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Thread: Ahhhhhhh!!!! First Time EVER Filing Taxes.

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    Senior Member RicanAsianMa's Avatar
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    Default Ahhhhhhh!!!! First Time EVER Filing Taxes.

    I'm 23. And, this is the first year I will be claiming taxes for myself and my son. I've been dancing since I was 18 and my parents always claimed me as their dependent. Also, I wasn't dancing as much or making as much and I was a student.

    So, this is the year I'm going to be doing this on my own. Basically, so I can have proof of income and such for when I decide to buy a house and for financial aide. In chicago, you need to have filed income taxes to try to get financial aide for school. I'm going to be claiming my son as a dependent.

    My work doesn't take any taxes from us. I don't get an hourly wage. NO W2s. NOTHING AT ALL!!!!!

    __________________________________________________ ____________

    What do I need to do to get started? What forms do I need?

    I have a tax preparer, who also does my brothers taxes. I was told NOT to go to HR Block, Jackson Hewitt, commercial places. Is this okay?

    I also have some receipts for expenses. Like outfits, prescriptions, co-pays, and also car mileage to get me to work. Can I use these things?

    Also, my work gives us a yearly add up of our tip out. Is this considered an expense?

    And lastly, since I don't pay any types of taxes will this mean I will be paying instead of recieving? Even with a dependent? Can I claim his $400 tuition?

    Please, help out guys! This is so confusing to me!

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    God/dess Deogol's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    First thing first - do you know how much you made?

    You will want to get a note book or something (accounting journal) and for each night write down how much you made.

    Now - how to calculate that is another question. Some say it is what you pulled in and then you write off tip-outs, etc. Others say it is after tip-outs.

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Im not filing this year but will next year. When do i begin recording for taxes next year? I should have begun January 1st?
    Sorry..OP..just had to ask. Dont go to HRblock to do ur taxes ..i heard they are a mess dealing with *us*
    Good luck with the tax filing!

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    Senior Member RicanAsianMa's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Anyone else?

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    God/dess Zofia's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    The easy way is to get a the small business version of Quick Books. Record you take home each night. Each quarter you will have to file a tax return and make a payment. It's a lot of record keeping.

    HTH
    Z

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    Senior Member brandys's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    I will try to help awnser some basic questions, but advise you to research these matters yourself, because I am NOT a tax person of any kind.
    You can go to www.turbotax.com and use there program for free untill its time to file, go thru the program, and it will ask you questions, tell you what all info you will need, and give you a idea of what you owe to who. After that, take the infomation you have gathered from using that program, and go see a tax person. Ask for recommendations from friends, but i agree... do NOT go to a place like hrblock or jackson hewitt.

    Do you know how much money you made?
    Yes, your clothing expenses and such are deductable,
    Your med bills and co pays are not normally deductable unless there a LOT of money. Your insurance premiums usually are though. Check with your advisor.
    As for your milage, unless you travel for work, and not just to work [ as in driving 10 miles to your club every week is not deductable, but driving 100 miles to work in a club for a special occasion will be] type of thing, or if you do private parties at peoples home and such.
    Yes, you could end up owing taxes. Not only do you have to worry about federel and your self employemnt taxes, but you also have state and local taxes too.

    I'm guessing the average person usually pays in about 30% of there income to taxes , and I find this true for myself. I take 30% of my income every night, and put it up for this purpose. I also pay estamated quaterly taxes so that I am not charged more for paying them late. another thing your tax person can help you set up.

    And last but not least..... your tip outs ARE a valid expense. You can deduct them. Just remember, you can't say you tipped out 10k, but you only made 7k. But I am sure that won't be a problem, cause you are claiming all you made, right?

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    There is a basic IRS rule that says that is you earned money from someone they want to know who that someone was, if you paid money to someone they want to know who that someone was.

    This is how this effects deducting tipouts, The "legal way" to do it, at least as far as the IRS is concerned is to document the payments by issueing a 1099 to each person involved. It is not good enough to just add it all up into a simple single line item and say "tipouts" or some other name and says it's X thousand dollarsand not state who (VIA 1099) you paid it to, much in the same way that if you want to deduct alimony paid, which you can, you must state who you paid it to, including SSAN. Then they will go looking for that person to claim it.

    Not simply "alimony" X thousand dollars.

