Re: Taxes- is camming still worth it?
^^^ additionally, if a student dancer or camgirl has earned enough money to 'challenge' an IRS determination that the parents were actually able to provide 51% of the student dancer / camgirl's financial support, it's very possible that the IRS will audit both the parents and the student. As posted in many other threads, in a 'middle class' family situation, the student daughter's dependent 'exemptions' are worth something in the neighborhood of $3,000 to $6,000. So if parents lose the ability to claim their daughter as a dependent it is likely to increase the amount of taxes the parents owe by $3-$6,000. On the flip side, remaining a dependent of your parents may cost you $3,000 in additional taxes on your camming income.
The absolute bottom line is that, once a US citizen camgirl earns more than $600 in a year, ( with very few exceptions ) her webcam host will create a 1099 payment report and send it to the IRS. That 1099 report will wind up in the IRS database, and when April 15th rolls around IRS computers are going to search all tax returns for a 'matching' reported income ( thus tax payment ) linked to the same social security number listed on the 1099. If the matching social security number is found matching a claimed dependent on a parents' tax return, the IRS will look further to see where the 1099 income was reported on that tax return. If the 1099 income does not appear on the parents' tax return, IRS computers will then search for a different tax return which is linked to the same social security number. If the 1099 income can't be matched up on either tax return, if the second ( camgirl's ) tax return doesn't exist, or if the camgirl's social security number appears as a claimed dependent on both the parents' and camgirl's tax return, an IRS audit is virtually guaranteed to follow.
Re: Taxes- is camming still worth it?
thank you for your help and i was going to ask if i start camming in January full time bc this fall is my last semester then will that show up on April 2014 taxes or 2015 bc on 2015 taxes i will be able to be my own dependent. and do my own taxes completely separate.
Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
sexysasha226
thank you for your help and i was going to ask if i start camming in January full time bc this fall is my last semester then will that show up on April 2014 taxes or 2015 bc on 2015 taxes i will be able to be my own dependent. and do my own taxes completely separate.
i think ur misunderstanding how taxes work. u get the 1099s for the year before like in 2015 you get ur taxes from 2014 and only what u did in 2014 is applicable for the taxes you file in 2015 most ppl ge the paper work in jan and then have till april to file them so if your done with school in 2015 and are unable to to not risk messing things up for your parents if you dont tell them about your camming then u have to wait wait till 2015 to start camming. and in 2016 when you get your 1099s from 2015 is the first time you will file your own taxes.
Re: Taxes- is camming still worth it?
no this fall is my last semester so i wanted to start camming in jan 2014 and i would pay the tax for that in april 2015 correct and since i wont be attending college in 2014 i can file my taxes for myself in 2015.
Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
sexysasha226
no this fall is my last semester so i wanted to start camming in jan 2014 and i would pay the tax for that in april 2015 correct and since i wont be attending college in 2014 i can file my taxes for myself in 2015.
then yes you can start camming after school in 2014 and then file your own for the first time in 2015 for the 2014 year make sense?
Re: Taxes- is camming still worth it?
yeah thanks you have been alot of help so when is the soonest i can start camming in 2014 ? jan 1 and it be on 2015 tax right ?
Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
sexysasha226
yeah thanks you have been alot of help so when is the soonest i can start camming in 2014 ? jan 1 and it be on 2015 tax right ?
pretty much
Re: Taxes- is camming still worth it?
http://us.thesalarycalculator.co.uk/salary.php
i wanted to post this link. you put in how much you made that month and it helps you determine how much you need to put aside for taxes.
Re: Taxes- is camming still worth it?
^^^ I'm certainly no expert on UK taxes, but that calculator seems to be based on 'employee' paycheck earnings. I suspect that taxes on business operations / profits i.e. a self-employed camgirl are treated differently. Specifically, the UK and US both appear to charge higher rates for National Insurance / Social Security for self-employed persons versus 'employees' ( with the self-employed person being required to pay both the 'employer's' and 'employee's' share of these taxes )
See
In the US, being an 'employee' versus 'self-employed' means a difference in Social Security tax rate of 7.65% versus 15.3% ( with US federal and state income taxes being added on top of Social Security tax ). In the UK the National Insurance tax 'rate' is much lower, but the income tax rate is higher. And in the UK there are a bunch of additional tax issues for 'self-employed' persons
See
Re: Taxes- is camming still worth it?
its uk addressbbut its for us.
