Ive not kept up with earnings! What about taxes??
Ive been dancing since December 2005. I never really gave much thought to taxes and thouight I didnt have to file. Well we were talking about it at work last night,and some of us were lost!
How do I start? I didnt keep track of money made....now I WISH i had deposited my money every morning like my friend does,for that proof of income since we r not on payroll. Ive never done taxes, my dad always handled mine. Now that Im on my own, guess I gotta grow up! Anyways... am I in trouble?
Sorry if this was posted before. If it was go ahead and delete it.
Re: Ive not kept up with earnings! What about taxes??
you are actually very lucky since your earnings are basically only for 2006 and since it's your first year, you won't have penalties and interest for not paying your estimated taxes on time.
You are not in trouble. Just don't wait too long until you talk to a tax professional. You're going to need to cough up eastimated taxes for everything you made in 2006 by April 15th (as well as estimated taxes for the beginning of 2007, so it's a double whammy.)
Re: Ive not kept up with earnings! What about taxes??
I was told that if you have not kept track of the amount of money you made, you have to back at look at your expenses. How much is your rent? Car payment? Groceries? Eating Out? Etc. When you figure out what you spent or saved every month you can figure what you earn. It's like backtracking. It's kinda like the way the IRS would audit you. Your income has to support your lifestyle. And from every moment from now, keep track of every dollar and every reciept. Get someone good to do your taxes. I believe it's worth paying extra for someone who gets me as many tax breaks as possible. Plus the amount you spend on having someone do your taxes is deductible as well.
Re: Ive not kept up with earnings! What about taxes??
As Emily already pointed out, because 2006 was essentially the first year you have had an income, and because of the existance of a first year 'exemption' from paying estimated taxes, you're not in any trouble yet. You won't be in any trouble as long as you are able to afford paying taxes due on all of your 2006 income plus your first quarter 2007 income by April 15th 2007 when tax returns must be filed.
However, be aware that as a self-employed independent contractor you'll be required to pay both federal income tax and self-employment tax (which equals both the employers and employees share of Social Security and medicare tax, since you are your own employer so to speak). If you are a typical dancer earning say $200 a night = $1000 a week, the amount of taxes due next April 15th is likely to be in the ballpark of (20% federal + 15% SEtax) * $1000 * (52 + 13) = $22,700 ! If you haven't set any money aside for taxes so far, and given that there are about 30 weeks remaining between now and next April 15th, you'll need to set aside about $750 a week every week from here on out in order to cover the taxes due (basically making up for the $350 a week you should have been setting aside to cover taxes due every week since you started dancing). As painful as this might be, keep in mind that by living in Florida you are avoiding having to pay an additional 5%-10% state and local income tax that girls in states like California and New York are required to pay.
Re: Ive not kept up with earnings! What about taxes??
Playing catch up with taxes is a bitch. As soon as you catch up for last year then you need more money for current estimate taxes. But better get started on it now while you can.
And I made higher than Melonie's calculation and paid less in taxes than $22,700 so it might not be that much but it will still be a nice huge chunk to cough up. Last year I didn't have my total amount by the deadline so I went what I could and they sent me a bill for the rest with penalty and interest.