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Re: Taxes- is camming still worth it?
I was doing some research for a client and found this site. I'm not a model (by far), but I'm a CPA and thought it was great that there is this tax discussion. Any, I figured that I'd join up to help answer US Tax related questions. Just doing it as a community service, not soliciting for clients.
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
Melonie
^^^ at this point, it will be necessary to file both a 1040NR non-resident 2014 annual tax return with an attached Schedule C 'profit or loss from an ( unincorporated ) business' - with associated check, and separately file a 1040ES voucher for first quarter 2015 estimated taxes - with associated separate check. These actually need to be sent to two different IRS addresses.
Depending on the particular US state you resided in, you may also have to file a non-resident 2014 state tax return - with yet another associated check and yet another state tax dep't address, and another state form for first quarter 2015 estimated taxes - with yet another check. This obviously varies widely by state, so you'll have to do a bit of internet searching.
A general discussion of IRS tax filings for US citizens living abroad can be found at . The link info is a few years old at this point, but changes for 2014 are minor ( threshold amounts have been increased ).
On the 'plus' side, if you were outside of US borders for 330 days in 2014, you will qualify for some very nice 'deductions' and 'exclusions' ! Those 'deductions' and 'exclusions' are a major reason that I decided to move 'way south of the border' on a permanent basis !!!
On the 'minus' side, as a resident of the UK in 2014, via the 1040NR tax return the IRS will want to know about both your US based earnings as well as any UK based earnings ... with the US also attempting to collect additional taxes on your UK earnings unless the amount of taxes you paid to HM Revenue and Customs was greater than the amount the IRS wants !
Finally, while there hasn't been any official announcement to this effect, it is rumored that the US IRS and the UK HMRC are now capable of sharing information with each other. For other readers, it HAS been announced that the US and Canada are now sharing financial information with each other via FINTRAC.
To be clear the 1040NR is for Non-Residents. If you are a US citizen, green card holder, and certain visa holders, you don't file the NR regardless of where you live during the year. You file the regular 1040 and might be eligible for the foreign earned income exclusion or tax credit.
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Re: Taxes- is camming still worth it?
I think there is a lot of confusion about estimated taxes on here, so I'd like to provide a run-down:
Say you owe $10,000 in taxes when you file your return. The govt doesn't wants to get their sticky fingers on that money sooner rather than later so they implemented the estimated tax system. Theoretically, they want you to make 4 equal payments of $2,500 so that when you file your return, you won't need to pay anything. Fortunately there are some rules that you can use in determining the amount you actually pay each quarter.
The easiest rules deal with the amount of money owed: simply, if you owe less than $1,000 in tax you aren't required to make estimated payments. Now that could be a gamble because if at the end of the year you owe $1,001 in tax you'll be assessed penalties for not making those estimated payments.
The major rule is called the "Safe Harbor Rule". This rule essentially limits the amount of money that you need to pay in estimated taxes during the year. Instead of trying to forecast your current year's tax obligation, you can simply pay 100% (110% in high income cases) of the prior year's tax less credits. For example, if your 2014 tax is calculated at $1,500 and you received a $1,000 child tax credit, you would owe $500 for 2014. So your minimum estimated tax payments for 2015 are $125 each quarter. So as long as you make those 4 payments on time, it doesn't matter if you owe $1,000,000 when you file your 2015 taxes, you won't be penalized for needing to send in a check for $999,500. Please note that there is no "first year" exclusion for new businesses that report on Schedule C.
Now you might not want to make a big payment to the govt at filing time. If that's the case your best bet is to figure 30% of your profit is going to go to tax. Self employment taxes are 15.3% and if your in the 15% ordinary tax bracket, that's 30%! So if you profit $50k, you'll owe $15,150 at tax time. Take that number and divide by 4 ($3,787) and you'll have your estimated amount. Now you may be thinking "can I figure my profit each quarter and make an estimated payment of 30% of that number"? The answer is maybe. If those payments put you in the safe harbor method then you'll be ok. If not, then you'll owe a penalty for underpayment at the end of the year. This is because the IRS takes the entire amount due at the end of the year and wants it quarterly. So if a couple of those payments were under what they should have been, you'll get a letter in the mail wanting money.