Re: Taxes- is camming still worth it?
^^^ you appear to be correct that the UK tax site calculator you linked is for US citizen taxes. But it is for 'employees', not independent contractor business operators. As such, it vastly understates overall US tax liabilities for dancers and camgirls because it does not take into account the fact that dancers and camgirls have to pay both the 'employer's' and 'employee's' share of social security and medicare taxes.
Re: Taxes- is camming still worth it?
If I rented a cheap apartment that I would use only for camming, would that be tax deductible?
Sounds weird probably, but I plan on getting a separate apartment only for cam stuff so I can physically GO to work. If I don't, I won't have the motivation to be on all that much.
Re: Taxes- is camming still worth it?
^^^ by the letter of the law, yes. However the 'real world' result would probably be an IRS audit if you rent the apartment personally ( versus having your LLC or S-Corp rent it ), and perhaps problems with the landlord and/or local zoning authorities for operating a 'sexually oriented business' in a residential area.
Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
Melonie
^^^ by the letter of the law, yes. However the 'real world' result would probably be an IRS audit if you rent the apartment personally ( versus having your LLC or S-Corp rent it ), and perhaps problems with the landlord and/or local zoning authorities for operating a 'sexually oriented business' in a residential area.
What about a little office in a strip-mall? I'm daydreaming here, but having as much lighting as wanted, a green-screen set-up, just stuff that is hard to expalin at home would be fine in an office. It would probably be cheaper then other offices without the need for a lot of windows/ natural light too. I have an S-corp by the way.
Re: Taxes- is camming still worth it?
^^^ sounds like a plan to me !!! Having your S-Corp rent a 'commercial property' shouldn't look at all unusual to the IRS.
Re: Taxes- is camming still worth it?
OMG, Melonie! You are such a lifesaver with all that you have contributed to this thread! Although I am new to working in the adult industry, I'm not new to knowing what it means to be an IC. My husband has been one for almost 10 years, working on a construction crew. But after reading your input and explanations, I feel like I knew next to nothing.
Maybe somebody already asked this and I missed it, but I do have another question about deductions. I have a designated room for working. It is small, and probably not even big enough to risk the hassle of an audit that could accompany claiming a home office deduction. But when I get around to redecorating it, I would like to deduct some of the furnishings I'll have in there. As I understand it, a percentage of a large item's value is usually claimed over a number of years. But I was actually considering just renting the furniture. Since that room is strictly for my pso/camming work, could I deduct the furnishings that are in there even if I don't file for the home office deduction, and how much of the rental payment can I deduct, if any at all?
Re: Taxes- is camming still worth it?
^^^ you're really talking about two different deductions ... with the first being the purchase or rental of 'capital equipment'. From an official standpoint this is probably a legal deduction. But in real world terms, the IRS is probably going to raise eyebrows if Rent-A-Center payments show up on a Schedule C because, generally speaking, the 'capital equipment' being purchased or rented has some obvious direct linkage to business operations. Also, the 'amortization' you mention only applies to major purchases ... rental costs are expensed. And for that matter, purchases costing hundreds or a few thousand are now able to be expensed as well i.e. able to write off the entire cost as a business expense under Section 179.
The second is obviously the 'home office' deduction. This deduction allows you to deduct a proportion of your rent / utility / insurance costs etc. The proportion that can be deducted is the same as the proportion of square footage of your 'home office' space versus the total square footage of your home / apartment. In real world terms, claiming the 'home office' deduction vastly increases the amount of attention your tax return will receive, since this deduction has been flagged as the target of massive 'abuse' in previous years. So you may be on the right track by skipping this deduction if it amounts to a very small proportion thus very limited tax savings.
There may also be some reason to think twice about making the fact that you are conducting an 'adult entertainment business' out of your residentially zoned home or apartment a matter of official record. The odds of this ever creating problems is very small. But if it were to ever happen the size of the problems could be very large !!!