View Full Version : Depositing Cash
michele11
03-31-2015, 05:35 PM
^ Dude don't talk to me like I'm an idiot! I own 3 houses and have been in this business for 20 years and have a hefty portfolio and could retire but am still a top earner....
baer45
03-31-2015, 05:45 PM
^ Dude don't talk to me like I'm an idiot! I own 3 houses and have been in this business for 20 years and have a hefty portfolio and could retire but am still a top earner....
LOL, all right, all right.
Naida
03-31-2015, 07:31 PM
I know this isn't a popular topic (and perhaps not even a favorable idea) among the financially straight girls on this forum, but how would you girls handle "cooking the books" with cash deposits? I'm not trying to evade taxes or hide large chunks of money, but I would like to shave a little off my reported income IF I come in just over a certain amount. I wouldn't want to lose or reduce certain benefits like a Roth IRA if I happen to make $116k for the year instead of $113k.
I'm thinking of dividing the total I can safely make for the year by perhaps weeks worked. If I come in a over what that average may be, I'll document a "realistic number" near the average, deposit what I recorded and sock away the additional cash in a home safe. Then, on weeks that I make below the average, document a "realistic number" near the average and deposit what I recorded using some of the saved cash from my safe. If I come out just a bit over my allowed amount, I can use the leftover cash on something like a service or pay cash for an item that I could argue was a "gift" if I were ever audited.
What do you guys think? Thoughts?
baer45
03-31-2015, 09:51 PM
I am not an expert but just share my train of thoughts here.
Everyone's situation is different than the others. I am still single (on paper), no kids. Most of my incomes, will not get reported. I have a mortgage payment $2100 per month. In 2014, I reported $2700 monthly income by getting a 1099 from a friend's company. IRS basically has no interest on people who earn less than $100k annually and pay tax. They will not bother you at all.
I have a home safe to store part of the cash. Last year I rent a bank safe-deposit box to stack some gold bars and important documents. I have multiple bank account and use multiple banks credit cards for my expense. I also have bought a bunch of insurance policies. Most of them are variable annuity type, universal life insurance products as well. My father is a Vietnam veteran, he taught me everything about guns. I have invested money in guns, ammo. I probably have $100k worth guns and ammo that I purchased during the years. Thank Obama, the best firearm salesman in the history. :) Who knows my investment will double it's value again or not. In the future, If I run into some Saul Goldman kind of lawyer, i might set up a trust for my future kids. LOL.
By the way, you can only claim $13,000 worth tax free gift a year if I remember correctly.
Melonie
04-01-2015, 02:37 AM
^^^ Naida, if your projected income is >$100k per year, I would highly recommend exploring the formation of an S-Corp. Doing so would allow you to legally 'shave' dollars off your tax bill. This becomes possible because earnings run through an S-Corp are paid out to the 'owner' in two distinct pieces. The first is a 'salary', which is subject to the same social security taxes and income taxes as unincorporated 'sole proprietor' income. But the second is a 'dividend' payment ... which is typically subject to a lower capital gains tax rate and, more importantly, ( mostly ) exempt from social security taxes. Forming an S-Corp also opens up new options in regard to tax deferred gov't sanctioned retirement plans and/or health insurance benefits ... i.e. the corporation providing a contribution which is deductible as a business expense.
Also, as mentioned elsewhere, establishing a 'corporate' bank account to go along with that S-Corp would also go a long way to dispel potential 'suspicions' ( thus suspicious activity reports ) on the part of bank personnel. Generally speaking, banks expect that small businesses are going to make regular 'cash' deposits.
You'll have to forgive me for not commenting in regard to 'cooking the books', for obvious reasons !
Zofia
04-01-2015, 02:56 PM
As a cash basis taxpayer, you can hold some deposits at the end of the year until January 1 of the next year. Also, I do some tax planning at the end of the third quarter to see if I need to pay some things early. Also, assuming your IRA was opened before December 31, 2014, you have until April 15, 2015 to make a 2014 contribution. That can help some.
HTH
Z
michele11
04-01-2015, 03:12 PM
I am not an expert but just share my train of thoughts here.
Everyone's situation is different than the others. I am still single (on paper), no kids. Most of my incomes, will not get reported. I have a mortgage payment $2100 per month. In 2014, I reported $2700 monthly income by getting a 1099 from a friend's company. IRS basically has no interest on people who earn less than $100k annually and pay tax. They will not bother you at all.
