View Full Version : Camming And Taxes
xxtinamariexx
12-18-2012, 04:03 PM
What do you guys tell your accountant that you do (for those that don't want to come out and say you cam). We have been going to the same accountant for at least 8 years. And not sure if I can say sitting across from him what I do.. When I give him the info from my husbands business about our expenses and things, I dont really put down exactly what I purchased (I do keep receipts) just if it was a business exp. office exp or what not, and the price. he usually just takes all the totals. We usually always get money back, but now with less child tax credits, not sure how that is all going to work out, and I just started to cam back in Oct of this year.
All this tax stuff is so confusing lol
SarahTime
12-19-2012, 06:08 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.
Thank you so much! :)
Melonie
12-21-2012, 03:17 AM
What do you guys tell your accountant that you do (for those that don't want to come out and say you cam). We have been going to the same accountant for at least 8 years. And not sure if I can say sitting across from him what I do.. When I give him the info from my husbands business about our expenses and things, I dont really put down exactly what I purchased (I do keep receipts) just if it was a business exp. office exp or what not, and the price. he usually just takes all the totals. We usually always get money back, but now with less child tax credits, not sure how that is all going to work out
In regard to interacting with your accountant, IMHO you're far better off being completely open and honest about what you do. If you accountant isn't aware of all of the details, he may not be aware that certain tax deductions may be taken that could potentially reduce your own tax liability. And if you use a CPA there is a 'professional confidence' factor that will prohibit the CPA from disclosing any of your personal / financial info to third parties ( which isn't necessarily the case with non-certified non-licensed tax preparers ).
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
Trying not to get political, but for a fact US camgirls and dancers are potentially facing a lot of tax changes for 2013 ... and especially so if 'fiscal cliff' negotiations fail.
- no matter what happens in Washington DC, the present 13.3% social security tax on small business ( independent contractor camgirls and dancers ) is slated to increase to 15.3%
- short of a specific change in existing law, the Alternative Minimum Tax threshold on 2013 income is slated to drop to as low as $45k in total annual earnings for a single camgirl or dancer with no dependents. The AMT basically overrides the normal US income tax brackets and normal tax deductions, and imposes a 28% federal income tax rate on income earned which exceeds the AMT threshold. This could be a very big deal for 'serious professional' camgirls who are earning something in the ~$75-100k+ a year ballpark, and who are used to being able to deduct high state income tax payments ( i.e. California, New York, Illinois etc. ) and/or high local property tax / mortgage interest payments from their federal income tax bill.
- for dancers and camgirls with children, indeed the 'child care' tax credit will be cut in half.
- for occasional dancers and camgirls, the 'low income' tax credit will be reduced as well.
~Carmen~
12-21-2012, 06:51 AM
What do you guys tell your accountant that you do (for those that don't want to come out and say you cam). We have been going to the same accountant for at least 8 years. And not sure if I can say sitting across from him what I do.. When I give him the info from my husbands business about our expenses and things, I dont really put down exactly what I purchased (I do keep receipts) just if it was a business exp. office exp or what not, and the price. he usually just takes all the totals. We usually always get money back, but now with less child tax credits, not sure how that is all going to work out, and I just started to cam back in Oct of this year.
All this tax stuff is so confusing lol
I told my accountant what I do. I had never met him before (hubby's always taken care of taxes) so I'm sure I blushed 50 shades of red.lmao
a_little_mermaid
12-27-2012, 06:01 PM
Ok so here is quite the complecated question. I am just starting to cam and to C4S again, had a Vanilla job all of last year till 10/28. When and how do I need to keep track of my earnings from cam sites, Indy camming and C4S. I am clueles as far as tax stuff goes. Oh and to add to it all I might be getting disability, I'm in the process.
Melonie
12-28-2012, 04:24 PM
^^^ since it's highly probable that you'll wind up receiving 1099-misc IRS forms from the webcam hosts for income earned last month and this month, on top of receiving a W2 IRS form for ( presumably ) 10 months worth of employee paychecks, you'll wind up doing the following ...
