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Thread: Aaahhhh taxes!

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    Default Aaahhhh taxes!

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    Last edited by Brendita; 10-07-2008 at 11:54 PM.

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    Default Re: Aaahhhh taxes!

    i think the best person to ask about taxes is Melonie.
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    Banned Melonie's Avatar
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    Default Re: Aaahhhh taxes!

    this is the version of TurboTax that independent contractor dancers need ...



    If you are considered to be an 'employee' dancer, you can get by with a least expensive version of TurboTax which only does W2 'employee' income. BTW you CANNOT deduct a whole bunch of things that independent contractor dancers can if your club treats dancers as 'employees' and issues W2's. Basically, you're limited to 'employee' business expense deductions like costumes and shoes !

    Also, there is a Catch 22 situation with many clubs that treat dancers as 'employees' in regard to reporting tip income. Basically, IRS code says that tipped 'employees' must report their tips to their employer on a weekly basis, so that the tip income can be run through the club's payroll system with taxes withheld etc. However, many clubs do not allow 'employee' dancers to report anywhere near the full amount of their tip income, since a higher reported dancer income equals higher costs for the club in terms of mandatory 'employee' workmens comp, unemployment insurance etc.

    Dancers who work at clubs that treat them as 'employees' often attempt to report their (previously unreported 'employee') tip income from that club as 'independent contractor' income on their tax return. This is technically not legal, but as long as the dancer has several sources of 'independent contractor' income i.e. working at several different clubs it usually escapes IRS attention. However, if you have no actual 'independent contractor' earnings from other clubs, and if you attempt to 'invent' independent contractor earnings in order to declare your tip earnings at an 'employee' dancer club without having reported those tip earnings to that club in the first place, this could potentially trigger an audit (as well as a potential tax fraud charge, since technically you would be reporting income from a ficticious business activity).

    On the other hand, if you attempt to report an amount of 'employee' tip earnings that does not agree with the club's reported W2 amount of your 'employee' tip earnings, this can trigger an audit as well. You'll probably survive this audit fine, but your club could wind up with BIG tax problems with the IRS as well as BIG problems with state workmen's comp and unemployment as well as BIG problems with Social Security due to underreporting of total 'employee' incomes (which reduces the cost to the club of buying workmen's comp and unemployment insurance coverage for 'employee' dancers, which reduces the cost to the club of paying the 'employer's' share of Social Security and medicare taxes on behalf of 'employee' dancers etc.).

    So from a pragmatic standpoint, 'employee' dancers are damned if they do and damned if they don't in regard to reporting tip income that was not previously reported to the club and run through the club's payroll system. And ultimately if and when the s#!t hits the fan with the IRS, the club will plead ignorance i.e. 'the dancer only told me she earned X amount in tip income for this week and that week and the next week', so I made my Social Security payments, workmen's comp and unemployment payments etc based on what the dancers told me'. If and when that conversation between the club's accountant and an IRS auditor happens, it will then be the 'employee' dancers who are at fault for failure to correctly report their tip income to the club on a weekly basis.

    Ironically, the safest course of action in this circumstance (but only in terms of avoiding IRS audits) is for the 'employee' dancer to report exactly the same base pay and tipped income that is shown on the club's W2 . However, this is not legal, since it leaves the 'employee' dancer in the position of being guilty of underreporting her tip income. The next safest course of action is for the 'employee' dancer to report her additional tip income (that was not reported to the club) as if it were the proceeds from an independent contractor business. However, this is not legal either, since as an 'employee' dancer there is not and cannot be any independent contractor business activity. The least safe course of action is for the 'employee' dancer to report her additional tip income (that was not reported to the club) as employee tip income. While this is more or less legal from an IRS standpoint, it WILL raise IRS eyebrows towards both the 'employee' dancer and towards the club if the amount of additional tip income being reported by the dancer is more than 20% of the total amount of W2 income reported by the club.

    !
    Last edited by Melonie; 01-27-2008 at 12:00 AM.

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    Default Re: Aaahhhh taxes!

    wow, thanks Melonie! I am glad I asked first!
    Hmm, so basically I should only file for whatever it says on my W-2? That kind of sucks because I don't think i will be able to buy a house in a few years that way!

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    Banned Melonie's Avatar
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    Default Re: Aaahhhh taxes!

    ^^^ The only thing that I can advise you in this regard is that from a standpoint of personal IRS trouble it is better to have reported the full amount of your tip income and pay taxes on the full amount of your tip income versus only reporting and paying taxes on the same amount of W2 income that your club chose to report that you earned. If the IRS were to raise eyebrows, at least they wouldn't be able to slap you with 'wilful tax avoidance'. However, be aware that when you do report the full amount of your tip income, it is likely that IRS attention will be drawn to your club, and also likely that IRS attention will be drawn to any other dancers who filed tax returns based on W2's issued by your club who chose not to report tip income over and above the club listed on their W2's.

