Re:What do I keep track of?
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Anyways...there are some dancers that report making $30,000 in a year...and I KNOW they are making much, much, much more than that (like about $90,000). They have an expensive car...high rent and lots of high end clothing, etc. They live WAY above their means if they are making $30,000. Even if they pay in cash...you KNOW that they are making way more than that.
It is exactly these girls who are at risk should some random IRS computer check or should a club investigation bring their names up. Once the IRS has been given a reason to ask questions, it will literally be a matter of hours before the IRS is looking at bank statements, credit card statements, stockbroker statements, car titles etc. If the "outgo" doesn't have a chance in hell of being explained by the declared "income", financial pain will soon follow.
Once upon a time, it was necessary for the IRS to prove the existance of undeclared income in order to slam a taxpayer for under-reporting, because the only technology available to them to gather info on the spending side of the equation was an army of human accountants and investigators. The army of accountants and investigators was so expensive that it was only used on major high profile targets like Al Capone. But with today's technology, the IRS can perform a pretty thorough spending side investigation with a few faxes and e-mails to financial institutions, state government agencies etc. This of course means the IRS no longer needs to directly prove the existance of undeclared income, but can indirectly prove its existance by the imbalance between declared income and actual expenditure records.