US Camgirls may want to take note of this ...
Interpretation of the President's new budget and tax proposals by McGladrey tax law experts ... from
(snip)"Require a Certified Taxpayer Identification Number (TIN) from Contractors and Allow Certain Withholding
Current Law
Service recipients making payments aggregating $600 or more in a calendar year to any non-employee service provider (contractor), other than corporate contractors, are required to send an information return to the IRS and the contractor, reporting the amount paid as well as the contractor’s name, address, and taxpayer identification number (TIN). The information returns are required annually after the end of the year and are made on Form 1099-MISC. Tax withholding is not required or permitted for payments to contractors. Since contractors are not subject to withholding, they may be required to make quarterly payments of estimated income taxes and self-employment taxes, and pay any balance due when the annual income tax return is filed.
Proposed Law
Under the Administration’s proposal, a contractor receiving payments of $600 or more in a calendar year from a service recipient would be required to furnish the payer on Form W-9 the contractor’s certified TIN. The service recipient would be required to verify the contractor’s TIN with the IRS. If the contractor failed to furnish an accurate certified TIN, the service recipient would be required to withhold a flat-rate percentage of the gross payments. Contractors, in turn, receiving payments of $600 or more in a calendar year from a service recipient could require the service recipient to withhold a flat-rate percentage of their gross payments. The percentage, selected by the contractor, could be at a 15, 25, 30 or 35 percent rate.
The proposal would be effective for payments made to contractors after Dec. 31, 2011.
Insight
Estimated tax filing is potentially burdensome for some taxpayers, and by the time estimated or final tax payments are due, some contractors have not put aside the necessary funds. With the self-employment tax rate at 15.3 percent, a contractor’s required estimated tax payments can be more than 25 percent of the contractor’s gross receipts. An optional withholding method for contractors would reduce quarterly estimated tax payment burdens, automatically set aside funds for the contractor’s tax payments, and help increase compliance."(snip)
The important point here is that, in addition to forcing camgirls to apply for a Taxpayer ID # a.k.a. EIN ( which involves a legal citizenship / green card right to work cross-check ), if this proposed law is passed it could result in RETROACTIVE ( to the first of January 2012 ) US 'estimated' tax withholding by webcam hosts from future payments made to US camgirls. Given a 15.3% level of US 'self-employment' tax, plus additional US income taxes also generally being due, this would mean that a minimum 25% withholding percentage should be expected. And that withholding percentage would need to be even higher if, for example, the new law is passed in March, such that the payer must 'overwithhold' from camgirl payouts between April and December to 'make up for' zero withholding from camgirl payouts from January to March.
Also note that the IRS 'information return' requirement by the payer is required as long as the payee is a US taxpayer. There is no exception if the payer is an 'offshore' corporation. Thus if this law is passed, every US camgirl can count on receiving a 1099 for 2012 income regardless of which webcam host she uses.
Re: US Camgirls may want to take note of this ...
This would actually be a positive thing for me, would make it easier for me to keep track if I got a 1099 from them all, and I wouldn't mind if they withheld the money for me either since I have to pay anyway.
I just hope it doesn't mean that some of the overseas sites would drop me because of the aggravation of the paperwork.
Re: US Camgirls may want to take note of this ...
I already put aside 30% of my income for taxes, so this would not be a financial burden for me. However, there have been times when I have borrowed (and paid back the next week) money from my tax account. If they decide to withhold 30%, I would not have any of those funds available to me for emergencies. I often find that I have way more money available in my account than I will owe for my next payment, so I do not consider this irresponsible, and it's nice to know it's there.
Also, while the US government will be keeping track of all this, it does make me a little nervous that an offshore company/bank will be holding the funds that I will owe to the US government. It's one thing to rely on an offshore company to pay me what they owe me for my work. It's another thing to know that the money I owe for taxes is going to be tied-up in some unproved, newly-approved beaurocratic process.
But, in the end, I know that I can't do anything about it and I just have to plan accordingly.
Re: US Camgirls may want to take note of this ...
I actually would like them to hold money aside for taxes, it would make it easier just like an employee. But would that money go straight to federal I assume ^^so I wouldn't have to owe it later? That would be nice. I am curious having been a dancer if the law would affect stripclubs too?
Re: US Camgirls may want to take note of this ...
If you get an EIN, how would you go about updating that with the cam sites you are on? Do you think it would be difficult to get them to replace your SSN with your new EIN? I hope this would not require creating new accounts on these cam sites....?
Re: US Camgirls may want to take note of this ...
yea i agree...them holding my taxes will take out the guess work bc in the end i still have to report it.. let them do the work.
Re: US Camgirls may want to take note of this ...
^^^ but the problem may be that 'doing the work' regarding additional accounting, withholding, IRS reporting etc. doesn't happen for free. In the worst case, this could prompt 'offshore' webcam hosts to simply drop US camgirls to avoid this extra work / extra cost. In a more probable case, this could prompt 'offshore' webcam hosts to lower the payout percentage to US camgirls to cover their new accounting / legal / IRS compliance costs for US camgirls.
Re: US Camgirls may want to take note of this ...
Yeah I don't think this would be a bad thing either but what about people who get earned income credit for having children that don't have to pay in taxes and they actually receive money back? Would they still withhold they earnings too and would the government have to give them back at the first of the year?
