Do you file taxes? Do you accept credit cards? (escorts)
So I have been flirting with the idea of accepting credit cards as an escort. I guess in that case one would really have to make sure her tax docs were up to par since there is a very clear paper trail. I have heard that guys tend to spend much more money when they're horny.. hehehe. Anyways, I wanted to hear more about this from our resident Tax goddess, BlkSharpie.
So I have a few questions: As an escort, do you think it is wise to report ALL your income. Do you think it's wise to accept credit cards? Please discuss. I really want to know what yall think. I am guessing that a major downside would be chargebacks but then you can combat that with having them sign an agreement stating that the transaction is non refundable right? PLUS would a client really do a chargeback KNOWING the escort has ALL his information?
Oh and feel free to PM me your replies! I really want to do things right this time!
Re: Do you file taxes? Do you accept credit cards? (escorts)
BUmb! I want to know!!! :(
Re: Do you file taxes? Do you accept credit cards? (escorts)
Well, one of my old bosses who's been in the business for years just got screwed over by someone who was mad at her and decided to report her to the IRS. Ignoring for the moment whether or not she has paid her taxes correctly (I don't know but she has been in business for like fifteen years+ so I would assume she's paying something to explain her income.) The burden of proof is on her and she has to deal with trying to explain that either yes, she has been honest (and providing the correct paperwork via bank account statements and whatnot), or no she has not been honest and then dealing with the fallout.
I also think if you're audited and found to have not paid you're taxes, you're audited for the next three years or something? Melanie in Finances would know. I also think if you're audited and found innocent you're like guaranteed three years of no audits. But I might just be full of hot air.
If you're worried about random audits being generated, I read somewhere that you cut your chances in half by having an accountant do them. I think auditing rates if you do them yourself are at 2%, and if done by an accountant 1%.
Re: Do you file taxes? Do you accept credit cards? (escorts)
I actually had a cpa once and now want to do everything myself. I'm not worrying about the IRS because I've done nothing for them to come after me. I was just asking if escorts should report all their income and whether or not accepting credit cards is a good idea.
Re: Do you file taxes? Do you accept credit cards? (escorts)
Someone I know somehow only reports 30k on her taxes. I have no idea how she does it, given that she lives in a very affluent area whose taxes ALONE are higher than that AND she has kids. I assume a good portion of it is deducted as travel costs, but she's been doing it for like 10 years. She also barters and gets TONS of laptops, TV's, etc as payment instead.
Apparently you CAN do it, but I'd be very very very very very wary.
Re: Do you file taxes? Do you accept credit cards? (escorts)
if you dont want to misstate your income at all, i dont see the harm in taking credit cards except for the risk of chargebacks. If you plan on understating your income, leave less of a paper trail as you can. Dont try to understate your income and then try to get all these deductions for things besides traveling expenses. I think a common misconception is that you can deduct everything from boobs, to tanning, to hair..etc... its not likely
Re: Do you file taxes? Do you accept credit cards? (escorts)
Quote:
Originally Posted by
BringOnTheMen
Interestingly enough, we were just talking about this for strippers-
in that thread, Kylea2 posted another thread for credit card options for adult workers
Melonie really knows what she's talking about here, hopefully she'll see this thread and contribute, but otherwise I would recommend posting this in Dollar Den. Melonie, Zofia, and some other people have degrees and long histories dealing with legal stuff when it comes to your money as a sex worker.
Thank you.
However, It is not the same because you're dealing with a business that's not really legal. Stripping and escorting is not the same at all. I posted here because it's other work and strippers don't know anything about escorting/escorting screening/escor etiqutte. Kylea is my friend and I speak to her on a daily basis via phone and she has advised me on this but I wanted to get other's escorts opinion.
Re: Do you file taxes? Do you accept credit cards? (escorts)
Quote:
Originally Posted by
xfatrabbitx
if you dont want to misstate your income at all, i dont see the harm in taking credit cards except for the risk of chargebacks. If you plan on understating your income, leave less of a paper trail as you can. Dont try to understate your income and then try to get all these deductions for things besides traveling expenses. I think a common misconception is that you can deduct everything from boobs, to tanning, to hair..etc... its not likely
Thanks! Another girl gave me this same advice via pm!