- file the 1040 US federal long form ( as well as the Indiana long form )
- complete a US federal Schedule C ( profit or loss from a business )
the 1040 form will have lines for direct entry of your employee W2 reported income. The 1040 form will also have a line where the business income from camming will be added to your employee income. In the end, the 1040 form will result in an amount of total 2012 federal income taxes due.
Depending on what sort of withholding was done on your employee paychecks, and assuming that you aren't prepared to send in estimated tax payments on your camming income by the January 15th deadline, odds are that you will wind up 'owing' a significant amount of money to the IRS ( and the state of Indiana ) next April. This is due to the fact that 13.3% of every camming dollar will need to go towards Social Security tax, and that the marginal income tax rate on your camming income will start where your employee income left off ( 15% ? ).
Also, by next April, you will also 'owe' the IRS ( and the state of Indiana ) estimated tax money on the camming income you earn in January, February and March of next year. So to avoid a very nasty 'surprise' next April, I would recommend setting aside ~30 cents out of every camming dollar as you earn it to cover US federal + Indiana state ( estimated ) taxes by the April 15th 2013 deadline.
If you are filing for SSI Disability benefits, the appearance of IRS 1099-misc forms next February or March proving that you are capable of earning money via camming may interfere with approval for those SSI Disability benefits.
a_little_mermaid
12-28-2012, 05:48 PM
^^^ since it's highly probable that you'll wind up receiving 1099-misc IRS forms from the webcam hosts for income earned last month and this month, on top of receiving a W2 IRS form for ( presumably ) 10 months worth of employee paychecks, you'll wind up doing the following ...
- file the 1040 US federal long form ( as well as the Indiana long form )
- complete a US federal Schedule C ( profit or loss from a business )
the 1040 form will have lines for direct entry of your employee W2 reported income. The 1040 form will also have a line where the business income from camming will be added to your employee income. In the end, the 1040 form will result in an amount of total 2012 federal income taxes due.
Depending on what sort of withholding was done on your employee paychecks, and assuming that you aren't prepared to send in estimated tax payments on your camming income by the January 15th deadline, odds are that you will wind up 'owing' a significant amount of money to the IRS ( and the state of Indiana ) next April. This is due to the fact that 13.3% of every camming dollar will need to go towards Social Security tax, and that the marginal income tax rate on your camming income will start where your employee income left off ( 15% ? ).
Also, by next April, you will also 'owe' the IRS ( and the state of Indiana ) estimated tax money on the camming income you earn in January, February and March of next year. So to avoid a very nasty 'surprise' next April, I would recommend setting aside ~30 cents out of every camming dollar as you earn it to cover US federal + Indiana state ( estimated ) taxes by the April 15th 2013 deadline.
If you are filing for SSI Disability benefits, the appearance of IRS 1099-misc forms next February or March proving that you are capable of earning money via camming may interfere with approval for those SSI Disability benefits.
I havent quite started camming yet, just reading and prepping. So no income from camming yet. I dont really understand tax stuff, I have always had an accountant that my family uses and pays for. I guess I could giver her a call.
gingerstripper
12-31-2012, 08:20 PM
Xpeeps went under so will I still receive a 1099 form from them? I dont have bank statements because i no longer am with the same bank i was depositing my checks into...so if i dont receive a form...will the bank have it on file?
Melonie
01-03-2013, 10:09 AM
^^^ it's extremely doubtful that you bank would have any involvement with 1099's. Those are a matter between the 'paying' business and the 'receiving' business i.e. your sole proprietor unincorporated webcam business.
As to whether Xpeeps will send out 1099's for 2012, in truth a lot of that decision has to do with the future fate of Xpeeps ( re-emerging from bankruptcy at some point, being 'bought' at a bankruptcy auction ) etc. To be 'safe' I would recommend holding off on filing your 2012 tax return until at least the end of March 2013 to see if an Xpeeps 1099 arrives in your mailbox or not.