    Now the problem comes from this, to issue a 1099 to all those people you are tipping, you have to know there real name, first and last, also there SSAN, Is that the case? John the DJ Tim the bouncer, and Marie the waitress or whatever, is that there real name? Do you know there SSAN's? Because all these people most likely don't want to claim all or maybe any of that cash you and all the other girls have been paying them, they probably are not going to want to give you this information.

    If you try to do it any other way the IRS view is that what you were giving all these unnamed people were simply "gifts" "voluntary gifts" that you can't deduct.

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    just something to think about for money you claim, paying taxes, and buying a house.....
    the government will take about 30% of your money, and you will pay 2 times the amount of the house on a 30 year mortgage example:
    house sale price: 100,000
    amount you pay over 30 years: 200,000+/-
    PLUS 30% OF ALL THE MONEY YOU MAKE

    The government does not charge on the first 8,000
    How ridiculous? it's hard enough if you are living poor and making less than 20 a year etc....
    but they would still want about 3 G +/- in taxes from your total 20 claimed and/or made!
    claim 50? they will probably want about 12 G!!!

    This goes for independent contractors such as yourself, that are not taxed per pay check through the year.

    So basically you would have to set an additional 30% of your money aside every shift you work for taxes if you are claiming this way!
    ....and considering some of us are already tipping out about 50% of total money earned in a night to the house, taking an additional 30% off what you have left really makes you be like WTF!

    As far as a house and credit.....it use to be VERY easy to get a mortgage, and alternative mortgages, ie...no doc, low doc anywhere just a couple of years ago. Because it was so incredibily easy, they were given to way too many people who did not have the financial backings or income they claimed, so now it has taken a complete turn and is near impossible.
    BUT, if you are a hustler, and you are putting money away regularly in your savings, and have good credit, then they only need to see 3 months, some will need up to 6 months of steady "income verification" . No doc mortgages are for people who can not or wish to keep private information for tax records and/or income.
    In todays market there are a ton of other options like lease options, rent to own, subject to, forclosures, auctions, ....the list goes on.....

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    God/dess Zofia's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Quote Originally Posted by phonehome View Post
    There is a basic IRS rule that says that is you earned money from someone they want to know who that someone was, if you paid money to someone they want to know who that someone was.

    This is how this effects deducting tipouts, The "legal way" to do it, at least as far as the IRS is concerned is to document the payments by issueing a 1099 to each person involved. It is not good enough to just add it all up into a simple single line item and say "tipouts" or some other name and says it's X thousand dollarsand not state who (VIA 1099) you paid it to, much in the same way that if you want to deduct alimony paid, which you can, you must state who you paid it to, including SSAN. Then they will go looking for that person to claim it.

    Not simply "alimony" X thousand dollars.

    Now the problem comes from this, to issue a 1099 to all those people you are tipping, you have to know there real name, first and last, also there SSAN, Is that the case? John the DJ Tim the bouncer, and Marie the waitress or whatever, is that there real name? Do you know there SSAN's? Because all these people most likely don't want to claim all or maybe any of that cash you and all the other girls have been paying them, they probably are not going to want to give you this information.

    If you try to do it any other way the IRS view is that what you were giving all these unnamed people were simply "gifts" "voluntary gifts" that you can't deduct.
    The easier, and also legal way to handle tip-outs is not to include them in income. For example, your income is not the gross of your dances and tips for the night, but the net, that is what you left with. Thus, you report on your schedule C the amount you left the club with. Of course you don't get to deduct the tip-outs. But, they are not in your income either. Thus, on line 1 of your schedule C you put in the total of all your nights take home money. If you get a 1099 from any or all your clubs, the total must equal or exceed the total reported on all forms 1099. If you got a W-2, normally that amount goes on your form 1040 line 7. However, if your W-2 was checked "statutory employee" that amount must be included on schedule C line 1 and the box must be checked.

    I cannot over emphasize that all your stripper income and expenses that are not shown on your W-2 (if any) must appear on lines on your schedule C.

    HTH
    Z

    Disclosure under IRS Circular 230: To insure compliance with recently released Internal Revenue Rules, this communication was not written or intended to be relied on to avoid federal tax related penalties or for promoting, marketing or recommending to any party any tax related matters addressed herein.

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Zofia

    Your way:

    Is it easier? Yes

    Is it common among dancers and other people working in "cash businesses? Yes

    Strictley speaking "letter of the law" legal? If you ask the IRS, not so much.