My advice to clients: only pay enough to the govt to be in the safe harbor. Take the rest of the amount you think you might owe and put it in savings. This way at the end of the year you'll most likely have all the money you'll need to pay your taxes and not have to worry about a refund. Instead take the excess in savings and treat yourself! :)
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Re: Taxes- is camming still worth it?
^^^ thanks CPA.
To clarify even further, technically speaking a 'self employed' person who starts working on January 1st will owe taxes due on income earned from January 1st through April 1st by an April 15th deadline. With the exception of 'first year in business' and other 'safe harbor' exemptions, if that money isn't paid by the April 15th deadline the IRS will begin to add interest charges. Similarly, taxes owed on money earned from April 1st through June 1st are due by a June 15th deadline. If that money isn't paid by the June 15th deadline the IRS will begin to add interest charges. Similarly, if the money not paid by the April 15th deadline remains unpaid, the IRS will tack on additional interest charges. This repeats for the other two quarters, with deadlines of September 15th and January 15th of the next year. In addition to the interest charges, if no estimated tax payments are made the IRS can also assess an additional 'penalty' charge.
"Employee' estimated taxes are also due to be paid in increments ... usually monthly. However, the 'employee' never has to deal with this because their 'employer' withholds the estimated tax money from every paycheck, and the 'employer' files and pays estimated taxes to the IRS on behalf each 'employee' every month.
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Re: Taxes- is camming still worth it?
I've thought about this too- I'm not sure if someone has mentioned this in the thread (haven't read all the replies yet) but I just formed an LLC for tax purposes. I cam on myfreecams and in the fine print it says you can form an LLC if you are registered only as a studio. Of course, initially I registered as a model and so, unfortunately, I'm going to have to sacrifice my model account and start a new studio one...but i'm thinking if you already have a pretty good fan base then it won't matter so much when you switch over as a studio.
Anyways, from what I understand, the idea of having your own LLC (with a separate bank account of course) is that all your income from camming goes in there and then you can write off "work related expenses"....and i suppose that can be defined however you want (outfits, lighting, even business dinners perhaps) and all that money is un-taxed. then when you go to pay yourself through the business then only a percentage of what you end up paying yourself (to go into your own account) is taxed. Somebody clarify me if i'm wrong .....hehe.....my boyfriend is the one that is business savvy and has explained all this to me. Have any of you other girls formed an LLC for your camming "business"? :)
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
Natrona
I've thought about this too- I'm not sure if someone has mentioned this in the thread (haven't read all the replies yet) but I just formed an LLC for tax purposes. I cam on myfreecams and in the fine print it says you can form an LLC if you are registered only as a studio. Of course, initially I registered as a model and so, unfortunately, I'm going to have to sacrifice my model account and start a new studio one...but i'm thinking if you already have a pretty good fan base then it won't matter so much when you switch over as a studio.
Anyways, from what I understand, the idea of having your own LLC (with a separate bank account of course) is that all your income from camming goes in there and then you can write off "work related expenses"....and i suppose that can be defined however you want (outfits, lighting, even business dinners perhaps) and all that money is un-taxed. then when you go to pay yourself through the business then only a percentage of what you end up paying yourself (to go into your own account) is taxed. Somebody clarify me if i'm wrong .....hehe.....my boyfriend is the one that is business savvy and has explained all this to me. Have any of you other girls formed an LLC for your camming "business"? :)
I highly recommend you speak with an accountant about that. There is no tax advantage between being a "sole proprietor" and a "one-man LLC". The primary advantage for a model would be an additional layer of privacy when it comes to your state records, and some additional protection for debts and liabilities that could occur as part of your business. If you can get the IRS to ALSO agree to tax you as a corporate entity, then you have some tax relief.
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
KatyBoleyn
I highly recommend you speak with an accountant about that. There is no tax advantage between being a "sole proprietor" and a "one-man LLC". The primary advantage for a model would be an additional layer of privacy when it comes to your state records, and some additional protection for debts and liabilities that could occur as part of your business. If you can get the IRS to ALSO agree to tax you as a corporate entity, then you have some tax relief.