Melonie
01-03-2013, 10:29 AM
US camgirls and dancers are potentially facing a lot of tax changes for 2013
While there are still a few unanswered questions, per the following appears to be the tax changes which will affect dancers and camgirls ( who are earning less than $400k per year anyhow )
- the Social Security = self-employment tax rate has increased by 2%. This tax applies from the first dollar of income earned. Thus a girl grossing $1000 a week = $50k per year will see a $1000 increase in this tax, while a girl grossing $2000 a week = $100k per year will see a $2000 increase in this tax.
- the Alternative Minimum Tax has been pegged to start applying above $50,600 ( single ) and above $78,750 ( married joint ) annual earnings levels. The AMT isn't a direct tax, but works via disallowing otherwise legal tax deductions if those deductions would result in the person paying 'too low' of a federal income tax rate. The most common otherwise legal tax deductions for dancers and camgirls that may be disallowed by the AMT would be things like money paid for state income taxes, money spent on home mortgage interest. Thus a girl grossing $50k per year would be unaffected by the AMT, while a girl grossing $100k per year is likely to be affected. And this will particularly be the case if that girl has a mortgage, or lives in a high income tax state like California, NY, IL, NJ etc. It's difficult to put a dollar amount to the increased faderal taxes resulting from the AMT, since personal variables can vary so widely, but for a girl making mortgage payments who lives in a high income tax state, I would guess a figure of an additional $1500 would be reasonable.
SarahTime
01-03-2013, 03:06 PM
Xpeeps went under so will I still receive a 1099 form from them? I dont have bank statements because i no longer am with the same bank i was depositing my checks into...so if i dont receive a form...will the bank have it on file?
What I would do is add up all the payments you received from them and claim that on your taxes. You don't necessarily have to have the 1099 in your hands to file, the most important thing you need from it is the amount paid to you.
Your bank, even if the account is closed, probably still has records of your account so you could go ask them for a print out of all the deposits made into that closed account.
SarahTime
01-04-2013, 04:28 PM
I found this today and thought it might be useful:
http://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Maybe a little too late.... since it is for 2012 only but it can give you a good estimate if you haven't been saving and want to know what you're going to get hit with... or if you have been saving and want to know if you saved enough. Make sure you enter your income in the "Business Income" section not the "Your Income" section.
Tsani
01-04-2013, 05:52 PM
I was wondering about that with Xpeeps too. I realized I couldn't look up my past earnings on there since the old site is completely gone. I don't know why I never thought about checking my bank statements DUH! I get so confuzzled around tax time, glad you savvy ladies are here!
Bellabbw
01-06-2013, 02:46 AM
Hi, this is my first year filing self employment as well as camming, i am just curious about some things wondering if someone can help me. I have two children i will be claiming, no other job besides camming and i don't make that much either. i would say on average every month between all my sites i work which is like 3 or 4 i make all together about $600-700 which is really crappy. my question is..making the little bit that i make, am i going to be required to pay some kind of money back to the IRS? i never set anything aside because frankly at this point i can barely afford my bills. do you think i will be stuck paying alot back at this rate? camming just is not for me, i am not making anything in which i can really survive at this point.
any thoughts..and should i even expect a refund back?
thanks for your help
bella
GlamourRouge
01-06-2013, 03:34 AM
I doubt you'll get a refund, you may end up owing if you don't have a lot of allowed deductions. You can estimate somewhat based on receipts and the amount of the other deductions you are allowed. Talk to an accountant.
Scarlett77
01-06-2013, 03:54 AM
Have you qualified for the Earned Income Credit in the past? Getting that credit is probably the only way you'll get a refund. Otherwise you'll probably owe a couple hundred dollars in taxes. But no one on here can say for sure... Taxes are complicated :)
Bellabbw
01-06-2013, 03:56 AM
I qualify for the EIC every year but again this is my first year filing self employed so i have no idea if this changes. i have no receipts of any purchases i have made as far as camming and lingerie etc goes.. can i still claim deductions without having these receipts?
