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Thread: Newbie!!! Tax Question! ( college student 'emancipation' issues )

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    Post Newbie!!! Tax Question! ( college student 'emancipation' issues )

    Hey! I posted this in the newbie board but then got anxious and decided to move it to the tax board, but I couldn't figure out how. Sorry for the double post. Eek!

    I have a tax question. I read the taxes for dancers thread, but it did not make sense to me. Could anyone dumb it down a little for me?

    This is my situation: I would really like to give stripping a try a) for the money as I am barely able to pay my bills now and I'm working two part time jobs and b) as a personal challenge to myself. I really want to do this. I think it would be fun and challenging.

    I have one problem though. My parents are extremely conservative and close-minded. I am a dependent on their taxes. They pay for my college (I am extremely thankful), but nothing else. They are also very controlling and I am having a difficult time gaining my own independence. I know I can simply claim myself independent whenever I want, but I have NO money right now and am extremely terrified. I would like to strip and built a nest egg so that I can claim myself as independent and feel comfortable doing so and not have to take out extremely high interest student loans. My parents have an accountant who does their taxes and I recently found out he has been doing mine too since I am a dependent of my parents. My father always closely looks over what the accountant does before he turns them in.

    So, my question is: can I have my cake and eat it too? Can I dance and my parents won't find out via my tax form? What do dancers taxes look like? I read that most clubs have you fill out a W-9. I tried to research what that means and am a little confused. Will my taxes say "stripper at Such-And-Such Club"?

    I hope I do not sound too ignorant. I am trying to transition into a fully functioning adult and become independent, but I do not know very much about taxes.

    If this matters, I am 21 and live bymyself. I have been on my own for nearly three years now and I am ready to take full control of my life. No more being puppet-ed by my parents.

    I am thankful in advance to any help and advice you can give me! Thanks!

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    Default Re: Newbie!!! Tax Question!

    ^^^ in most cases, working as an exotic dancer will result in a W2 ( automatic report of earnings for an 'employee' dancer ) or 1099-misc ( automatic report of earnings for an 'independent contractor' dancer ) form being sent out by your club to the IRS. As someone else's dependent, the existance of a W2 or 1099 income report to the IRS cannot be 'kept secret' from the person who is claiming you as a dependent. In fact, based on specifics like the proportion of 'living expenses' provided by the person claiming the dependent versus the dependent themselves, the dependent status could very well be questioned by the IRS. This would probably result in an audit of both parties !

    Additionally, the existance of a W2 or 1099 income report to the IRS will definitely be shared with gov't student grant / loan agencies. The existance of this extra dependent income must be added in to the 'total household income' included on student grant / loan applications filled out by the parents. And if this extra dependent income significantly increases 'total household income' it may reduce or eliminate student grant amounts.

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    Default Re: Newbie!!! Tax Question!

    If you are ready to start taking matters into your own hands and live by yourself, then I see no reason your parents should be claiming you as their dependent anyway. If you waited to start dancing until January 1st then your first quarterly estimated tax payment would be due April 15th. January isn't that far off if you can wait about 2 weeks!

    That way you would be able to work for a solid three months, like the rest of the dancers do, and make your 1st quarterly estimated payment with three months worth of pay under your belt. By that time you should be able to start getting into your niche and making money more consistently, so you might not feel as strapped for cash.

    Assuming you are using a calendar year system for your taxes (see my tax cheat sheet for further explanation) then your tax return forms (federal 1040 and your state's 1040) wouldn't be due until April 15th of the following year. You must pay your Q4 taxes by January 15th of the next year (3 months before your returns are due) in order to be able to file your returns April 15th.

    What this means for you is that your parents will never actually see a tax return until over a year after you start dancing (if you started in or after January) so by that point things may very well be different. If I was you I would start claiming yourself and call it a day. Do your own taxes or hire your own accountant (can be written off as a business expense) to keep your parent's noses out of your business. You may wind up having to take a reduction in student grants, but if you are making enough money to pay for your schooling and support yourself then there is no reason to use them in my opinion.

