
Originally Posted by
Melonie
going back to some basic legal points about 'employee' dancer status ...
- it's possible that the club will choose to simply add dancer 'sales commission' payouts into dancer paychecks. But this will subject that money to employer and employee payroll taxes, to unemployment and worker's comp insurance premiums etc. on a weekly basis ... meaning that for every nominal $20 in 'sales commission' payouts some $8 would go towards taxes and insurance with the dancer actually receiving $12.
- it's also possible that the club will treat dancer 'sales commission' payouts as non-payroll income ( which saves the employer money and arguably allows the employee to break even ) ... but which the dancer may not find out about until a 1099 form arrives in her mailbox in February of 2012. At that point, the dancer would be responsible for paying a 15.3% SSI tax on the total amount, plus paying perhaps another 13% in federal income tax and another 4% in state income tax on the total amount, out of her own pocket. While this is better than only keeping $12 of every $20 ... probably amounting to keeping $14 ... it still means having to pay out $6 on every $20 sales commission earned in 2011 ... and potentially having to do so all in one lump sum. Since the IRS also imposes a requirement for workers receiving 1099 income to pay quarterly estimated taxes, the club should disclose their intention to issue 1099's to dancers as soon as the 'funny money' system is implemented so that dancers can be prepared for making the necessary quarterly estimated tax payments and avoid the IRS penalties for NOT making them ( as well as avoiding a $10,000+ 'surprise' lump sum tax payment when doing their tax returns a year from now ).
~
Bookmarks