Bellabbw
01-06-2013, 05:10 AM
ok so i added up everything i made for this year for all the sites i work and i came up with a total of $5036.76 this is all of my sites together for the entire year 2012 . does anyone know approximately how much i would be paying back and if i could possibly receive a refund since i do have two children i claim?
thanks.
Billabong
01-06-2013, 06:44 AM
Well, you need to make at least minimum wage to owe less and get a decent refund. Funny huh?
I recommend going to turbo tax and filling out your information the best you can to give you an idea of what you can get back. You might be able to get at least a couple thousand per kid and have your taxes owed deducted from that.
Cam_Model_Jess
01-06-2013, 07:04 AM
You really need to talk to an accountant or do the paperwork yourself. You can pull up estimated tax return payment forms & fill out one of those to find out if you should anticipate owing anything. I could tell you myself, but I'd have to do so many calculations that I'd practically be doing your taxes for you. It's really not hard. Just make the deductions & figure out what your tax rate is.
We have no idea what your individual financial variables are. Just by looking at those numbers, and as long as you're not getting any kind of unemployment benefits or other aid, I'd say that you won't owe anything or if you do it will be very little. But I don't want to get your hopes up b/c it's best to be prepared.
SarahTime
01-06-2013, 08:28 AM
ok so i added up everything i made for this year for all the sites i work and i came up with a total of $5036.76 this is all of my sites together for the entire year 2012 . does anyone know approximately how much i would be paying back and if i could possibly receive a refund since i do have two children i claim?
thanks.
Oh gosh no, if that's all you made and you have two children you will probably actually get a refund back! Each child gives you a $3800 credit plus you will qualify for other credits as well.
I make well over that amount in one month and I am only just now owing a couple thousand. Granted I am married so I get that credit and I have 3 kids....
But no way, you are going to be just fine, don't worry about owing.
I posted a tax estimate calculator in the taxes thread that is stickied you might want to check out too.
Timor
01-06-2013, 08:54 AM
Debating trying out the TurboTax online filing thing - no idea which one to do though and I'm not even sure what I'd file as :/ first year filing as a camgirl. Plus I'm out in Alberta and not really sure what I would need to do as a Canadian camgirl filing.
Cam_Model_Jess
01-06-2013, 08:56 AM
^That is probably the case if there are no other assets. We weren't really given all the info, which is why I didn't want to hazard a guess. But yes, if there is no assistance or other income or assets, then she will probably not owe anything. There can be so many variables. But yes, if it's a simple return...
annabellz
01-06-2013, 09:36 AM
^ Heres a list on Wiki of tax sites for Canada. What I would recommend is testing some out. Try filling out a few online with fake personal info but your real $ amounts and see if you get the same results. Maybe different programs will pick up different deductions or credits (I really dont know much about the taxation system in Canada). Perhaps maybe just one program is more user friendly, or asks you to enter something another one totally omitted. If they all give the same result then you can breathe easy and know youre doing it correctly.
http://en.wikipedia.org/wiki/Comparison_of_Canadian-tax_preparation_software_for_personal_use
Mlle_Mystere
01-06-2013, 03:54 PM
I'm pretty sure we use T4002: http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html
And these are our tax brackets: http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html
Alberta's provincial rate is a flat 10%, which makes it easy.
annabellz
01-06-2013, 07:25 PM
Youre not going to owe anything, and if you do it would be a very small amount (under 50 bucks in my estimation)
Any tax you would have owed would be eliminated by the earned income credit and child tax credits. You would have potentially have gotten a refund if you had more income. The system is funny like that. If you make very little you get zero, then theres a 'magic zone' where you can earn and get a refund. If you had earned slightly more- probably around 6000-7500 youd probably would have gotten back around 100-200 bucks. (play around on tax sites and see for yourself for next year). BUT if you went over 7500, it would flip and youd end up owing, unless you had other things to deduct like mortgage interest.
StephanieXS
01-09-2013, 01:39 PM
Do we get a 1099 from the sites we work on? Or do we need to figure up our income ourselves?
