are upright and honest and will not file things incorrectly unless they are ignorant. So you need to do your research and determine the accountant you are hiring is qualified and that they have the experience and knowledge to know your business and the tax codes that apply to it. You can see in this thread how tax codes constantly change and how people constantly interpret them differently. Ideally youd be looking for someone who has years of experience filing returns for taxpayers who operate independent businesses from home.
So like with anything else, before you jump in and hire someone, you should get some free consultations. Meet with them. Tell them about your business. Ask them some key questions. Theres lots of info in this thread. Pull some quotes of Melonies. Ask about the 'housewife test'. Ask what you can deduct and what you can not. If their answers conflict whats posted here- then while they are qualified- theyre ignorant and you should pass.
Melonie
11-20-2012, 10:57 AM
^^^ the biggest issue with utilizing an accountant is the accountant's familiarity with the specific provisions of the IRS tax code ... and the actual IRS interpretation of those provisions if and when an audit is conducted ... when making recommendations. Some accountants are VERY familiar with these issues. Unfortunately, other accountants may be almost clueless. So it's up to you to make sure that the accountant you choose ( and will be paying for ) is actually going to do more good than harm.
The big box tax preparers i.e. H&R Block, Jackson Hewitt etc. typically train their accountants to deal with employees not business operators. And while they may have been trained on general IRS tax code requirements for small businesses, they will almost certainly not be familiar with limited scope IRS 'letter rulings' etc. that are of specific relevance to dancers and camgirls.
While the IRS never officially comments on their criteria for audits, scuttlebut has it that tax returns completed by a CPA ( which is not the same thing as a big box tax preparer accountant ) do receive less IRS scrutiny. However, if a CPA missed the recent IRS publication now denying deductions related to 'maintaining an image', and the tax return attempts to still claim related deductions i.e. dep't store makeup, tanning / health club expenses, hair / nails etc, it's highly likely that said tax return will be subject to audit.
Fridays
11-20-2012, 12:30 PM
I still can not believe we can not deduct what we used to anymore....
Melonie, can u PLEASE post the official link where you found this information?
if It was posted here before, I apologize..
but posting it one more time.. or 20 more times will deff. help us..
I need to save it to my fav.. seems it would be easier for you..you are so savy with this stuff..
I will be lost for hours and hours reading stuff and not knowing exaclty what Im reading..
thank you.
Melonie
11-20-2012, 03:43 PM
from the IRS website at
(snip)"Appearance and Image
Taxpayers in the entertainment industry sometimes may incur expenses to maintain an image. These expenses are frequently related to the individual's appearance in the form of clothing, make-up, and physical fitness. Other expenses in this area include bodyguards and limousines. These are generally found to be personal expenses as the inherently personal nature of the expense and the personal benefit far outweigh any potential business benefit.
No deduction is allowed for wardrobe, general make-up, or hair styles for auditions, job interviews, or "to maintain an image"."(snip)
In fairness, this new IRS interpretation has yet to be challenged in a US court ... since tax returns filed by April 15th 2013 will be the first ones subject to the new IRS 'rules'. This new IRS interpretation arguably directly conflicts with a different provision of the tax code which states that business expenses which are 'ordinary and necessary' are legitimately deductible.
Fridays
11-20-2012, 04:50 PM
thanks xx .. added to favs!
Sexy Shana
11-21-2012, 09:36 AM
I survived an audit with a minor adjustment. You don't really need an accountant, which is an added expense. Just be reasonable with your listed expenses......if you can wear an outfit on the street, it is probably not deductible. Same for makeup, "stripper" type heels would make an expense.
My web cam, computer dedicated to camming, lights, toys, lubes, some bed sheets, internet fees (take a partial deduction) it should be OK.
Common sense approach.....deduction has to make sense. Gym membership? No!, Makeup? No.
Unless you deduct to the stars, U should be OK. Again, I survived.....my mistake was a math error and lack of clarity.
Fridays
12-15-2012, 11:10 PM
hows everyone doing with saving for the taxes, this year......
~Carmen~
12-16-2012, 06:55 AM
hows everyone doing with saving for the taxes, this year......
Much better than last year :)
sammii
12-16-2012, 07:07 AM
^ Same. I've been consistently saving 30% of every paycheck. I'm pretty proud of myself. Occasionally I'll take a couple hundred out of my tax savings when I'm low on cash, but I always pay it back as soon as my next paycheck arrives. :)
When I first started camming after my year long hiatus, it would depress me to think of how I had to set aside 30% of every paycheck ... but then I realized, I just need to earn more. If I'm earning more, the 30% goes a little more unnoticed.
Melonie
12-16-2012, 07:35 AM
just a note that in the USA at least, saving money all year long in your own bank account for paying taxes at the end of the year isn't what the IRS requires, and they can potentially fine you for doing it even if you pay the taxes you owe in full at the end of the year.