I have a home safe to store part of the cash. Last year I rent a bank safe-deposit box to stack some gold bars and important documents. I have multiple bank account and use multiple banks credit cards for my expense. I also have bought a bunch of insurance policies. Most of them are variable annuity type, universal life insurance products as well. My father is a Vietnam veteran, he taught me everything about guns. I have invested money in guns, ammo. I probably have $100k worth guns and ammo that I purchased during the years. Thank Obama, the best firearm salesman in the history. :) Who knows my investment will double it's value again or not. In the future, If I run into some Saul Goldman kind of lawyer, i might set up a trust for my future kids. LOL.
By the way, you can only claim $13,000 worth tax free gift a year if I remember correctly.
Not true. I've had a few friends get audited who claimed and made less than 100,000 in the adult industry.
Melonie
04-01-2015, 05:04 PM
Indeed many factors contribute to an IRS audit taking place. Some percentage of tax returns are audited as a matter of pure random selection. Certain types of incomes are assigned a higher than average audit probability ... among them people working in 'cash' businesses ( = strike one for adult industry workers ), people working in businesses which have a bad historical record of tax compliance ( = strike two for adult industry workers), etc. Additionally, 'red flags' being waved by such things as bank cash transaction reports, state deed and title agency reports, etc. can increase the probability even further.
baer45
04-01-2015, 05:43 PM
Not true. I've had a few friends get audited who claimed and made less than 100,000 in the adult industry.
I have never been audited. It might have something to do with the reported career. I am a financial analyst as a part time.
Naida
04-02-2015, 05:35 PM
Thanks, Melonie! I'll have to do more reading regarding incorporating options. I had just always left that option off the table because it seems more complicated than sole proprietorship and I wouldn't be "employing" anyone often. Guess I'll have to do some more reading.
Melonie
04-03-2015, 08:11 AM
^^^ at a $100k level of annual income, in exchange for a couple of thousand dollars worth of one-time setup costs plus few hundred dollars worth of annual accounting and paperwork costs, forming an S-Corp and 'employing' yourself potentially offers some significant advantages ...
- splitting total income into two pieces, with perhaps 35% or $35k 'dividend' income piece no longer being subject to the 15.3% social security tax ( thus a ~$5000 potential annual tax savings )
- a reduction in effective tax rate - because only 65% or $65k of income is still subject to progressive income tax rates ( instead of the entire $100k ), with the remaining 35% or $35k being subject to a ( presumably ) lower capital gains tax rate ( thus another ~$500 potential annual tax savings )
- being able to directly subtract life and health insurance premiums from gross business earnings by accounting for them as 'employee' benefit costs ( thus another ~$1000 potential annual savings vs paying premiums personally with after-tax dollars )
- your S-Corp can provide employment and income verification for you personally
- your S-Corp, in combination with an EIN, provides an official layer of separation for your adult entertainment industry related work vs personal tax history
- your S-Corp, in combination with an EIN, allows the opening of true 'business' bank accounts ( which as mentioned above are far less subject to 'cash' transaction questions by bank personnel )
However, as you can see, the tax savings made possible by an S-Corp are mostly 'percentage' based, while the setup and annual accounting / compliance costs of an S-Corp are more or less 'fixed' dollar amounts. This means that there is a particular level of income below which the costs of an S-Corp exceed the tax savings. While personal variables apply, for a 'single' person with no dependents who is not a mortgaged homeowner, the 'break even' income level is typically somewhere around the $60-70k range in states like Texas which don't levee a state income tax.
HaitianKitty
06-10-2015, 07:39 PM
How do you pay quarterly?
Melonie
06-10-2015, 11:56 PM
print out IRS form 1040-ES ...
cut off the payment voucher for the appropriate quarter
write the check
mail the voucher and check to the IRS address !!!
Note that the deadline for the second quarter 2015 estimated tax payment is June 15th !!!
Prettyglitter
06-11-2015, 02:33 PM
This is really making my head hurt. I'm not putting anything else into the bank until I find an accountant. I don't MIND paying taxes but I'm not doing all that calculating and quarterly stuff. Every time I try to read one of these threads I go cross eyed.
HaitianKitty
06-13-2015, 11:01 AM
Ok thank you! I later want to start my own photography business and traveling hairstylist (all considered independent contractor)do i add that income to it or would i have to file seperate.
Melonie
06-13-2015, 11:47 AM
^^^ You can make one quarterly estimated tax payment to cover the taxes due on all of your business activities. When it comes time to file your annual tax return next April 15th, though, you'll need to file separate Schedule C's for your photography business and hair care business. Thus you really need to 'keep separate books' for each of these two highly unrelated businesses.
Where the business activities are more closely related, for example exotic dancing and camming, you can get away with keeping a single set of 'books' and filing a single Schedule C.
HaitianKitty
06-13-2015, 12:00 PM
Oh ok sounds good! Thank you :-)