Melonie
01-09-2013, 01:47 PM
^^^ odds are that if you are a US citizen that most webcam hosts will send out 1099's. However, they can take until early March to do this.
italianstarcamgirl
01-13-2013, 03:48 PM
quick question hoping one of you ladies will know. Planning a Disney vacation in the next few months and am going ahead and using Turbo tax to file my taxes but I don't have my 1099 from SM but I do have all my earnings ect organized so I know how much I made......
so do I put this under business income and bypass the 1099misc forms?
Pretty much how do I file if I don't have the 1099 in front of me?
SarahTime
01-13-2013, 03:59 PM
quick question hoping one of you ladies will know. Planning a Disney vacation in the next few months and am going ahead and using Turbo tax to file my taxes but I don't have my 1099 from SM but I do have all my earnings ect organized so I know how much I made......
so do I put this under business income and bypass the 1099misc forms?
Pretty much how do I file if I don't have the 1099 in front of me?
Previously I thought you were able to file without the 1099, but I've been corrected. If you are expecting a 1099 you pretty much need to wait until you receive it to file because when you do Turbo Tax will ask you for all the information for the person reporting it, which is on the 1099. Things like the reporting companies EIN, address, amount, etc. Also, if for any reason you report something different than they did, it's a red flag. Additionally, if they report a 1099 for you and then you bypass reporting a 1099 received, that is also a red flag.
So it's probably best to wait. I'm pretty sure I got my SM and MFC 1099 before the end of Jan last year, not sure when other sites sent out.
Also, the IRS will not accept any returns before Jan 17th regardless.
italianstarcamgirl
01-13-2013, 04:04 PM
Alright, I'll just wait - better safe than sorry. I'm expecting one from Cams and SM. Anyone remember when they got their cams.com 1099.
Thanks sarah ;)
SarahTime
01-13-2013, 04:08 PM
Alright, I'll just wait - better safe than sorry. I'm expecting one from Cams and SM. Anyone remember when they got their cams.com 1099.
Thanks sarah ;)
This will be my first time getting one from cams.com, hoping they send out early... I hate waiting too!
And you're welcome! :)
Melonie
01-15-2013, 02:54 AM
IRS regulations allow 'payers' until the end of February to send out 1099's. Add snail mail delays, and 1099's could conceivably not arrive until the middle of March. This is especially the case when the 'payers' are not US based corporations.
By the 'letter of the law', IRS regulations do NOT absolutely require that businesses ( and obviously, camming income is treated as business income ) must wait until all 1099's are in hand before filing a tax return. But if the IRS receives a 1099 from a 'payer' AFTER the 'payee' business has already filed a tax return, this will raise a question with the IRS as to whether or not the business included that particular 1099 income in their tax return totals ... versus the 1099 amount actually comprising additional income that the business did not report and did not pay taxes on. This sort of question can greatly increase the chances of an audit.
If you have kept very good records all year, it is possible to make line item entries for each 'payer's estimated 1099 amount in the Schedule C supporting details ... and thus file your tax return without waiting to actually receive the 1099's. However, if there is a discrepancy between your estimated total annual earnings from 'payer x' and the amount of actual annual earnings that 'payer x' reports later on a 1099, this can similarly raise questions and increase chances of an audit.
prettypinkprincess
01-15-2013, 08:06 AM
Im new here and soo confused. Would it be easier for me to just get an accountant to help me with my taxes? Whats this I hear about cam models having to do taxes every 3 months?? Also, what am I supposed to say I do for a living on my taxes or say an apartment application? I live in Colorado, would setting aside $30 for every $100 I make cover my taxes? Im also confused on whats actually a tax write off. Hair, makeup, internet, toys...? Somebody PLEASE help! I have been reading through this thread and im still not understanding. THANKS.
Melonie
01-15-2013, 10:25 AM
Yes cam models need to file an estimated income tax voucher plus send the IRS a check for the amount of their estimated taxes due on a quarterly basis. 30% set-aside would probably cover it as long as your total earnings won't exceed $1000 a week = $50,000 a year.