The IRS doesn't have to agree to tax you as a corp entity if you're a single member LLC, you just tell them to treat you that way. They'll automatically treat you as a sole proprietor otherwise. Also, you want corp treatment you could always just make your business a corp. There can be some hang ups here though so you'd need to talk with your CPA.
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Re: Taxes- is camming still worth it?
Well honestly your gonna pay taxes on any job and camming "normally" pays better per hour then most jobs.
so, do you want to work 40hrs a week whenever someone else tells you to for shit money and pay the same amount in taxes..
or do you wanna cam make more per hr , work less and pay the same % in taxes....
And honestly if your paying big taxes your making big money to so WIN WIN!
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Re: Taxes- is camming still worth it?
Considering moving to puerto rico for 183 days to become a technical citizen & pay a 4% tax for services performed out of PR to customers not in PR, but the only place from my understanding that has great internet is Luquillo... It's beautiful but kind of scary with bars on all the windows. Any suggestions for places to live with great internet and low taxes? We don't make that much, but for future reference if we someday do.
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Re: Taxes- is camming still worth it?
Hey , i am new in this forum:D I am a videochat model working since 5 years ago. I have reached high payouts in this time. I saw this forum and i felt nostalgy:) 5 years ago i was helped to start my bussines and now i am very thankfully. So i tought to help others if i can:) As i am an experienced model,i can give you all the tips and tricks to start your bussines.My skype is diamondrosex ,so feel free to contact me and i will help you as much i can:D please tell meif you find it helpfull.Have a nice day just add me and we keep in touch.Kisses
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Re: Taxes- is camming still worth it?
can you write coffee off as a business expense?? LOL
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Re: Taxes- is camming still worth it?
Ha ha! I want to write off baby wipes (don't know if you call them that, they're fragrance free little cloths that you can use to wipe things). I buy a lot of them.
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
pinklemonade0
Ha ha! I want to write off baby wipes (don't know if you call them that, they're fragrance free little cloths that you can use to wipe things). I buy a lot of them.
I've written them off for 5 years, and counting.
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Re: Taxes- is camming still worth it?
I never have filed taxes on my cam money. It's "contributions" so basically gifts of money. When I did port however I was sent a tax form. Bang bros is super strict (Doral inc)
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
thekhaleesi
I never have filed taxes on my cam money. It's "contributions" so basically gifts of money. When I did port however I was sent a tax form. Bang bros is super strict (Doral inc)
Just like a customer contributes money and gets a Kindle Fire. You can get it a lot lot of trouble and I would always advise paying taxes so that you are doing the right thing and also don't get fined/go to jail. I gather you are on MGF and up to 90%. That's a LOT of unpaid taxes right there...
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Re: Taxes- is camming still worth it?
I'm a new model on skyprivate. I understand that I need to pay taxes from a certain amount of income.& YES, I've searched 10000 times on google but I can't seem to find the right answers. My grandpa is an accountant so he does all the paperwork for my taxes. Skyprivate doesnt issue a 1099 form so how is he even getting the taxes I owe? Also, *big question* How would I be able to change the name of skyprivate on the taxes so he doesn't see that I'm camming online? I don't mind he does the taxes, I just dont wan't him seeing that. (I have no access to the taxes at all...only he does.) & lastly, if I'm making money and spending it (on makeup, clothes, rent)...Do I have to keep track of the all the things I buy? I heard that you do...why is that? Does that take any part of taxes?
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Re: Taxes- is camming still worth it?
Income from foreign sources is reported to the IRS by the various payment services. Provisions in the ACA now force every foreign entity that does financial transactions with US citizens (such as banks, e-wallets like PayPal and Google Wallet, Amazon, Payoneer, and Paxum) to report your transactions to them. It takes a while, but their computer will find discrepancies between what you file and what money flowed to you and what money you saved or spent. Note they have 7 years to figure it out, so you may get away with it for 6 years, and on year 7 they can hit you with fines and penalties for the last 7 years. Note that even if you are innocent and file your taxes well, they can still audit you and go fishing...and if your records aren't well-kept you can still get fined.