As 'independent contractor' dancers or camgirls, you are required to file an estimated tax voucher on a quarterly basis. The next one is due on January 15th and covers taxes due on income earned between Sep 1st and Dec 31st. If the estimated taxes aren't paid quarterly, the IRS can start charging you interest on the unpaid quarterly estimated tax amount. And if the total amount of of unpaid estimated taxes throughout the year falls more than 10% below the total amount of taxes calculated on your annual tax return, the IRS can tack on a penalty charge for 'under-withholding'.
The US federal estimated tax voucher form can be found at . Also note that if you live in a US state that also levees its own income tax, you'll have to do a quarterly state estimated tax voucher filing and payment as well. Fortunately they share the same quarterly deadlines of Jan 15th, April 15th, June 15th and September 15th.
In terms of the 'principle' involved, where regularly paid employees are concerned the IRS considers the estimated tax money withheld from employee paychecks to be due every pay period. They require employers to file estimated tax reports and send the IRS the money the employer has withheld from employee paychecks on at least a monthly basis. With independent contractor businesses, the IRS requires quarterly filings / payments instead of monthly.
I would also point out that the IRS ( and states with income taxes ) allow a 'first year - new business' exemption from estimated tax filings and payments. Or put another way, if you didn't file a tax return for dancing / camming income last spring, you won't be penalized if you didn't file quarterly estimated tax vouchers and send in quarterly estimated tax payments throughout 2012. However, if you DID file a tax return for dancing / camming income last spring, the 'first year - new business' exemption does not apply - and you can potentially be hit with IRS interest charges and an 'under-withholding' penalty charge if you didn't file and pay quarterly estimated taxes throughout 2012.
~Carmen~
12-16-2012, 09:06 AM
I did pay quarterly. I should have added that :). As much as I balked at the idea at first, now I'm glad it works that way so I don't have to save up so much at once.
SarahTime
12-16-2012, 08:52 PM
In all my years filing self employed taxes as an independent contractor, I've never had to pay in and have always gotten a return. I do not file quarterly either.....
Is filing quarterly only for those people who think they will OWE money?
I'm sure my situation is different though because of married and having 3 kids......
~Carmen~
12-17-2012, 06:58 AM
I did pay quarterly. I should have added that :). As much as I balked at the idea at first, now I'm glad it works that way so I don't have to save up so much at once.
Sarah, it's not really filing quarterly like you have to file at the end of the year. That's what I thought at first too but it's much simpler than that. It's just a piece of paper that you send in with a check. I wouldn't think you would have to send in quarterly payments if you don't expect to owe.
SarahTime
12-17-2012, 07:36 AM
Sarah, it's not really filing quarterly like you have to file at the end of the year. That's what I thought at first too but it's much simpler than that. It's just a piece of paper that you send in with a check. I wouldn't think you would have to send in quarterly payments if you don't expect to owe.
Thats good to know that it's pretty simple! I made a lot more this year than I have in a while so I may owe a little but I doubt it will be too bad. If everything goes as planned in 2013 I'll hopefully make even more so I think I'll start filing quarterly in 2013, pretty sure I'm going to have to owe next time around at least.
Jinja
12-17-2012, 08:43 AM
Does the quarterly tax thing apply to small business too?
~Carmen~
12-17-2012, 09:07 AM
I only work part time and it applies to me but I think it depends on how much you make. My tax man told me I was on the borderline.
Fridays
12-17-2012, 11:49 AM
question for melonie... :)
I was just brainstorming this and I was thinking...
it takes me about 1 hour a day to do " offline work", meanwhile I am "losing" 1 hour of work, so therefore it is an expense. lol
any way I can deduct this 1 hour of work as a loss ?( at whatever/hour I normally make).
hope this makes sense......
annabellz
12-17-2012, 01:03 PM
Ideally the IRS would like everyone (whos self employed) to send in quarterly payments, even if youre expecting a refund. That way you pay in (the government gets use of your money for the year) and at the end of the year you file back for a refund.
However if you didnt have any tax due and you didnt make quarterly payments it doesnt trigger any kind of 'alert'- like hey wheres the estimated payments? Basically the first year you owe money your free ride of not having to send estimated quarterly payments is over. The following year they will expect quarterly payments.
So lets say for 2012 you file and owe 1000 bucks. In 2013 you should start making quarterly payments. Because last year you owed $1000, they will want 250$ a quarter. Because theyre assuming in 2013 you will owe apx 1000 again.
They will send you notices if you do not make the quarterly payments- telling you to do so. If you dont because youre confident that in 2013 your earnings will be different and you will be back on track to get a refund and not owe- well thats your choice and lets hope youre right because if youre not and you do end up owing money again you will be penalized for failing to pay quarterly payments when you were required to do so.
If you were right and youre back on track and receive a refund again then youre back to where you were- no need to file and make quarterly payments.