There's a bunch of threads in the Dollar Den regarding what's deductible and what is not, regarding how and when to file with the IRS, etc. There's also a 'search' function available on every main forum page ... try entering 'estimated taxes' , ' independent contractor' etc.
prettypinkprincess
01-15-2013, 03:49 PM
THANKS SO MUCH Melonie! What would we do without you? =) Just one more question. What do I say I do for a living? I shouldnt say Im a webcam model/host right?
MiaraRiley
01-16-2013, 01:21 AM
I'm a little confused about quarterly payments.
I've been camming since July. When do I start sending in quarterly payments? In July, since it will have been a full year since i've been an independent contractor? Or beginning this year?
Melonie
01-16-2013, 03:39 PM
I've been camming since July. When do I start sending in quarterly payments? In July, since it will have been a full year since i've been an independent contractor? Or beginning this year?
You already 'missed' the sept 15th payment due on money earned in june, july and august. And you just missed the January 15th payment due on money earned in sept, oct, nov and dec. Not to worry, though, because all 'new' businesses get a first year waiver. However, when the next due date rolls around on april 15th, not only will you owe ~30% tax on the total amount of money you earned in 2012 via filing your 2012 tax return, but you will ALSO owe 30% estimated tax on the money you will earn in the month of jan, feb and march of 2013. the concept of estimated taxes is a lot like employees having X% of estimated tax money withheld from every paycheck ( which the employer sends to the IRS on behalf of the employee via an estimated tax payment voucher ), but with businesses the IRS only requires a quarterly filing and payment ( since small businesses fill the roles of both the employer and the employee ).
What do I say I do for a living? I shouldnt say Im a webcam model/host right?
since all businesses must file a Schedule C along with your 1040 tax return, you're forced to use an IRS code number. The one I use is 711510,
prettypinkprincess
01-16-2013, 09:25 PM
So a cam model is considered a small business owner right? Also when I go look for a new apartment what do I put on my application, an entertainer? Model? And what about a 401k? How would I go about setting something like that up for myself? Would getting an accountant/financial advisor make things easier? Thanks so much.
prettypinkprincess
01-16-2013, 09:30 PM
Almost forgot to ask this to. I dont have any kids but I am married, do we file joint taxes or do I file mine separately?
Melonie
01-17-2013, 12:26 PM
So a cam model is considered a small business owner right? Also when I go look for a new apartment what do I put on my application, an entertainer? Model? And what about a 401k? How would I go about setting something like that up for myself? Would getting an accountant/financial advisor make things easier?
Yes a cam model is considered to be an unincorporated small business ... at least until the point of forming an LLC or an S-Corp. As to the 'job title' you assign to yourself regarding applications for apartments, loans etc. you can pretty much call yourself anything that you want to.
401k's won't fly unless you form an S-Corp. You can establish a SEP-IRA however, which will similarly defer taxes due on current year income to a future year. But without an S-Corp, your business can't write off a 'matching' contribution against business profits.
If you are married you have the option of filing a joint 1040.
And indeed involving an accountant who is experienced with small business taxes would probably be a very worthwhile investment ... if for nothing else than to help you 'set things up' in the most tax-efficient manner during your first year of business operation.
MiaraRiley
01-17-2013, 08:45 PM
However, when the next due date rolls around on april 15th, not only will you owe ~30% tax on the total amount of money you earned in 2012 via filing your 2012 tax return, but you will ALSO owe 30% estimated tax on the money you will earn in the month of jan, feb and march of 2013. the concept of estimated taxes is a lot like employees having X% of estimated tax money withheld from every paycheck
Wait a tick!!
I was under the impression that you file as much as the percentage your tax bracket falls under. If I calculate how much I would've made last year based on what I made 1/2 the year, I fall under $25k, which isn't the 30%..it's actually somewhere less than 20%. I am aware there is a tax for being self employed....
And last I checked, estimated taxes due is an estimate based on how much you've made in the past. Am I missing something?