Re: Do you file taxes? Do you accept credit cards? (escorts)
Ooh I just saw this.... Im no expert! LoL! I just research my assssss off :P
Is Tax Domme still around on this board? Or at all?? She did my taxes for me a few years ago and I heart her for it! :D
Anyway, its funny, as I was driving home from picking up breakfast this morning, I was thinking about taxes and how to handle this...I jest you not.
Now, taking from what Tax Domme did for me and how she explained things to me...anything i used for my cam business, from web costs, to makeup, upkeep like gym membership etc can all count as a deductible. Now escorting brings on other espenses that cam doesnt have, like mileage, hotel/flight travel costs.
Technically, I have three things going for me right now...my freelance business, cam, and now escorting... Im going to divvy up my escorting income/expenses in with my freelance and cam businesses.
So, all of my income anf the travel expenses will be explained by and go under my freelance business...all my beauty, fitness and adertising expenses will be explained by and go under my cam business...Im saving the receipts for *everything*
Cam has a definite paper trail of how much is earned, through the statements that come from the individual cam sites I work on...but with my freelance business, I track all of that myself. And since I do a lot of face to face business transactions, it wont be at all curious for me to have cash payments on my books.
Im going to be odd about it and say I want to be able to record as good an income as I can since my tax papers and bank statements will be the only proof I have to my income level, and I do want to be able to upgrade to a nicer apt or be able to buy a house one day...I want it clear to my landlord/mortager that I can afford whatever it is Im going after.
I dont want to have mad money in the bank anf then the IRS is looking at me all funny when my reported income doesnt match...and besides, having extra proof to show as income isnt a bad thing. I cant imagine claiming only $30k...especially living in Miami. My honest to goodness income over the past few years has been more than that...Yeah Id have to pay more in taxes, but Id also be able to afford more without worry what the govt will think of the paper trail.
The whole reason Im doing this is to live a better life...I dont see the point in living in squalor while hoping to avoid being noticed by the gvt.
Anyway, I do hope the Tax Domme is still around, as a matter of fact, I need to get myself squared away, and it would be great to just keep my records, and hand everything over to her to work her magic since she has exceptional experience in the adult industry. If not, I will probably find another licensed tax preparer with experience in the adult biz/finances to do it for me... Even though I know *how* there are certain idiocracies that I would not be aware of that someone who has seen it all would....and can make work to my benefit.
Re: Do you file taxes? Do you accept credit cards? (escorts)
This is a good thread.
I am not trying to thread jack or anything but I have some serious questions about escorting taxes as well that I would prefer be answered one on one. So if anyone is pretty knowledgeable in this area I would appreciate a pm if possible?
Re: Do you file taxes? Do you accept credit cards? (escorts)
Quote:
Originally Posted by
SexxySadie
This is a good thread.
I am not trying to thread jack or anything but I have some serious questions about escorting taxes as well that I would prefer be answered one on one. So if anyone is pretty knowledgeable in this area I would appreciate a pm if possible?
You should pm "Noa".
Re: Do you file taxes? Do you accept credit cards? (escorts)
Re: Do you file taxes? Do you accept credit cards? (escorts)
Quote:
Originally Posted by
xfatrabbitx
if you dont want to misstate your income at all, i dont see the harm in taking credit cards except for the risk of chargebacks. If you plan on understating your income, leave less of a paper trail as you can. Dont try to understate your income and then try to get all these deductions for things besides traveling expenses. I think a common misconception is that you can deduct everything from boobs, to tanning, to hair..etc... its not likely
The harm in taking credit cards really comes down to if you are breaking the "Terms of Service" aka TOS of your provider contracts for the machine, bank, etc. & if the service you are providing is legal or not. If a person is caught taking credit cards for a service which goes against the TOS or is illegal, they do risk possibly never being able to have a credit card merchant account again. That means if you are doing something illegal now, you get caught with the machine, & 20 years down the road you want to open up a little boutique selling purses/accessories... you are SOL because no one will be interested in granting you a merchant account. Look at some of these sites for "Visa/MasterCard Terminated Merchant File" or "Match"
Credit cards also leave a pretty big paper trail. If the authorities knows you are doing something illegal they are likely to start questioning your customers based off records from your merchant account. Another issue is that not everyone is the brightest crayon in the box... customers will leave receipts in places where a spouse will come across them, or a spouse could be snooping through e-mail & run across the digital version of the receipt. The other issue is in many places to obtain a merchant account you need to file a business license prior to being eligible for a merchant account from the bank. In many states business licenses are public record, sometimes even online. That means there is a much bigger potential that some irritated customer could look up your business name, find your legal name, & track you down to harm or harass you. "Cash is king" for a reason... it's less traceable.
