Results 1 to 18 of 18

Thread: feel dumb but need help

  1. #1
    Senior Member sbeezy305's Avatar
    Joined
    Feb 2010
    Location
    MIAMI/JERSEY/BOSTON/CHICAGO
    Posts
    84
    Thanks
    6
    Thanked 39 Times in 18 Posts

    Default feel dumb but need help

    Hi-
    So I have a question. I escort and get paid in cash, I do some webcamming but my problem is, how do I report/prove my income so I can pay taxes/have proof of income for renting/loans/buying a car? Do I need to keep a budget/ledger of all the money I make? Do I need to file myself as an LLC or self employed? I shouldve done this a long time ago, but I can't just keep just making cash and having bills in my name, sooner or later I'm gonna get in big trouble and I would feel much better if there was a way I could report my income, please help me, thank you.

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    The 'official' answer is that you are already considered to be a self-employed sole proprietor business. As such ...

    - you should be keeping a 'business ledger' that lists your individual payments received (from whatever source ) on one side of the page, and your business related expenditures on the other side of the page. This can be done via a program like QuickBooks, via a self generated spreadsheet, or via something as simple as a paper ledger. However, if and when you are audited by the IRS, the degree of 'professionalism' displayed in your book-keeping can become a factor in convincing the IRS that your business records are accurate ( versus self-serving fictional bulls$!t that the IRS could claim vastly understates your actual income level ).

    - since you appear to operate in several different states, you should also subtotal your income receipts and business expenses by state. The reason for this is that some of the states you list in your siggy levee a state income tax on earnings derived from business activities in that state.

    - you should then be making quarterly estimated tax payments to the IRS and to the states which levee an income tax based on the expected percentage of tax that is likely to apply. At minimum, the IRS expects to receive 15.3% of your net business income ( total income receipts less business expenses ) as Social Security / medicare tax. The IRS and the various states also expect an additional percentage as income tax which is based on your level of total annual income. The most recent payment was due on June 15th for net business income earned between April 1st and June 1st. The next payment will be due on September 15th for net business income earned between June 1st and September 1st. The federal estimated tax filing, and the various state estimated tax filings, will all be different amounts and need to be paid via separate vouchers and separate checks sent in to separate locations.

    - Next February you will receive 1099-misc forms from your web host(s) that show the total amount of money they paid out to you in 2010. After receiving these 1099-misc forms, you will then need to complete a federal income tax return plus individual state income tax returns for each state you conduct business in that levees its own income tax - these are all due by next April 15th. The amount of actual total taxes owed that will be calculated via these tax returns must then be compared to the total of quarterly estimated tax payments you have already sent in during 2010, and you will either wind up paying additional money or receiving a refund depending on the actual accuracy of your estimated tax payments. These tax returns can be prepared via a program such as TurboTax for Home and Business, or obviously by an accountant. While it is possible to prepare a federal plus multiple state tax returns manually ( I had no choice but to do this in the 'old days' ) keeping track of the individual state income amounts and tax credits due in your home state for taxes paid to different states is a huge pain in the a$$.

    - once you have filed your federal tax return, you then have a copy of that tax return which serves as legal 'proof of income' that will be accepted by prospective lenders.

    The option of whether you want to leave your business organized as the current 'sole proprietor' business, or form your business into an LLC, S Corp, or C Corp, involves a bunch of trade-offs. The more complex the business structure, the more difficult it is to 'support' in terms of accounting and other business paperwork. However, in general, the more complex the business structure, the more likely it is to legally pay less taxes ! Also, with any business structure other than the 'sole proprietor', that business structure protects your personal assets from potential loss from future claims which might be made against your business.

    However, between the changing tax laws / tax rates due to go into effect in 2011, and the potential variables in your own business situation involving business activities in multiple states, I must defer to a 'professional accountant' in regard to recommending the best business structure option.

    ~
    Last edited by Melonie; 06-17-2010 at 10:06 PM.

  3. #3
    Featured Member pixierocksonthepole's Avatar
    Joined
    Sep 2008
    Location
    mmhmm
    Posts
    1,798
    Thanks
    1,862
    Thanked 377 Times in 218 Posts
    Blog Entries
    13
    My Mood
    Flirty

    Default Re: feel dumb but need help

    Melonie...you need your own forum lol. You are so helpful its ridiculous but I love it.





  4. #4
    Senior Member Lillionaire's Avatar
    Joined
    Jun 2010
    Location
    MD
    Posts
    166
    Thanks
    63
    Thanked 43 Times in 22 Posts

    Default Re: feel dumb but need help

    Quote Originally Posted by pixierocksonthepole View Post
    Melonie...you need your own forum lol. You are so helpful its ridiculous but I love it.
    seriously...

    www.melonieweb.com

    or

    the "Melonie Den" forum

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    ^^^ thanks, but no chance of that. I'm already 'skating on thin ice' in terms of an 'amateur' giving financial advice here in Dollar Den. Starting my own 'dedicated' website would greatly increase the possibility of potential lawsuits against me for giving out 'bad' advice !