Melonie
01-18-2013, 08:53 AM
^^^ actually there are two different taxes involved. While social security taxes are a 'small' issue for employees ( because the employer actually pays half of the tax), as a small business you must pay both 'halves'. With the 'fiscal cliff' settlement, SSI taxes on small businesses are now at 15.3% of total income. This 15.3% SSI tax applies to EVERY dollar earned, is NOT divided into different percentages for different total earnings etc. So in the case of the $25k annual earnings example, 15.3% of $25k equals $3825 in SSI tax.
The other tax is the federal income tax. This tax IS 'bracketed' into different percentages based on different income levels. This tax is also subject to deductions, exemptions and tax credits. Again using your $25k annual earnings example for a single person, the first $8700 is taxed at a 10% rate and the remaining $16,300 is taxed at a 15% rate. However, net of deductions and exemptions, the 'effective' federal income tax rate on a $25k annual income might only come out to be 5% = $ 1250. However, since tax credits disappear with rising income, and since the federal income tax rises to 25% on income over $35k and again to 28% on income over $70k, for a single dancer with no children earning say $50k per year an 'effective' federal income tax rate of 15% is certainly in the ballpark.
And when you add the 15.3% Social Security a.k.a.'self-employment' tax rate with the ~15% 'effective' federal income tax rate on a somewhat typical $1000 a week = $50k per year income level, the combined percentage is likely to be close to the 30% discussed above.
Obviously if the girl resides in a state that levees it's own income tax, there will be an additional percentage for state income tax tacked on top of the Social Security tax and the federal income tax.
In regard to estimated tax filings, yes there is a 'first year' exemption from filing and paying estimated taxes by the quarterly deadlines for 'new' businesses. however, this doesn't eliminate the need to pay actual taxes by April 15th. And unless you do something bizarre about the fiscal year used by the business, 2013 earnings and estimated taxes don't fall within the 'first year' tax filing ( i.e. calendar 2012 ). Thus the first quarter 2013 estimated tax payment will be due on the same April 15th deadline that the actual taxes on 2012 income are due.
annabellz
01-18-2013, 12:50 PM
Melone always gives excellent advice. Its exactly to the letter of the tax codes. Its just sometimes hard to swallow. Miaria when did you start camming? July 2011 or July 2012?
When will your first full camming year tax return be filed?
If you started in July 2011 that means your first full year return will be in-2012, if so and you owed taxes on it then in April 2013 your first quarterly monthly payment would be due.
If you started in July 2012 that means your first full year return wont be until 2013 and if so and you owe taxes on it then April 2014 your first quarterly monthly payment would be due.
If you started in July 2010 that means your first full year return would have been in 2011, if you owed on it, you would have been required to have been sending quarterly monthly payments starting April 2012, if you failed to do so, you will be penalized when it comes time to file your 2012 taxes now if you you owe again for what they loosely call 'underpayment penalties'.
Melonie
01-18-2013, 01:36 PM
you will be penalized when it comes time to file your 2012 taxes now if you you owe again for what they loosely call 'underpayment penalties'.
yes the IRS sometimes does assess an additional 10% penalty charge on top of the actual taxes owed. PLUS the IRS starts accruing interest charges ( right now around 6% I think ) on the 'unpaid' estimated tax money from the quarterly estimated tax due date when it was supposed to be paid. The IRS position is that, once the 'first year exemption' period ends, you actually owe then the estimated tax money by the quarterly due date. If you fail to file and pay the quarterly estimated tax money by the quarterly due date, the IRS essentially 'loans' you the estimated tax money that you did not pay ... at 6% ( or whatever ) interest. Thus when the IRS finally does catch up to a person who has not been making estimated tax payments, they will owe the actual amount of taxes due on their business income, plus a potential additional 10% of the actual amount of taxes due in the form of a penalty charge, PLUS some amount of interest charges.
MiaraRiley
01-18-2013, 03:49 PM
Melone always gives excellent advice. Its exactly to the letter of the tax codes. Its just sometimes hard to swallow. Miara when did you start camming? July 2011 or July 2012?