    The real fault here lies with the 'employee' club's decision to only allow dancers to report a small percentage of their actual weekly tip incomes so that the club can (illegally) minimize their own costs for 'employer's' share of Social Security tax on behalf of the 'employee' dancers, minimize their own costs for workmen's comp and unemployment insurance premiums on behalf of the 'employee' dancers etc. Because of IRS cross-checking, the only way that the 'employee' club can be completely assured of getting away with this underreporting of dancer incomes and underpayment of taxes and insurance premiums is if the club and ALL of the club's 'employee' dancers basically swear to the same 'lie'. As soon as one dancer decides to 'tell the truth' on her individual tax return, all of a sudden IRS computers start waving yellow flags that the 'employer' and 'employee' income numbers don't match, IRS computers start waving yellow flags that some 'employees' of the same club are reporting large amounts of additional tip income while other 'employees' of the same club didn't report ANY additional tip income etc.

    By the letter of the law, you were supposed to report the full amount of your 'employee' tip income to your club on a weekly basis. However since the club wouldn't allow you to do this, you're definitely far closer to being 100% legal if you report the additional tip income on your personal tax return by one means or another than if you swear to the club's W2 'lie'. Also as you point out, where future lenders and creditworthiness is concerned, your income as reported to the IRS is the only income that will be considered when it comes time to fill out loan applications.

    As to whether or not your 'telling the truth' will create IRS problems for your club, or will create IRS problems for other dancers working at your club, is another matter that really won't affect you directly - other than the possibility of nasty IRS / Social Security / workmen's comp + unemployment insurance judgements against your club causing it to go out of business !

    When I was doing a lot of dancing on the road, my accountant absolutely forbid me from ever working at a club that treated dancers as 'employees'. I didn't really understand why my accountant was so dead set against this at the time, but I sure do now. Basically, unless the 'employee' dancer club will allow the 'employee' dancers to actually abide by the law and report the total amount of their tip earnings to the club on a weekly basis (which essentially none of the 'employee' clubs will do because it costs them so much more additional money for Social Security, workmen's comp, unemployment insurance etc.), the club is placing 'employee' dancers in a position of either not being 100% legal on their own income taxes or being in the position of 'ratting out' the club and fellow dancers in regard to THEIR taxes.

    ~
    Last edited by Melonie; 01-27-2008 at 01:13 AM.

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    Default WOW!

    Okay, so I work at a DC club where I am an employee. No one has EVER mentioned reporting tips, at all, ever. On my little weekly paycheck, for every night I worked the club reports $26.40 in tip money. I'm obviously earning more than that, and I make regular bank deposits, keeping my income around $24k for the year. Should I go talk to my club and find out if they will report my tip income thru their payroll? I would think they won't do it purely because it would be more worked, and the managers are already overworked/incompetent with what they have on their plates. So what should I do to protect my ass?

    Also, 'employee' business deductions? How do I do those? I've got all my receipts for everything remotely related to stripping (clothes, shoes, hair, makeup, body). I was told that I can only deduct the tax I paid on those items? And that it's not worth it, because you'd have to itemize everything, and it's night impossible to pay more taxes than the standard deduction?

    Thanks for the help!

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    Default Re: Aaahhhh taxes!

    Since we're on the subject:

    My boyfriend said the HR lady at his work showed him a website that had to do with Bush's 'tax refund' or rebate or whatever. Something about $800 to singles and twice as much to families or married couples.
    I haven't seen anything about this in the news other than briefly on Glenn Beck (and I'm sad to say I missed everything he said because Girls Next Door was on E!). Is there an official site that has information about this thing, or is it only found in news articles? I'm trying to understand exactly what this is. Does it come on top of your IRS refund check, is it separate? Does everyone 'low' income get it? Where is there good information on this?

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    God/dess doc-catfish's Avatar
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    Default Re: Aaahhhh taxes!

    Quote Originally Posted by PrettyCurlieQ View Post
    Since we're on the subject:

    My boyfriend said the HR lady at his work showed him a website that had to do with Bush's 'tax refund' or rebate or whatever. Something about $800 to singles and twice as much to families or married couples.
    I haven't seen anything about this in the news other than briefly on Glenn Beck (and I'm sad to say I missed everything he said because Girls Next Door was on E!). Is there an official site that has information about this thing, or is it only found in news articles? I'm trying to understand exactly what this is. Does it come on top of your IRS refund check, is it separate? Does everyone 'low' income get it? Where is there good information on this?
    If approved, the "stimulus" rebates (up to $600 for singles, $1200 for couples + $300 for each child, $300/600 for low income people) are supposed to come in the form of a check sometime around May. They are separate from people's tax return check. Many people received a similar check back in 2001.

    http://www.suntimes.com/business/762...012708.article
    Former SCJ now in rehab.

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    Default Re: Aaahhhh taxes!

    Thanks doc!

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    Default Re: Aaahhhh taxes!

    re the upcoming 'tax bates' ... notice I didn't say rebates since the gov't is planning to send checks to people who didn't actually pay income taxes ... nothing is final yet. It is supposed to be up for a vote in the US senate tomorrow, but there is some risk that the bill will be derailed because the senate proposes to add expensive unrelated items like increased subsidies for the home heating bills of 'poor' Americans. Latest proposals have talked about a $600 check for singles, or a $1200 check for married couples, providing they earn less than $75k a year (which will leave out most full time dancers who accurately report their incomes).

    As to allowable 'employee' business expense tax deductions, the IRS puts out a fairly short and specific list. Where 'employee' dancers are concerned, the list limits them to costumes and shoes - based on IRS criteria set down to cover other types of employees like nurses and waitstaff. Such non-specific other expenses such as hair, makeup, tanning etc. will NOT fly as 'employee' business expense deductions.

    As to attempting to get your 'employee' club to report a more realistic amount than $26.40 per night in tip income, while you are in the 'right' from a legal standpoint you would also be playing with dynamite. Keep in mind that for every dollar of additional dancer tip income that the club reports, the club will also have to pay 7 cents in Social Security plus 3 cents in workmen's comp plus 2 cents in unemployment insurance premiums out of their own pocket. Also keep in mind that one of the major tools of the IRS to sniff out tax funny business is the use of their computers to find instances that don't match a pattern. Thus if the club were to report $100 or more per night in tip income for one dancer, while still reporting $26.40 per night for all the other dancers, this is likely to stick out like a proverbial sore thumb. So in essence if your club were to report a more realistic amount of tip income for you, in order to avoid triggering IRS suspicion it would also have to report a more realistic amount of tip income for all the other dancers. And of course this would also mean that the club would have to pay out the 7 cents plus 3 cents plus 2 cents for every dollar of additional reported tip income for the other dancers out of the club's own pocket as well.

    Put another way, requesting that your 'employee' club accurately report your tip income is the same as asking your clubowner to reduce his own income by $50k-$100k per year ! Some clubowners don't react very well to such requests, even though the person making the request may be 'in the right' from a legal standpoint. Thus 'employee' dancers working for such clubowners are stuck between a rock and a hard place.

    ~
    Last edited by Melonie; 01-28-2008 at 09:06 PM.

  11. #11
    PhillyDancer1982
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    Default Re: Aaahhhh taxes!

    Quote Originally Posted by Brendita View Post
    Ok, I am completely confused about my taxes and I don't want to go to H&R Block or Jackson Hewitt because I have heard that they are incompetant and expensive. I would do it myself, but i have no idea what I am doing. I worked at a hotel for half of 2007 and at my SC for the other half. We are employees there and get paid 3 something an hour so I did get a W-2 for both jobs. I want to claim all of my tips, and also use my nose job and a bunch of other things as deductions, but I dont know how to do any of this! Can somebody direct me to a reliable tax person in Denver who isn't charging an arm and a leg? Or if I do turbo tax, will I be able to do that on there?
    I agree that H&R Block and Jackson Hewitt are expensive and incompetent. I went to H&R Block around the Philly area in spring 2003, was told that I woulda had to PAY taxes if I'd made $200 more than my $5200 gross annual income even though I was a full-time college student, and then got charged a whopping $105 when my parents' accountant coulda done it for $35.

    Because you are a dancer, personally I prefer actual accountants to do taxes...not the reps that get paid $7.50/hr at H&R Block. The "real" accountants know a lot about all the deductions you can take, which can add up to a lot and thus save you a lot of money on your taxes! A good accountant will be a little expensive -- mine was $100 in 2006, and $80 in 2007 -- but they are worth it. I was told this by other dancers and I had good experiences with this. Besides, the $100 and $80 I paid to two very good accountants was still less than the $105 I stupidly spelled out to H&R Block.

  12. #12
    PhillyDancer1982
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    Default Re: Aaahhhh taxes!

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    Last edited by PhillyDancer1982; 02-10-2008 at 10:35 AM. Reason: accidentally posted the same thing twice

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