    Some dancers will actually deduct their tax return (which they calculate) from their Q1 payment of the following year (i.e. deducting your $2,000 return from calendar year 2010 from your 2011 Q1 payment) but that is totally up to you.

    In regards to a W-2 and form 1099-misc, (to add to Melonie's statement) not all clubs will send these forms out. You should ask the club before you begin working and keeping records because if you do not have a line entry on your Form 1040 Schedule C for your April 15th return explaining any 1099-misc amounts dollar for dollar then the IRS can count this as additional taxable income. (See my tax cheat sheet for more info). I don't know much about the W-2's being sent out by clubs because I haven't really touched on them with Melonie, but I sure will now.

    My tax cheat sheet:

    If you are willing to do for one year what other's won't, you can spend a lifetime doing what other's cant.


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    Default Re: Newbie!!! Tax Question!

    I would also add that, as a full time college student, becoming 'emancipated' from being a dependent of your parents is not that simple. In general, for a full time student to become 'emancipated' ... thus free to file their own tax returns and student grant applications without involving their parents ... one of the following usually needs to be the case

    - age 24/25 ( varies by state )
    - married
    - a (former) member of the US military
    - a family court order establishing emancipated status ( varies by state )
    - a full year of independent living ( college housing does not count ), with financial documentation proving that the student has earned and paid more than 50% of their total living costs ( with tuition cost included in the total )

    I have known a couple of girls who had major problems with the 'emancipation' issue. Even though their parents knew that they were dancers, the girls were A. getting killed by the high tax rate applying to their dancing income ( because they could not claim themselves thus received no standard deduction or exemptions ), and B. getting killed by their dancing income reducing / eliminating their eligibility for student grant money ( which is based on the total of the parents' PLUS the student dancer's income). Both ultimately decided to take a year off from college in order to successfully establish their 'emancipation' ... and then returned to school.

    ~
    Last edited by Melonie; 12-15-2009 at 04:01 AM.

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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    -------
    Last edited by Athenathefabulous; 02-26-2011 at 09:21 AM.
    The best thing i have heard in a strip club to date:
    customer: we should get married right now! we should get a shotgun marriage!
    me: uhh... i think you are misunderstanding what a shotgun marriage means. A shotgun marriage means you knock me up and my daddy shows up at your door with a gun and forces you to marry me and raise the baby. You mean elope.
    customer: hmm... nah actually i will take the shotgun marriage. At least then we would be having sex.


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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    They are dependents and probably wont get audited, and if the club doesnt collect their social security info then Im pretty sure the IRS will never know (Melonie would know better than me on this though).
    Obviously such a wilful failure to report dancing income isn't legal. However, undoubtedly there are some college student dancers who attempt it. But the kicker these days is the possibility of their club issuing a W2 or 1099-misc form automatically reporting ( some portion of ) their dancing income to the IRS ... and indirectly to gov't grant and loan agencies. If a college student dancer were to attempt to simply not report her dancing income, and if a W2 or 1099-misc form should show up next February, then ...

    - the IRS is likely to audit the dancer, with an eye toward 'estimation' of her dancing income ( which could be a significantly larger amount than she actually earned ) and collection of unpaid income taxes ( with penalties and interest ) on that undeclared income

    - the IRS is also likely to audit the dancer's parents, with an eye towards denying then the student daughter's dependent status. If this were to happen, it could result in thousands of dollars of additional taxes being leveed on the parents' income ... even though the parents' income was fully reported

    - Sallie Mae / Pell / whatever student loan or grant agency is going to apply the IRS income 'estimate' for the college student dancer toward the 'family' income amounts claimed on the grant / loan forms filled out by the parents. If this increase in total 'family' income makes the student ineligible for grants / loans that have already been paid out, the parents will get a bill for immediate repayment of such grants / loans ... with the possibility of fraud charges and/or punitive fines in addition to immediate repayment demands.

    In other words, because of the 'family' connection involving both dependent status and student loans / grants, dancers who choose not to report dancing income are exposing not only themselves but also their parents to significant financial and LE risk.