When will your first full camming year tax return be filed?
I've noticed! Deargods, it really is a lot to swallow and i'm getting even more confused, but i'll get it.
I started camming last year, July 2012, that's why I was curious if I'd have to start paying quarterly (on top of what I owe from last year) after the full year (july '12-july '13), or at the beginning of this year.
Melonie
01-19-2013, 01:24 AM
^^^ It depends on how the IRS chooses to interpret the 'first year' exemption rule, as well as the fiscal year your business adopts.
The worst case interpretation, assuming that you have not incorporated your business thus use the calendar year, is that tax year = calendar year 2012 was your 'first year' of business operation. Thus 2013 estimated taxes should be paid on 2013 income. And the first estimated tax due date of April 15th ( for estimated taxes on income earned in Jan, Feb and Mar ) is the same as the April 15th due date for filing your 2012 annual tax return and paying actual taxes due on income earned in 2012.
A 'middle of the road' interpretation is that your business actually started operating in the 3rd quarter of 2012, thus the 'first year' exemption won't require you to start filing and paying estimated taxes until 3rd quarter 2013. However, the flip side of this interpretation is that when the Sept 15th 3rd quarter estimated tax deadline rolls around, you'll need to pay estimated taxes on all income earned from Jan 2013 through August 2013.
A 'stretching it' interpretation is that since 2012 was only a partial year for your business operation it doesn't count, 2013 will be the first full year of business operation, thus the 'first year' exemption protects you until the first quarter of 2014. IMHO this interpretation has zero chance of surviving an IRS audit.
StephanieXS
01-19-2013, 02:17 PM
So do we need to pay taxes quarterly instead of just yearly? If that is the case does anyone recommend any websites like turbotax or anything like that to help file quarterly?
StephanieXS
01-19-2013, 09:16 PM
Also, question. If you assume that you make 1000 a week, between fed tax and SS would you be paying 38.3% in taxes or did I figure something wrong somewhere? With KS having a 6.45% income tax that comes out to like... 44.75%
Am I missing something? I'm filing as single.
Melonie
01-20-2013, 01:07 AM
^^^ actually there are five filings in all. Four are the extremely short quarterly estimated tax vouchers ... see . The fifth is filiing your annual tax return with Schedule C.
As you mentioned, Turbo Tax Home & Business version will indeed prepare the quarterly 1040ES forms as well as the annual tax return with Schedule C. It will also prepare quarterly K-40ES forms as well as annual tax return for Kansas State income taxes.
Using your $1000 a week = $50k per year example ...
'self employment' tax will be $50,000 * 15.3% = $7650
Fed income tax is subject to exemptions, deductions, and credits, but will probably be in the 10% range for a single person with no children and typical deductions = $ 5,000
KS income tax is similarly subject to exemptions, deductions and credits, and will probably be in the 3.5% range = $1750
Based on this guesswork, quarterly federal estimated tax payments would be $12,650 / 4 = $3,150 , and quarterly Kansas estimated tax payments would be $1750 / 4 = $ 438
Also based on this guesswork, and assuming that you started camming in the third quarter of 2012, if you start paying estimated taxes in first quarter 2013, by April 15th 2013 you'll probably owe something like $ 6,300 in federal taxes on your 2012 income PLUS $3,150 in first quarter estimated federal taxes on first quarter 2013 income, PLUS $ 800 in KS state taxes on your 2012 income PLUS $ 400 in first quarter estimated Ks state taxes on your first quarter 2013 income. If you worked ALL of 2012, while the quarterly estimated tax amounts will be the same, the totals owed on the annual tax returns will be $12,650 federal and $1,750 KS state taxes.
So in terms of an 'effective' overall tax rate, it appears that as a KS resident you're looking at 15.3% + 10% + 3.5% = ~29% relative to a $50k annual income level. Again please remember that the guesstimated 10% and 3.5% figures can go up or down based on individual circumstances.