Re: US Camgirls may want to take note of this ...
^^^ as proposed, the 25% ( or whatever ) withholding percentage is 'blind' ... unlike a US employer the 'payer' won't have any knowledge of the 'payee's' total income / tax deductions / dependents etc. As such, the 'payer' would be required to withhold the fixed percentage and the 'payee' would have to file a US tax return in order to have this money refunded the following year. And that assumes that the 'payer' actually forwards the withheld moneys to the IRS ... something which isn't specifically spelled out in the proposed law. It's also possible that the 'payer' will simply hold the money until they receive an OK from the IRS to 'release' it to the 'payee' ... which could add another month after a tax return is filed.
Re: US Camgirls may want to take note of this ...
My financial Advisory told me to hold 22% for taxes so far its been more than enough for me to pay my taxes
Re: US Camgirls may want to take note of this ...
Lets keep all this in mind come voting season, eh? ;)
Re: US Camgirls may want to take note of this ...
First off, a SSN or EIN is a legal TIN, so we wouldn't be required to file for EINs and update info. Second, "employers" or the main sites are required to filed and pay those "withheld" amounts quarterly. I don't see it being a huge cost for the companies as computer programs can handle the majority of the work load. Plus it would be nice that we don't have to file it all ourselves. The back dating could definitely put a damper on earning for a bit so it's of course important to make sure we have a cushion to fall back on.
Re: US Camgirls may want to take note of this ...
Quote:
First off, a SSN or EIN is a legal TIN, so we wouldn't be required to file for EINs and update info
True if you are a sole proprietor business AND a record already exists in the IRS database for verification by the webcam host. Under the proposed law, if the webcam host is unable to verify your info as being valid via the IRS database, they won't be able to legally pay you.
Quote:
Second, "employers" or the main sites are required to filed and pay those "withheld" amounts quarterly
True of 'employers' located within the USA. Not necessarily true for 'offshore' companies ... whether they are 'employers' or simply 'payers'. The new law does not address the issue of how 'offshore' companies are expected to handle this in any detail. And since the whole concept of 'offshore' companies having to make informational filings to the IRS, having to withhold money from payments to US citizens, etc. is a totally new development, there really isn't much 'precedent' to go by.
Re: US Camgirls may want to take note of this ...
So as long as you have a tax record of your own or have been claimed as a dependent then you are verifiable through the IRS from my understanding. I assumed the same rules of quarterly filing of with holding would apply no matter what the company was.
Thanks for the info though, that would be big news for all of us if they start doing this. I see it mainly as a positive so there are no surprise bills at the end of the year and so I don't have to think about it. Plus, since I do have dependents I would continue to get a tax refund as I always have.
Re: US Camgirls may want to take note of this ...
Re: US Camgirls may want to take note of this ...
Quote:
I see it mainly as a positive so there are no surprise bills at the end of the year and so I don't have to think about it.
That would be true ... IF the offshore webcam host companies agree to do all of this extra stuff for free !!! As I said earlier, one consequence for US camgirls could be the webcam host 'charging' an extra 5% - i.e. lowering the payout percentage to US camgirls from 35% to 30% ( or whatever ) - to cover these new costs. Another consequence could be that some offshore webcam host companies decide that they can earn just as much money if they 'fire' all US camgirls and avoid the new costs altogether.
Re: US Camgirls may want to take note of this ...
Yes, I could totally see them reducing percentages for US hosts. Honestly though, I would be willing to take a cut on a higher traffic site or a site without free chat if they would handle the accounting headache for me and do my tax withholding. It'd be way worth it for me.
Re: US Camgirls may want to take note of this ...
I dont get this at all.So if I am paid 35% for a site and then that site is going to take out 25% for taxes out of the 35% that I am making WOW that is not much to pay my bill at all
Re: US Camgirls may want to take note of this ...
Quote:
if I am paid 35% for a site and then that site is going to take out 25% for taxes out of the 35% that I am making WOW that is not much to pay my bill at all
In the final analysis, If you are a US camgirl with average earnings levels, you owe the IRS 25-30% in taxes anyhow.
The major difference would be that your webcam host would be required to withhold the 25% from your webcam 'paychecks' before you ever get your hands on the money. And the speculated additional difference could be that your 35% payout may be reduced to say 30% if you are a US camgirl, with the additional 5% being used by your webcam host to cover the new additional costs of bookkeeping, IRS reporting, managing the funds transfers on the withheld 'estimated tax' money transfers etc.
Re: US Camgirls may want to take note of this ...
Quote:
Originally Posted by
Melonie
In the final analysis, If you are a US camgirl with average earnings levels, you owe the IRS 25-30% in taxes anyhow.
The major difference would be that your webcam host would be required to withhold the 25% from your webcam 'paychecks' before you ever get your hands on the money. And the speculated additional difference could be that your 35% payout may be reduced to say 30% if you are a US camgirl, with the additional 5% being used by your webcam host to cover the new additional costs off bookkeeping, IRS reporting, managing the funds transfers on the withheld 'estimated tax' money transfers etc.
I rather do my taxes myself this sucks its like I will barely be making nothing ,I would just like to get a 1099 and call it a day hope this well not pass