Quote:
Originally Posted by
TouringGirlfriend
However, It is not the same because you're dealing with a business that's not really legal. Stripping and escorting is not the same at all. I posted here because it's other work and strippers don't know anything about escorting/escorting screening/escort etiqutte. Kylea is my friend and I speak to her on a daily basis via phone and she has advised me on this but I wanted to get other's escorts opinion.
Some of us strippers do know a thing or two relating to other industries.
Here's some more evidence though on what I said to you. For the record ladies, it's better to report the income! If you end up in court any illegal resources of income are a separate charge from the charge of tax evasion. That means if you don't report income you would have two charges instead of one, & tax evasion means you will also pay interest on the money you should have paid to begin with.
Straight from the horse's mouth:
"Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."
Source:
http://www.irs.gov/publications/p17/ch12.html
Anyone who is using the term "escorting" but not the the sense of social escorting (or even legal escorting in places where it's restricted to licensed escorts) should also read this:
http://www.slate.com/id/2229094
One of the most interesting facts/statements from that is:
"Congress has established something of a safe harbor for people reporting income from illegal activities. The IRS may not disclose tax returns to law enforcement authorities unless the individual in question is already under investigation for wrongdoing. In other words, police can use a tax return in their investigation, but it can't be the initial tip. The opposite is not true: Local police can, and do, notify the IRS that they have uncovered a prostitute or ring of prostitutes who may have violated the tax laws."
Source:
http://www.slate.com/id/2229094
Also look up the term "tax stamps" & drugs. It's amazingly ridiculous, but the government in many places has decided that even though drugs are illegal, dealers should still have a was to prove taxes were paid on them... they they've come up with this little "tax stamp" system to report income from illegal drugs. Really quaint, right? LOL
http://www.google.com/search?q=%22Tax+stamps%22+drugs
I'm still searching for that case I discussed with you on the phone, but it was how I first learned that there really is an advantage to paying taxes even on illegal income. The case happened somewhere around 2005 - 2009, & the man was charged with some really heavy crimes involving millions of dollars (I believe from drugs and/or mafia), which he paid taxes on. I'm pretty sure drugs like coke were involved since as I recall this has something to do with the guy running stuff from Colombia. Anyhow, the authorities didn't know when they arrested him that he'd paid the taxes. The guy goes to court & totally walks away pretty much a free man... I'm not even sure that he did time in jail. At any rate, their weren't able to get him on tax evasion & he didn't have to pay any sort of interest for having not paid his taxes... because he did pay them. Melonie might remember that case, I think her memory is much better than mine. Anyhow, it was front news, & everyone was talking about it at the time. I'll keep searching for it, & will post when I find it. I can still remember the photo in my head pretty well from the article too!
Re: Do you file taxes? Do you accept credit cards? (escorts)
That is really good info to know, Thank you Kylea!!! I really was thinking of dividing up my escorting business between my freelance and cam business so that I could still report it, but not directly.
It would be easier and make sense though to keep it all separate.
Im just going to keep my records on everything, and have it all ready come tax time for my tax preparer...I hope she remembers who I am, its been a couple years now!
Re: Do you file taxes? Do you accept credit cards? (escorts)
Thanks Kylea!! :) Sooo much info!