For SkyPrivate, they have a parent company name that's fairly generic...most companies do. If you cam through us, we do issue a blanket 1099 for SkyPrivate earnings that is our generic company name for internet marketing.
Business expenses are another minefield entirely, and you will need qualified help to navigate that. We do it for our own models, but we're conservative and follow IRS guidelines to the letter. If you go to a CPA, he/she may feel they can get away with a little more and may be willing to sign off on looser interpretations of the housewife test. The key there is to KEEP YOUR RECEIPTS and properly label them. Do not mix non-business purchases on the same receipts to keep them easier to handle. If you don't have a receipt, it didn't happen when it comes to expenses.
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Re: Taxes- is camming still worth it?
So, according to the IRS- the tips are not charitable contributions over a specific amount or just in general?
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Re: Taxes- is camming still worth it?
So I have a question...
Say I made about $17-20k this year from camming and I had been saving %25 from every paycheck. But then a huge life event happened where I had to use every last cent of those taxes savings to not end up homeless and keep the lights on. It's about to be December now and I have nothing to pay my taxes with and I won't for a while. What do I do? I don't even have enough money to pay for a tax person. There is absolutely no way I can cam anymore and the job I just got this week only pays $9 an hour! What would happen if I didn't pay my taxes? I am very anxious and worried that they're going to send me to jail or something for tax evasion. Can I file my taxes with no money to pay them?
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
koryncutie
So I have a question...
Say I made about $17-20k this year from camming and I had been saving %25 from every paycheck. But then a huge life event happened where I had to use every last cent of those taxes savings to not end up homeless and keep the lights on. It's about to be December now and I have nothing to pay my taxes with and I won't for a while. What do I do? I don't even have enough money to pay for a tax person. There is absolutely no way I can cam anymore and the job I just got this week only pays $9 an hour! What would happen if I didn't pay my taxes? I am very anxious and worried that they're going to send me to jail or something for tax evasion. Can I file my taxes with no money to pay them?
You can set up a payment plan where you pay a portion each month. Yes, you can file taxes without money to pay them.
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
pippapippa
You can set up a payment plan where you pay a portion each month. Yes, you can file taxes without money to pay them.
This is true and it is very important that you file even if you can't pay what you owe in taxes. The failure to file penalty is 5% per month until you max out at 25% while the failure to pay penalty is only .50% per month until you max out at 25%. Would you rather have a 5% or .50% penalty adding up every month?
Also if you set up a payment arrangement that .50% penalty per month drops to .25% per month.
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Re: Taxes- is camming still worth it?
Quote:
Originally Posted by
la
So, according to the IRS- the tips are not charitable contributions over a specific amount or just in general?
Usually when people talk about taxes & charitable contributions they're talking about taking a deduction for contributing to a charity. You can only do that if you're itemizing your deductions. Unless you contribute a lot of money & have a lot of deductible personal expenses, go with the standard deduction. To answer your question, if you solicit tips or get them in the course of doing your job they are income not gifts. They must be claimed as income.
Quote:
Originally Posted by
thekhaleesi
I never have filed taxes on my cam money. It's "contributions" so basically gifts of money. When I did port however I was sent a tax form. Bang bros is super strict (Doral inc)
Here we're talking about working for a living then saying the money you earn is from donations. Customers aren't donating money to you, they are paying you for a service. We all need money. Needing the money doesn't mean you're a charity... at least not one recognized by the IRS.
Since you're soliciting the money, it's taxable. It doesn't matter if you got a tax form. Eventually the IRS will figure it out. If your reported income is less than your searchable expenses (rent, mortgage, health insurance, car payment, car insurance, student loans, etc) there's a paper trail of you claiming to receive less money than you're paying out.
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Re: Taxes- is camming still worth it?
Are amazon gifts just gifts or are they taxable items?
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Re: Taxes- is camming still worth it?
According to the IRS whitepapers, Amazon gift cards are income if received as compensation for your business. Basically anything that has cash value counts. The label "gift" does not make it legally so. Any cards or gifts purchased on your behalf over $25 total by clients must be added up and reported.
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Re: Taxes- is camming still worth it?
What happens if people give you Christmas presents or birthday presents? As actual presents?