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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    I was afraid something like this would be the case. After I read Melonie's first reply, I researched dependent vs. independent and found out exactly what she later explained... that I would actually have to emancipate myself. That really does not seem to be an easy route.

    Athenathefabulous, thank you, you brought up another good point. I do go to a private 4 year university. If I did emancipate myself, I would need about $26,000 to $30,000 after scholarships for just my senior year tuition. As a newbie, I can't imagine making that much very quickly or in my area (south FL). (Trust me, I have no illusions of being a pro right off the bat!)

    I wouldn't want to risk dancing under the table simply because I would not want to put my parents in a difficult situation or possibly cause them to be audited. They own their own business and are super stressed 100% of the time already.

    It looks like stripping is not an easy option at this point in my life. Makes me sad, but I'm glad I have all this extra knowledge. My parents are very manipulative, but if I managed 21 years, I think I can handle one and a half more!

    So, I have another question now: first, I graduate (hopefully) May of 2011. At this point in time, how does my dependent vs. independent status work? Since I wouldn't be 24 and wouldn't yet have paperwork to show I have supported myself for a year, am I still declared dependent? Would I then have to still emancipate myself after college? Could I strip after college or would I have to wait a year and prove I can support myself? Also, if I were to take a year off school, I would have to work and go through the emancipation process still, correct?

    (I don't think I would have the paperwork to prove I have supported myself because I live in college housing, my parents won't let me move off-campus, and I pay my "rent" to them when I can and they pay the housing fee in my tuition bill).

    Thank you all for helping me!

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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    i think that once you are out of school you are good to go, your status as a dependent just is extended if you are a student... otherwise i think it might end at 19? I think thats how most insurance companies seem to do it at least.

    After you are done with school, you can still be claimed a dependent if your parents provide half or more of your income. Some sources say that you have to live at home for at least half the yr, but i am not sure if this is actually true or not.




    yea you arent going to want to try to tackle dancing and paying for a college like that at the same time. itll be miserable. Why dont you try getting a normal job that your parents wont object to? If you really want to be in the entertainment industry, maybe be a go-go/platform dancer if there is a place in your city that hires them. Around here there is one, the owners daughter tried to convince me to do it-- it was like 12 an hr which isnt bad for a college student. You wont develop hustling skills, but it sounded like fun to me! And good excersise! And since its not stripping your parents would probably be cool with it.
    The best thing i have heard in a strip club to date:
    customer: we should get married right now! we should get a shotgun marriage!
    me: uhh... i think you are misunderstanding what a shotgun marriage means. A shotgun marriage means you knock me up and my daddy shows up at your door with a gun and forces you to marry me and raise the baby. You mean elope.
    customer: hmm... nah actually i will take the shotgun marriage. At least then we would be having sex.


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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    I work two normal part time jobs, but the pay is minimum wage and the hours are not very flexible and don't work out with my class schedule very well. So I end up either super tight or short each month when it comes time to pay my bills. I like the go go dancer idea. I need to look into that. I've also been considering getting a job as a waitress. What do you think about being a cocktail waitress in a strip club?

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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    --------
    Last edited by Athenathefabulous; 02-26-2011 at 09:21 AM.
    The best thing i have heard in a strip club to date:
    customer: we should get married right now! we should get a shotgun marriage!
    me: uhh... i think you are misunderstanding what a shotgun marriage means. A shotgun marriage means you knock me up and my daddy shows up at your door with a gun and forces you to marry me and raise the baby. You mean elope.
    customer: hmm... nah actually i will take the shotgun marriage. At least then we would be having sex.


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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    I like these ideas! I think I could cocktail waitress. Honestly, I wouldn't tell my parents. I would let them find out through taxes (in a year) and then say something along the lines of "Well, it was much better money than my other jobs and I wasn't stripping". Then it would be too late to do anything about it and I'd be nearly done with school. Plus, it would ease them into the strip club idea. I've done many things (piercings and dating wise) that I don't tell them until they find out and they slowly get over it. My mother is sorta a bully and very controlling. It's honestly much healthier for me to not tell her the truth about a lot of things.