    The way the IRS sees it you are underreporting your income and in effect taking a deduction you otherwise would not get.

    Now you are probably asking what is the big deal? Either you claim the full amount and deduction, then pay taxes on what remains or you just claim the net and pay taxes on it, either way the amount is the same and the taxes are the same.

    The difference is the IRS wants to have the taxes paid on all that cash you and all those other dancers pay that DJ or whatever. Either you make them claim it because you 1099nd them and they pay the taxes on it or you are going to pay it and the IRS will consider the money you gave them a "gift"

    To use my alimony example, you can say who you paid it to, you get the deduction and they claim the income and pay the taxes or you don't and you pay the taxes. If for some reason you were to earn enough cash to cover it, simply under reporting your income by the same amount is not an option.

    Another example would be that you get some 800CC non deductible housewife size boobs, they cost 6 grand. You under report your income by 6 grand and "take your deduction" would that in effect "work"? yes Is it "legal"? NO

    Also if everything is self reported, IE you don't get 1099nd by your club and you don't 1099 any of what are in effect "you independent contractors" it comes down to what the IRS is willing to beleive.

    I think to many people would try to minmize what they took in and maximize what they paid out and that would be the heart of the problem.

    The other end of the spectrum would be if you work at a funny money club and EVERYTHING is paid to you via credit card or funny money even tips as is the case from what I hear in some clubs in CA now where it is supposedley against the law to pay a dancer at least inside the club in cash. The result of that is that every dollar you make is documented via 1099 from the club and you can't just pretend you didn't make X amount so you are left with trying to 1099 those people that maybe you don't know there name and for sure there SSAN's or just calling it a "gift" or the cost of doing business, ya know like a bribe, the IRS says you can't deduct those either.

    It would be the same as if you owned a small business that got paid in mostly cash, lets say landscaping. You hire a lot of "day labor" the kind that speak spanish and don't have SSAN's you also buy a lot of incedentals, meals etc. and pay in cash, you don't get reciepts. IRS rules say that these "expenses" are not normally deductable so you just under report your income by that amount, might seem the easy quick way to do it, its just not legal

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    God/dess Zofia's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Quote Originally Posted by phonehome View Post
    Zofia

    Your way:

    Is it easier? Yes

    Is it common among dancers and other people working in "cash businesses? Yes

    Strictley speaking "letter of the law" legal? If you ask the IRS, not so much.
    The Supreme Court has held that the language of Section 61(a) encompasses all "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426, 431, 75 S.Ct. 473, 99 L.Ed. 483 (1955). In this situation, the dancer does not have complete dominion over her tip outs. Until you cite precedent to the contrary, you are unpersuasive.

    Z

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Z

    There are a few basic facts, you made the money to begin with, it at some point in time, however short was in your possesion and THEN you CHOSE to give it away to all those people, maybe "that's just how it is" and you feel or more accurateley are made to feel that you have no choice in the matter but in the end they are still called "tips" for a reason. In your contract as an IC written or otherwise are you REQUIRED to pay these people?

    The reality is that you are basically bribing or if you would rather call it paying people to do something for you that you think furthers your interest, as I said the IRS won't let you deduct bribes either.

    Answer me this:

    You work in that 100% 1099 club. What do you do now? The option of petending you didn't make the money is gone. There is an approved IRS method for IC's to document payments, cash or other wise, voluntary or required to anyone other than a non W-2 "employee" that is issue them a 1099.

    Yes it is a pain and the people in involved don't want to cooperate. The same could be said of clubs issuieing 1099's to dancers.

    As much as 10-15 years ago clubs with a few rare exception did not issue 1099's to dancers, up until then they like you just pretended that they didn't make the money. These days especailly among "corporate chain clubs" IE Deja Vu and Spearmint Rhino it is much more common. Why the change if your way was "perfectley legal"? Tthe answer is when faced with the evidence of X million per year going through there cash registers and no way to "document" payment of that money to anyone, dancers in this case the IRS ruled the owed taxes on the entire amount.

    Now I am sure that you will reply and say that here is no evidence that you made the money, that is not the point you are trying to say you never made it at all not just thaere is no evidence that you did.