  6. #6
    Featured Member pixierocksonthepole's Avatar
    Joined
    Sep 2008
    Location
    mmhmm
    Posts
    1,798
    Thanks
    1,862
    Thanked 377 Times in 218 Posts
    Blog Entries
    13
    My Mood
    Flirty

    Default Re: feel dumb but need help

    You could always do what it takes to be able to give out good advice legally ^_^ Or you could make a website with a disclaimer on it!!

    But either way, we majorly appreciate it here.





  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    You could always do what it takes to be able to give out good advice legally
    Yes I could but I would never be able to recoup the necessary investment of time and tuition money. Plus I'm supposed to be 'officially retired' !!!

    Or you could make a website with a disclaimer on it!!
    legally worthless, unfortunately !

    But either way, we majorly appreciate it here
    thanks for the vote of confidence. However, a large number of Dollar Den posters would appear to disagree !

  8. #8
    God/dess shasta's Avatar
    Joined
    Sep 2005
    Posts
    2,175
    Thanks
    778
    Thanked 658 Times in 317 Posts
    My Mood
    Breezy

    Default Re: feel dumb but need help

    Ask around for an accountant in your area who specializes in sole proprietor stuff. Maybe ask an escort that has her shit together that you really respect. I asked the one dancer in my first club who really had her shit together for the name of her accountant. It was a great move! I own a house now and have a 4.3% interest rate!!

  9. #9
    Moderator Miss_McKenna's Avatar
    Joined
    Nov 2007
    Posts
    1,892
    Thanks
    82
    Thanked 825 Times in 437 Posts

    Default Re: feel dumb but need help

    I was wondering how an escort would report her income, being that escorting is illegal? Or would it be the case of, escorting itself is not illegal? Or would the person just put down something like "entertainer"? I'm just curious... I know personally I didn't want to put down "dancer" and so I wondered what an escort would write.


  10. #10
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    ^^^ the IRS actually doesn't care ... all they want is your tax money. They figure that if you are in jail you aren't earning money and paying taxes !

  11. #11
    Featured Member wanderlust08's Avatar
    Joined
    Apr 2008
    Posts
    761
    Thanks
    24
    Thanked 248 Times in 136 Posts

    Default Re: feel dumb but need help

    Quote Originally Posted by Miss_McKenna View Post
    I was wondering how an escort would report her income, being that escorting is illegal? Or would it be the case of, escorting itself is not illegal? Or would the person just put down something like "entertainer"? I'm just curious... I know personally I didn't want to put down "dancer" and so I wondered what an escort would write.
    Escorting itself is not illegal (provided you have a business license or work for an agency who does), but escorting is just being paid for time and companionship. All those things that everyone knows goes on during the appointment, however, are illegal.

  12. #12
    Senior Member sbeezy305's Avatar
    Joined
    Feb 2010
    Location
    MIAMI/JERSEY/BOSTON/CHICAGO
    Posts
    84
    Thanks
    6
    Thanked 39 Times in 18 Posts

    Default Re: feel dumb but need help

    yes, wanderlust is right, escorting is not illegal, but prostitution is. i know of a situation of someone who sells illegal substances reports their income and on whatever form their business is 'selling miscallaneous items', also you could put entertainer, therapist, private dancer, body rub specialist etc. etc

  13. #13
    Senior Member sbeezy305's Avatar
    Joined
    Feb 2010
    Location
    MIAMI/JERSEY/BOSTON/CHICAGO
    Posts
    84
    Thanks
    6
    Thanked 39 Times in 18 Posts

    Default Re: feel dumb but need help

    okay, so when I pay taxes on my earnings that are in cash, in a very basic sense, all i have to do is find out when the quarterly tax deadlines fall, pay in my taxes, and then what? I'm trying to find an apartment in October, so when theyre like "where do you work" and I'm like "I get paid in cash, I just paid my taxes in September" I will have a 'reciept' or something similar from the IRS showing I say I have paid taxes on a cash income? LOL sorry, i know I really need to go into an accountant but I just want to have this shit out of my head, and on paper

  14. #14
    God/dess shasta's Avatar
    Joined
    Sep 2005
    Posts
    2,175
    Thanks
    778
    Thanked 658 Times in 317 Posts
    My Mood
    Breezy

    Default Re: feel dumb but need help

    A good accountant is expensive and you pay them so that you don't have to give yourself a headache. They will take care of you, I promise!
    If you were in AZ I would send you to mine!

  15. #15
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    I'm trying to find an apartment in October, so when theyre like "where do you work" and I'm like "I get paid in cash, I just paid my taxes in September" I will have a 'reciept' or something similar from the IRS showing I say I have paid taxes on a cash income?
    Actually, the best answer is 'I'm a self-employed business owner'. And yes you will have a copy of your IRS September 15th estimated tax 'voucher' to show to the prospective landlord. But in the grand scheme of things, these vouchers are not anywhere near as authoritative as an IRS annual tax return ... which you won't have available until at least next February.

