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Thread: Yet another income tax question... is this legit?

  1. #1
    TheSexKitten
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    Default Yet another income tax question... is this legit?

    Since I'll be needing to get my first year of dancing taxes out of the way, I've been asking around for a good accountant. Several of the girls in my club use this on guy who is an accountant who specifically works with self-employed people. Great! Or not... Here's some of the things these girls have told me that he encourages:

    -Deduct gas mileage to/from home club every night worked
    -Deduct makeup, phone, waxing, breasts (I remember the housewife test), hair treatments, etc
    -Deposit enough to cover bills + 30% in bank account, enough for 3 months, all the rest is to be kept in cash
    -blah blah blah

    One of the girls who gave me the scoop on this guy said that her income is around the 125,000/year mark, and the first year she danced she put all her money into her account and owed $7,000 in taxes. Apparently this year she took out her deductions and stuff and owed $940.

    Obvy I would prefer NOT to spend like $3000 on my taxes but I will do it if it sounds like this accountant knows what he's doing. Honestly though? It sounds pretty shady. Any opinions? Should I deal with this guy or find someone else?

  2. #2
    Banned Katrine's Avatar
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    Default Re: Yet another income tax question... is this legit?

    The housewife test isn't an IRS rule/law, but a guideline. You aren't supposed to deduct the mileage either, but that's also subject to debate as you are still a contractor.

    His advice for cash management/savings is crappy, but accountants's aren't financial planners.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  3. #3
    TheSexKitten
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    Default Re: Yet another income tax question... is this legit?

    But for the most part, you'd say that the deductions sound ok? I haven't saved many receipts because I was under the impression that I would only be able to deduct licensing fees, costumes, stripper shoes, or hella humongo implants and stuff.

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    Banned Katrine's Avatar
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    Default Re: Yet another income tax question... is this legit?

    If you havn't saved receipts, you are going to need bank statements so you can backfill and approved mileage tracker. The IRS WILL require a proper mileage log if they audit.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  5. #5
    TheSexKitten
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    Default Re: Yet another income tax question... is this legit?

    Oh I have no intention of deducting anything I haven't had the foresight to save the receipt for!! Way too complicated. However, for this next year/term/whatever should I really be saving my receipts for makeup and hair cuts and razors and keeping a mileage log? Basically, can I actually deduct these things (is the accountant correct) or would I run the risk of getting audited (the accountant is wrong)?

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    Banned Melonie's Avatar
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    Default Re: Yet another income tax question... is this legit?

    the IRS 'housewife test' guideline is definitely gray on the area of makeup, hair, waxing etc. because housewives do purchase all of these things with no business purpose ... and you yourself would purchase some or all of them if you weren't dancing. On the other hand, these things are 'ordinary and necessary' things that dancers are expected to do. The issue basically boils down to a conflict in IRS guidelines, meaning that if you are audited the judgement of the auditor will play a pivotal role.

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    Default Re: Yet another income tax question... is this legit?

    the irs can kiss my ass

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    Banned Melonie's Avatar
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    Default Re: Yet another income tax question... is this legit?

    ^^^ yes but the IRS can also shove something rather painful up that same ass !

  9. #9
    TheSexKitten
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    Default Re: Yet another income tax question... is this legit?

    Quote Originally Posted by Melonie View Post
    the IRS 'housewife test' guideline is definitely gray on the area of makeup, hair, waxing etc. because housewives do purchase all of these things with no business purpose ... and you yourself would purchase some or all of them if you weren't dancing. On the other hand, these things are 'ordinary and necessary' things that dancers are expected to do. The issue basically boils down to a conflict in IRS guidelines, meaning that if you are audited the judgement of the auditor will play a pivotal role.
    Soooo... can I trust that guy when he tells me to deduct makeup/gas/hair cuts or not?

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    Banned Melonie's Avatar
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    Default Re: Yet another income tax question... is this legit?

    ^^^ well can you trust him to admit he recommended these things if and when he goes with you to your IRS audit ? Will he go with you to your IRS audit ?

    bottom line here is that some deductions attract more IRS scrutiny than others. One of the deductions that the IRS appears to have a 'bug up their ass' about is business mileage. The IRS rules are pretty clear about what sort of business mileage is deductible, and it does NOT include driving from home to a regular place of business and back. From what I have heard from a couple of independent contractors that were recently audited, the IRS auditor wanted to see overnight hotel bill receipts in order to allow corresponding business mileage deductions.

    Where makeup and hair are concerned, they both fail the 'housewife test' but both are covered under 'ordinary and necessary' business expenses for dancers. I'm not making a recommendation here, but from a personal standpoint I only claimed 50% of such expenses as a business expense tax deduction, leaving the potential IRS auditor to concede that the other unclaimed 50% were for personal benefit thus prompting him to drop potential arguments over the 50% that I did claim.

  11. #11
    TheSexKitten
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    Default Re: Yet another income tax question... is this legit?

    Thanks!! That really helped. I think I'll try to find a more conservative accountant.

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    God/dess britneyireland's Avatar
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    Default Re: Yet another income tax question... is this legit?

    Page 84 of March 2008 SmartMoney Magazine.
    The article is entitled "10 Things your Tax Preparer Won't tell You."
    #9 Tax Preparation is an art, not a science"

    Get the magazine, read the article, then decide how conservative you want to be.
    Rebecca Avalon







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    Default Re: Yet another income tax question... is this legit?

    ^^^ agreed with Britney that where independent contractor business persons are concerned, decisions regarding which deductions you choose to take are indeed more of an art than a science. If you don't list the deduction in the first place, you're going to pay more taxes. But if you go overboard listing deductions, you may wind up being audited and paying WAY more taxes.

    I'm a little flustered over this myself since two basic issues have changed this year in regard to dancers and taxes. The first is the fact that the US congress appropriated extra money for the IRS, with the express purpose of beefing up a new division that is being specifically targeted towards adult businesses (and the IRS considers 'stripping' to be part of the Adult industry). The second is that lots of states that have their own income tax (and tax enforcement agency) are in deep budget trouble ... and the first place that state tax people usually start looking in an attempt to 'shake down' more money is taxpayers involved in 'cash businesses' (and of course 'stripping' is a cash business for the most part).

    A few years ago there was a fairly good body of 'evidence' as to what types of deductions, and what dollar level of deductions, were likely to draw unwanted attention versus what was likely to fly under the radar. However, with these two new wrinkles re tax enforcement don't necessarily have to follow any previous track record. We'll probably have a much better idea a year from now of course, but the way that better idea will be formed is through audits and additional tax bills that will occur later this year !

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    Veteran Member Robertjordan's Avatar
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    Default Re: Yet another income tax question... is this legit?

    The mileage deduction cannot be taken for you normal business commute (going to and from work). It's meant for when you drive to places other than your normal business commute. I think it would be difficult to argue that your mileage should be deductible if you work at the same club. If you work at various clubs around town and even out of town, then I could see you deducting mileage. Or if you have a main club you work at, that mileage shouldn't be deducted, but when you go to other clubs on occasion, or PP's or whatever, that mileage should.

    As for all the personal expenses you're going to be wading into a grey area. I could see that going either way. If you are comfortable with your deductions and able to articulate them to someone who could potentially audit you, go for it. Some people push the envelope and I think that's fine, if they know what they're doing and willing to accept the consequences if they get dinged.

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    Banned Katrine's Avatar
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    Default Re: Yet another income tax question... is this legit?

    Here's the cardinal rule to know for the "art" of accounting. The IRS is the De Medici family and can fucking destroy the "artist" if they deem the "art" unappealing. I hope that analogy wasn't too dorkus-y.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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