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    Senior Member brandys's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    um.... actually... in my contract, it does specify tip out amounts. So therefor, it is a valid expense.
    I guess if you don't have it in your contract, you could ask for it to be included, that way you have documention of it in case of a aduit.
    Even in the event of a aduit, I find it very hard to believe that if you did tell them , say for example.....
    ''I made 20k and I payed out 4k in tips to the club for everydance I performed, then I had to pay 3 different djs, $500 apiece, and 3 different bouncers $400 apeice, so I only made $13,300 , and that is what I reported I made and that is what I payed taxes on...''
    ......That they would not believe you.
    I would recommend keeping detailed notes on what you pay to who. Or maybe write everyone a check at the end of everynight instead of paying cash, then you have a paper trail that if needed, the irs could locate who you paid and you would have proof.
    You could always invite them to the club for a drink and a lapdance to see how things work, right? LOL!!!

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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Z

    The reason I started this discussion at all was because you stated in your original post that doing it your way was "perfectley legal"

    My point in this pretty much from the start is that you can't just either one pretend you didn't make the money to begin with or simply make a one line entry "tipouts" for X grand a year to un-named individuals. You have to NAME who you paid this money to. By name and hopefully including the SSAN of who you paid it to. The way this is normally done in the context of an IC business arrangement is either if they are in fact your employee you issue them a W-2 in the case of other IC's which those dj's and bouncers are you do it with a 1099. Now if you know the info and can provide it to the IRS you will probably be OK even if you didn't actually do a 1099, but if you in fact know the info then there is no reason that you can't issue these people 1099's when you will do it you will also CC the IRS with the info in the same way that the club sends a copy of all the 1099's they issue to dancers to the IRS.

    The IRS wants to tax somebody for the money in question, they are either going to tax you or the person you gave it to.

    Will who ever resist giving you the required info? yes they will, they want to jeep getting all that tax free cash, just the same way that dancers for years avioded clubs that started doing 1099's for dancers. If you want to "fly under the radar" are there still clubs, most local, neighborhood hole in the wall, mom and pop type places that don't do it? Yes but there are less all the time and the bigger more upscale clubs, most corporate chain owned, where you have the most earning potential they do if you want to work there you give up the info.

    If they want your money they give you the info, how you verify it's correct I don't know, clubs do it for dancers though so I guess it is the same. Bottom line they don't give you the info you don't give them the money.

    Give them the money while you don't know this info, well the IRS will call it a "gift'

    Paying them by check actually isn't a bad idea!

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    Banned Melonie's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    again I wasn't intending to jump in this often, but ... the matter of handling tipouts for tax purposes is major.

    According to my accountant, Zofia's interpretation will work perfectly well providing that the DJ, bouncers, house mom etc. who are receiving tipout money are in fact employees of the club (or that the tipout payments are made to the club, who in turn hands the money over to the DJ, bouncer, house mom etc.). In that case, 'netting out' of nightly income (i.e. recording total income minus tipouts as net income for the night) is acceptable since all of these transactions are occurring in regard to the SAME business entity. Put another way, from an official IRS standpoint there are only two business entities involved, the club and the independent contractor dancer.

    However, if the DJ, bouncers, house mom etc. are not employees of the club, are in fact independent contractors just like the dancers, and are paid directly by the dancer(s), then a situation develops where there are three or four or five different 'businesses' involved with tipout transactions. In this case, by the letter of the law (and assuming that total annual tipouts to each person exceed the $600 IRS reporting threshold), in order for a dancer to legally claim tipouts it is necessary that the dancer ISSUE 1099 forms to the DJ, bouncers, house mom etc. which reports the tipout payment(s). At that point, the IRS is informed that the dancer's 'business' has incurred a business expense, and also that the DJ, house mom, bouncers etc. 'business' has received income. In the absence of such 1099's, arguably the IRS is going to interpret tipout payments by a dancer to a DJ or bouncer or house mom that is NOT employed by the club as a voluntary gift on the part of the dancer (which is NOT a legitimate business expense tax deduction). But issuing 1099's requires that the dancer knows the real name, real address, social security number (or other tax number) etc. of each person receiving tipouts ...

    ~
    Last edited by Melonie; 02-13-2009 at 09:39 AM.

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    God/dess Zofia's Avatar
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    Default Re: Ahhhhhhh!!!! First Time EVER Filing Taxes.

    Quote Originally Posted by phonehome View Post
    Now I am sure that you will reply and say that here is no evidence that you made the money, that is not the point you are trying to say you never made it at all not just thaere is no evidence that you did.
    Cite a Rev.Rule, Rev.Pro, case or statute that says I am wrong. Until you do, you are unpersuasive.

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