I am wondering if house fees are deductible. We are given receipts every night with the amount we paid in house fees, and I consider them a business expense - just wondering if we would get to deduct those?
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I am wondering if house fees are deductible. We are given receipts every night with the amount we paid in house fees, and I consider them a business expense - just wondering if we would get to deduct those?
House fees are deductible on Schedule C. But you have to report income and pay self employment taxes in addition to income taxes.
House fees are considered Rent and are deducted on the front of Sched. C as expense if you file as an independant contractor. If you file as an employee you can still deduct House fees/Rent as an itemized expense required by your employer on the long form. 1040A (but not 1040EZ). This is an item that is seldom challenged in an audit.
This is an item that is seldom challenged in an audit.
Does this mean we can deduct house fees even if we are not given receipts?
Jasmine
House fees are a legit expense (Money that is NOT available for you to spend) and can be deducted in some manner but it depends on the form you use when you file.
If you do NOT recieve a receipt for your house fees and tipouts then that money was never available to you so your actual reportable income is total cash recieved less house fees/tipouts. This is the same concept that applies to a waitress who splits tips. It doesn't matter who actually recieves the money in the club. (One waitress may recieve 90% of the tip money and only leave with 10% of it). Your actual income is what you walk out the door with.
If you file as a business (Schedule C) then "legally" you must claim all income and then deduct expenses from that. House fees are considered as Rent on Sched. C. Tipouts are considered as sublet labor. The IRS views both catagories as legit business expense and accepts them on a percentage basis when documentation is not available.
If you file on 1040 and DO recieve receipts for house fees and/or tipouts, they are an expense required by your employer and are deductable.
If you file on1040EZ and DO recieve receipts .......... OK...you shouldn't be using 1040EZ ;) but, alot of dancers seem to do it this way and I've seen the results of audits on this basis. If you paid the money out to someone else as an expense of earning your own income then it is income to THEM, not you, and the IRS does not double tax in this situation.
Aren't Taxes Fun?
If you don't have receipts you should have a written basis from which you caculatec how much you paid in house fees (i.e. number of days you worked per week times number of weeks you worked times the daily house fee). This can be very confusing if you work at a Deja Vu-club where house fees can include fines/penalties. These are also deductable.
These fees are seldom challenged but it's a catch-22 in not having your receipts. If you're under reporting income and use a calculation for how much you paid in stage fees then under reporting income is easily catchable. Dividing income by days worked may reveal that you're reporting you made $50 a day (for example) and may cause the IRS to do a lifestyle audit where they'll easily prove you've made much more.
The moral of the story deductions with receipts are gold anything else should be done in caution.