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Last edited by GrlWithTheMost; 04-05-2011 at 08:43 AM.





I believe the housewife test still applies to you. You should contact a local CPA though who can give you more specific information to your situation and maybe have them do your taxes for awhile so you can see what is deductible and what is not.
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Last edited by GrlWithTheMost; 04-05-2011 at 08:43 AM.





Yup the 'housewife test' definitely applies i.e. anything that a housewife would spend money on with no business reason to do so will be questioned by the IRS when claimed as a business expense tax deduction. This more or less disqualifies hair, nails, dep't store makeup etc. Some girls have claimed 50% of such expenses and gotten away with it.
As far as business 'investment' write-offs, you have the potential to capitalize your purchase of the webcam, a new laptop, software etc. AS LONG AS it is 100% used for business purposes. Usually, in order to make this deduction fly, you need to have a second computer for personal use. If in fact your webcamera and laptop meet the 100% criteria, then you can list them as capital items ( 3 year schedule I think ) and take a partial deduction over each of the next three years.
There is also the potential for a 'home office' business expense deduction if you have one room of your house that is set up for 100% use as a webcam studio. However if that room is also used for other purposes at other times, then attempting the deduction is extremely dicey.
Don't forget that if you are already doing webcam that the IRS and the Louisiana Dep't of Revenue will be expecting to receive estimated income tax payments from you on a quarterly basis. In fact, the second quarter estimated tax payment was due two days ago. The next one is due on September 15th. Based on wild guesswork, you'll definitely owe a 15% tax rate for Social Security / medicare tax ( a.k.a. self-employment tax) plus maybe 7% federal income tax plus maybe 3% LA state income tax for a total tax rate of perhaps 25%
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Last edited by Melonie; 06-17-2009 at 02:36 PM.



Thanks for the info!
Last edited by GrlWithTheMost; 04-05-2011 at 08:44 AM.





^^^ any income earned after June 1st is considered to be third quarter.
As your name isn't on any mortgage, lease or rental agreement, the home office deduction will be extremely difficult to attempt.
It sounds like you're in good shape for taking a depreciation deduction on your business only laptop and web camera.





Must be a very expensive laptop. Section 179 of the IRC allows you to expense tangible personal property in the aggregate of up to $250,000. Also, you can use the computer less than 100% for business and still expense the business portion as long as more than 50% during the year you put the property into service.
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.





Zofia is correct that you can elect to 'expense' the laptop and camera against first year earnings under section 179. The decision to expense 100% in the first year of a business versus capitalize and write off over several years boils down to judging the amount of future year income (thus tax bracket thus value of the write-offs) versus the amount of first year income (thus tax bracket thus value of the business expense tax deduction).





I believe there is still the Section 179 in which you can depreciate your 'capital' assets (dedicated computer/camera etc) in a single year - the year of purchase., There is a pretty high dollar limit on it (wow 250k$ ??), but I'm sure your costs are below that. Mel is right that maybe your net gain by taking the depreciation in future years may be better in your case if you could expect to earn a LOT more over that time. For this you need to project into the future and make some calculations.
You may be able to write off your internet service provider expense, or some portion of it, which can certainly mount up to real dollars.
Finally, you could sign a lease with your boyfriend for the office room to have a legitimate deduction. Call it a Suite.
Last edited by threlayer; 06-20-2009 at 09:34 AM.
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.





Certainly internet service is an ordinary and necessary business expense and thus is a deduction. However, the Commissioner may argue that a portion, or even all of it is personal depending on the bandwidth you pay for.
That looks like an ideal case for the application of the sham transaction doctrine.Finally, you could sign a lease with your boyfriend for the office room to have a legitimate deduction. Call it a Suite.
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.





^^ "...legitimate..." It can be done on the up and up.
Not a sham if you actually paid him rent specifically for the office(room), it were on a %sq.ft. basis plus utilities, and you got receipts. He'd have to declare it as income on his Sched E in case of an audit.
Or is it a sham because they sleep together?
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.





It is more because they live together than where they sleep. The Commissioner views people who live together as one economic unit, not two.
Look at it like this A agrees to pay rent to B for a room in the house that A & B share. At the end of the transaction, do A & B have any changed economic circumstances? No. Jointly they still have the same amount of money and same number of rooms. The IRS and more importantly the Tax Court and District Courts view this as a sham without economic consequences. When the courts apply the sham transaction doctrine, they disallow the deduction. "Home offices" of any type are considered suspect by the Commissioner. In the case of a cam girl, a "home office" is certainly a defensible deduction. But, the only way to get it is to follow the rules, to the letter. Leases not negotiated at an arm's length are not given any accord by the service or the courts.
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.





^ It is not without spatial conserquences either since that room would not be living space they share.
More importantly it is not without economic concequences. The fact that B pays taxes (Sch E) on A's rent on B's property (not jointly owned) and in this case A takes an expense deduction is not automatically inconsequential -- the consequence being the difference in marginal tax rates. Now only in the case that A and B were married and filing jointly, there would be no economic consequences. Finally if there were no office and rent, B would get no income and A would get no deduction.
Of course the rent wouold be based on prevailing office rents in that locale.
I don't know the actual practice that applies, but reading Publ 17 would lead one to believe that the simplist case I described is correct.
A theoretical way around this 'practice', <as it were> might be to for A lease more (non-deductible) rooms than the office from B, but that could run into a lot more income tax for B.
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.





If you claim a home office be prepared to defend it in an audit; home offices lead the list.
As for taxes I find Turbo Tax excellent; better then most professionals. Now this is not directed at you personally but I wonder if toys and such can be deducted. I hope you make enough money to worry about taxes.



...........???
Last edited by GrlWithTheMost; 04-05-2011 at 08:44 AM.





We need more information. Are you an employee or an independent contractor?
It's a credit. Here is the Commissioner's take on the child care tax credit: http://www.irs.gov/taxtopics/tc602.htmlI also saw ona post childcare is deductable???
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.



..........
Last edited by GrlWithTheMost; 04-05-2011 at 08:45 AM.





yes independent contractor = sole proprietor business, with revenues and business expenses reported on form 1040 Schedule C.
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