    I'm sorry to ask so many questions, but do you know if I need any prior knowledge or a certificate or anything to cocktail waitress? I am currently searching the internet, but if anyone has any hand's on experience, I'd like to hear about it.

    I suppose this can be my new plan until I graduate. Possibly it could make for a smoother transition into dancing too if I still have as strong a desire to do so after college as I do now.

    I will look into Hooters as well and any waitress job really. The Hooters suggestion is definitely a good idea and I never would have thought of it! Thank you so much for all this help! I'm thankful I've had someone to ask these questions and bounce ideas off of.

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    Default Re: Newbie!!! Tax Question!

    Quote Originally Posted by Melonie View Post
    I would also add that, as a full time college student, becoming 'emancipated' from being a dependent of your parents is not that simple. In general, for a full time student to become 'emancipated' ... thus free to file their own tax returns and student grant applications without involving their parents ... one of the following usually needs to be the case

    - age 24/25 ( varies by state )
    - married
    - a (former) member of the US military
    - a family court order establishing emancipated status ( varies by state )
    - a full year of independent living ( college housing does not count ), with financial documentation proving that the student has earned and paid more than 50% of their total living costs ( with tuition cost included in the total )

    I have known a couple of girls who had major problems with the 'emancipation' issue. Even though their parents knew that they were dancers, the girls were A. getting killed by the high tax rate applying to their dancing income ( because they could not claim themselves thus received no standard deduction or exemptions ), and B. getting killed by their dancing income reducing / eliminating their eligibility for student grant money ( which is based on the total of the parents' PLUS the student dancer's income). Both ultimately decided to take a year off from college in order to successfully establish their 'emancipation' ... and then returned to school.

    ~
    This caught my eye.

    Are you saying that for me to move out of my mom's house and claim myself on my 2011 return (from working in Q4 of the calendar year 2010) I would have to prove that I lived independently for a year and paid at least 50% of my living expenses? Even if I wasn't applying for grants or a full time student?

    I was going to claim me on this year's return and make it her last because I'll be moved out by the time next year's returns are due and I'll have my son. I don't want her claiming me AND him as a dependent.

    We may have to start a new thread.
    If you are willing to do for one year what other's won't, you can spend a lifetime doing what other's cant.


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    Default Re: Newbie!!! Tax Question! ( college student 'emancipation' issues )

    ^^^ without going into too much detail, the idea of not being 'emancipated' revolves around the supposed fact that a college student dependent does not maintain a separate 'domicile' ( campus housing does not count ) as well as the supposed fact that the college student's parents are still providing more than 50% of the student's total financial needs ( including college tuition $ ).

    You'll have to check your own state laws, but if you were to maintain your own 'domicile' for more than 6 months of 2010 ... and if your own 2010 reported income is sufficient to cover more than 50% of your total 2010 expenses ( including 2010 tuition payments, rent, food, utilities, car payment etc.) ... then there should be no question that you are 'emancipated' when tax return time rolls around in 2011.

    For most students who graduate from college in May and start a job in June, this 'emancipation' sort of happens automatically since they will be working full time and paying rent for the remaining 7 months of the year.

    Also keep in mind that 'emancipation' has some additional wrinkles ... like an 'emancipated' child typically losing eligibility for health insurance coverage under the parent's employer's group health insurance plan. Fortunately, most employers don't 'update' their coverage records more often than annually, meaning that if a student had dependent coverage under the parent's employer for their final spring semester that such coverage will probably continue through the end of the year. But this is not always the case i.e. the employer's insurance carrier has the legal right to end dependent coverage as soon as the student becomes 'emancipated' i.e. is no longer a dependent.


    I will look into Hooters as well and any waitress job really. The Hooters suggestion is definitely a good idea and I never would have thought of it! Thank you so much for all this help! I'm thankful I've had someone to ask these questions and bounce ideas off of.
    yup, working at Hooters sounds like a win / win situation in regard to both the 'straight' job world as well as future exotic dancing

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