    Also, keep in mind that making the September 15th estimated tax payment in an amount that the landlord will consider sufficient to 'qualify' you as credit worthy might be a challenge. Let's say that the landlord's criteria is something on the order of $50,000 in annual earnings. This would correspond to $12,500 in earnings during the June-Sep quarter. Given a 15.3% social security / medicare tax rate, plus say a 10% effective federal income tax rate, plus perhaps a 3% effective state income tax rate, you're probably looking at paying out 28% of $12,500 or $3,500 in September 15th estimated tax payments - and continuing to make ~$3,500 quarterly estimated tax payments in the future.

  16. #16
    God/dess 4everresolutions's Avatar
    Joined
    Nov 2009
    Location
    Great White North
    Posts
    3,605
    Thanks
    2,475
    Thanked 2,620 Times in 1,383 Posts
    My Mood
    Chatty

    Default Re: feel dumb but need help

    Small threadjack - Melonie, where can I find a Canadian version of all this info you posted? All of the Dollar Den stuff you post is super helpful, but geared towards American's. I've tried Google, but can't find any helpful sites on explaining how to file taxes in Canada as an IC (if that's even what it's called here in Canada). Do you have any links to websites that would explain things in plain English to a newb? I REALLY want to be able to prove my income so I can sign on my own apartment soon....
    Last edited by 4everresolutions; 06-19-2010 at 01:36 PM.



  17. #17
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: feel dumb but need help

    ^^^ actually there is a ton of info out there regarding Canadian non-incorporated business tax return filings ... see . There is also a FAQ section at

  18. #18
    Featured Member Laurisa's Avatar
    Joined
    Sep 2009
    Location
    Doesn't Matter
    Posts
    1,969
    Thanks
    649
    Thanked 1,823 Times in 587 Posts
    My Mood
    Confused

    Default Re: feel dumb but need help

    I just want to point out that you should be careful with what you label your business as on your IRS forms.

    If you put something too far from what you actually did it will be difficult to highlight your positive traits for future employment opportunities. If you say you are a window painter but are actually an escort (sex aside) then it'll be difficult to say you have good sales and customer relations skills.

    What you list your business nature as will also affect what deductions you are eligible for. If you say you are a therapist (which could cause issues with providing valid licensing...therapists need to be licensed) you won't be able to deduct certain things like travel expenses for touring, regular physical maintenance, etc. Business deductions are subject to 'the housewife test' as Melonie has pointed out before...which means that trying to deduct lipstick and eyeliner could be problematic if you are audited because these are 'normal' purchases for women. You need to keep meticulous records and keep every receipt.

    If you want to be super legal you'll also have to issue a 1099-misc (for your employees) to your driver or personal assistant provided you pay them more than $700 annually. This will require them disclosing their real SSN, name, DOB, etc etc. If you are trusting someone to know the nature of your work and protect you/screen clients for you (assuming you'd be going indy) then you should find people that are trustworthy enough to issue you this information. This will further protect you in the event of an audit. This scenario is true of dancers who tip out DJs, waiters, doormen, etc, although you'd be damn lucky to get any one of those employees to disclose that information to you and pay taxes on your tips.

    If you work for an agency I'm assuming you are an independent contractor as well... doesn't seem right that they'd make you an employee. I've seen some agencies advertise legitimate employment letters and check stubs from third party companies though, so this may not be the case. You should check into that.

    However, you also have to keep in mind that future employers can perform a background check on you. If you claim that you are an escort, professional body-rubber, stripper, professional companion, or something too closely associated with sex work then you may find yourself being denied for potential employment opportunities. I'd suggest listing your business as some sort of an entertainment business. If you list yourself as an entertainer then your acceptable business deductions are open for interpretation (which could cause potential issue during an audit but is less likely) and is easily explainable during job interviews..."I provided private Violin performances", for example.

    If you're going to pay taxes on money that stems from an illegal business just be careful and don't make a wrong move. For instance, when you are convicted of money laundering the focus of the investigation is whether or not you were attempting to conceal the origin of the money. It's not as much of their concern where the money came from as it is that you had the intent to conceal it. Earning money from selling something illegally is a separate offense and is grounds for the money being seized.

    I agree with Melonie overall, though, the IRS doesn't care where the money came from as long as they get their money!
    If you are willing to do for one year what other's won't, you can spend a lifetime doing what other's cant.


Similar Threads

  1. ok we have dumb dancers...what about dumb custies...
    By cameronfl in forum Stripping (was Stripping General)
    Replies: 26
    Last Post: 08-30-2015, 01:45 PM
  2. I feel dumb
    By Alianne in forum The Lounge
    Replies: 2
    Last Post: 08-30-2007, 12:04 PM
  3. I feel really dumb asking this...
    By cinammonkisses in forum Body Business
    Replies: 15
    Last Post: 03-27-2007, 06:45 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •