Should I put aside 30% of my earnings each shift?
Hi all! Tax questions: I’ve read that independent contractors, in any field, should always put aside 30% of what they earn in a separate savings account designated specifically for taxes. 1. Is this what most of you do, put aside 30% for taxes? Or a higher or lower percentage? 2. How do you go about putting away your chosen percentage? Do you do it each time you deposit money once a week for example, or do you set aside 30 of what you made on each shift? Would really appreciate answers on this as I am confused! Xo
Re: Should I put aside 30% of my earnings each shift?
Yes! That’s a pretty conservative estimate. Just put it in a business savings account. Also,
You should pay quarterly taxes your 2nd year- it all goes toward your tax bill. You should get a CPA, but for now saving 30% is safe.
Re: Should I put aside 30% of my earnings each shift?
Thanks so much for replying! Do you take 30% aside of what you make each shift that night, or wait until you deposit your money weekly and do it then? I’m trying to figure out a system. I keep getting tripped up because when I count my money after a shift (after tip outs) I’m like, ok, I made $400, but then I’m like “so did I REALLY make $400, or is my net take home 400 minus 30%?” I’m getting so confused lol!
Re: Should I put aside 30% of my earnings each shift?
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Originally Posted by
guineapigmama
Thanks so much for replying! Do you take 30% aside of what you make each shift that night, or wait until you deposit your money weekly and do it then? I’m trying to figure out a system. I keep getting tripped up because when I count my money after a shift (after tip outs) I’m like, ok, I made $400, but then I’m like “so did I REALLY make $400, or is my net take home 400 minus 30%?” I’m getting so confused lol!
Get a good CPA. How are you getting paid ? In cash ? Is anyone filing a 1099 on you ? Are you on the books or an independent contractor. Most dancers are the latter. What is your annual total take looking like ? The higher it is the more you should sock away. I get the Triple Whammy of Federal, New York State AND New York City income taxes so I sock away 50% of my Subchapter S distributions. Most of the time it is weekly except for those weeks when it is a "wash" and I don't take a distribution. My CPA has explained it to me like 5 times and I'm still unsure of exactly how it works. I just write a check to myself for the number that he tells me. I also get a salary that has withholding. Get a good CPA.
What do your expenses look like ? Remember the "housewife rule". Generally things like makeup , hair, the gym etc. are NOT deductible. Costumes are. I don't know how tips to the House Mom , DJ and bouncers are handled. Get a good CPA. Commuting to work is not deductible BUT as an independent contractor you MIGHT be able to get away with deducting at least some travel expenses. Get a good CPA.
Re: Should I put aside 30% of my earnings each shift?
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Originally Posted by
Eric Stoner
...What do your expenses look like ? Remember the "housewife rule". Generally things like makeup , hair, the gym etc. are NOT deductible. Costumes are. I don't know how tips to the House Mom , DJ and bouncers are handled. Get a good CPA. Commuting to work is not deductible BUT as an independent contractor you MIGHT be able to get away with deducting at least some travel expenses. Get a good CPA.
Tipouts are difficult to deduct and account for. However, there is case law that says tipouts are deductible. That said, you have to generate a 1099 for all those paid. Which makes the whole process of using the existing case law difficult. Instead, I record as income whatever I leave the club with after all the tipouts and fees. I deposited nightly, not weekly. That makes it very sure that my record of deposits is my contemporaneous record of income. That way, I don't have to worry about sending out 1099s and deducting tipouts. They are already gone before I record the income.
Eric's advice of getting a good CPA is excellent.
HTH
Z
PS, saving 30% for taxes is usually a good idea. Filing your quarterly returns is a good idea too.
Re: Should I put aside 30% of my earnings each shift?
Quote:
Originally Posted by
guineapigmama
Thanks so much for replying! Do you take 30% aside of what you make each shift that night, or wait until you deposit your money weekly and do it then?
I do nightly deposits into my business checking. Weekly would be the most I would wait. Using your business checking account for business income is the best way to have a contemporaneous record of income for the IRS>
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I’m trying to figure out a system. I keep getting tripped up because when I count my money after a shift (after tip outs)
That's the way to do it.
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I’m like, ok, I made $400, but then I’m like “so did I REALLY make $400, or is my net take home 400 minus 30%?” I’m getting so confused lol!
Don't over think this. You made $400, but, you owe taxes on it still. Your final tax bill will be determined by filling out your 1040 and Schedule C. But, by holding money to pay your taxes, you will be prepared. That's all.
HTH
Z
Re: Should I put aside 30% of my earnings each shift?
Thank y’all for the replies it’s so helpful!!
Re: Should I put aside 30% of my earnings each shift?
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Originally Posted by
Zofia
Don't over think this. You made $400, but, you owe taxes on it still. Your final tax bill will be determined by filling out your 1040 and Schedule C. But, by holding money to pay your taxes, you will be prepared. That's all.
HTH
Z
Piggybacking
You can deduct a lot. You really should find a cpa OP. 30% will you from stressing when taxes are due. Anything left over will make a nice nest egg. Camming is easier for taxes since I get a 1099. I order everything from Amazon, so I can easily find my expenses at the end of the year. I don’t deduct beauty stuff (hair, make up, nails). I’ve heard you can, but I don’t want to fight the irs. Definitely stripper shoes and stripper outfits you get from the stripper store are safe to write off. That’s why you need a cpa OP. Tax write offs are your friend! A CPA can help you decide
What to write off.
Re: Should I put aside 30% of my earnings each shift?
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Originally Posted by
moneybags
Piggybacking
You can deduct a lot. You really should find a cpa OP. 30% will you from stressing when taxes are due. Anything left over will make a nice nest egg. Camming is easier for taxes since I get a 1099. I order everything from Amazon, so I can easily find my expenses at the end of the year.
I pay all my business expenses from the business account. I have a debit card just for that account so I can use it for online expenses or even in person. Makes it easier to do the accounting at the end of the year, too.
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I don’t deduct beauty stuff (hair, make up, nails). I’ve heard you can, but I don’t want to fight the irs.
Theatrical makeup is deductible, anything else is not. Like moneybags, I just never wanted a fight even though there are online and even a few bricks and morter theatrical supply stores.
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Definitely stripper shoes and stripper outfits you get from the stripper store are safe to write off. That’s why you need a cpa OP. Tax write offs are your friend! A CPA can help you decide
What to write off.
Agreed. A huge boob job is even deductible. Hess v. C.I.R., 1994 U.S. Tax Ct., Lexis 88. The problem with Hess is, to win at the Tax Ct., she had to her boobs up to size 56FFF. I definitely wouldn't do that just for a write off.
HTH
Z