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Thread: Sugar Daddy Money Questions

  1. #1
    Veteran Member domino.damoiselle's Avatar
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    Default Sugar Daddy Money Questions

    My sugar daddy has paid me in cash every week since September. He gives me about $1400 a week plus he pays some of my bills. I don't have a regular on-the-books job, but I do dance. I'm also a college student. I'm married and my husband works full time. I do not intend to pay income tax on any of my under the table income from 2010.

    He is also buying me a brand new car, and it will be registered in my name. I have another car that I have a loan on (about $345/month) and I'm concerned that another car will be a red flag to the IRS.

    My questions are..

    • How can I avoid the new car being a red flag? Should I pay gift tax on it?
    • How can I invest all this cash (or at the very least, save it in an account) without paying taxes on it? I have some in a safe deposit box, but I'd like to invest some without it looking suspicious. I'm willing to go to the Caribbean to deposit the money in a foreign account.
    • Are foreign banks reliable? Is my money safe there? What risks are involved with this?

    Thanks for your input!

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    Banned Melonie's Avatar
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    Default Re: Sugar Daddy Money Questions

    - you can't ! The minute an expensive new car is registered in your name, the IRS will be automatically informed. IRS computers will then check past years tax returns to see if the amount of reported income jives with the cost of the new car. In your particular situation you're probably talking about $25,000 'appearing out of nowhere'

    - you can't ! Any US bank or foreign bank with US branches is going to automatically report large cash deposits to the IRS. IRS computers will then check past years tax returns to see if the amount of reported income jives with the amount of the deposits.

    - unless you have dual citizenship or legal residence in a foreign country at the very least, you can't open a 100% foreign bank account these days with less than $1 million dollars to deposit, even if you travel to the foreign bank. Thanks to the IRS creating an international incident with the Swiss over UBS, 100% foreign banks have decided that the risks involved simply aren't worth the ( comparatively ) small profits they might earn from middle class US banking customers.

    ~
    Last edited by Melonie; 02-07-2011 at 04:18 PM.

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    Veteran Member domino.damoiselle's Avatar
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    Default Re: Sugar Daddy Money Questions

    Thanks Melonie!

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    God/dess hockeybobby's Avatar
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    Default Re: Sugar Daddy Money Questions

    Have you considered reporting all of your income and gifts, and using all the legitimate deductions available? How about hiring an accountant (tax deductible expense) and having him/her help you pay as little taxes as required? This way you can contribute to the general welfare of your country, build a solid financial base, and not have to be constantly looking over your shoulder, and covering your tracks. Treat your situation exactly as if you are in business. You Inc.
    Just a suggestion.

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    Banned Eric Stoner's Avatar
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    Default Re: Sugar Daddy Money Questions

    Isn't the donor responsible for paying gift tax ?

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    Banned Melonie's Avatar
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    Default Re: Sugar Daddy Money Questions

    ^^^ yes the 'donor' is indeed responsible for paying gift tax. However, in sugar daddy circumstances, there is an abundance of IRS precedent that 'compensation' provided by the sugar daddy is to be considered payment for services rendered rather than a charitable 'gift', and also that 'compensation' received by the dancer is considered to be taxable income.

    Under that IRS interpretation, the OP's annual 'compensation' would amount to some $1400 * 52 + $25,000 = nearly $100,000, on which she would probably owe something on the order of $35,000 in taxes. Also, since the OP is married and her husband has a full time job, the effective tax rate on the husband's $50,000 annual earnings ( grasping a number ) would now be the same as a person earning $150,000 per year i.e. yet another $15,000 in taxes due over and above the taxes already withheld from his paychecks.

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    God/dess Zofia's Avatar
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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by domino.damoiselle View Post
    My questions are..

    • How can I avoid the new car being a red flag? Should I pay gift tax on it?

    The donor pays the gift tax and files the return. However, there is some precedent that says this is not a gift at all, but payment and thus income to you.

    How can I invest all this cash (or at the very least, save it in an account) without paying taxes on it? I have some in a safe deposit box, but I'd like to invest some without it looking suspicious. I'm willing to go to the Caribbean to deposit the money in a foreign account.
    Very difficult. Depending on how much income you report you can invest some of the cash without raising suspicion. The better course though, since you have cash is to report the income and pay the taxes on it.

    Are foreign banks reliable? Is my money safe there? What risks are involved with this?Thanks for your input!
    Some are, some are not. Big foreign banks can and do fail. So far the Europeans have bailed out their banks, but with so many on the watch list, I'd be reluctant to put money in any European bank. The Canadian banks, except RBC seem much more stable. RBC is far too exposed to the US real estate market to be considered anything other than an immediate failure risk.

    HTH
    Z

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    Banned Melonie's Avatar
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    Default Re: Sugar Daddy Money Questions

    ^^^ I would point out that all Canadian banks are co-operating with the international 'terrorist anti money laundering treaty' ... i.e. if an American citizen opens an account and makes deposits at a Canadian bank, the US state dep't and IRS is going to be automatically informed !!! Same for banks in the UK, France, and all but a handful of other countries.

    Additionally, any foreign bank that also has US branches is now required to not only make automatic reports on the financial activities of American citizens, but also to comply with the HIRE act passed by Washington last year ...

    (snip)"On March 18, 2010, Obama passed a $17.5 billon stimulus act, H.R. 2487 - the Hiring Incentives to Restore Employment Act, cleverly and ironically abbreviated H.I.R.E. However, hidden ever so subtly in the HIRE package, on page 27, is an insidious mandate known as Offset Provisions – Subtitle A - - Foreign Account Tax Compliance. This whole Tax Compliance Provision was scripted in the name of catching tax evaders, but in truth, it is nothing more than a blatant money grab and a set up for the preemptive final take.

    Before I get into the essentials within the Provision, as a way to verify the information, about a week ago I received a call from one of my radio listeners. He stated that he has a friend in Panama who told him that they have already been implementing these measures from HR 2487 there. They are now in the process of closing all United States accounts that aren’t exempt. I will address the exemptions soon. Without going through the subsections of the Provision specifically, quoting from Jorgen’s Blog, the “Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account holders to the US and the IRS. And should this Provision be deemed illegal by a given foreign nation’s domestic laws (think Switzerland), well, the foreign financial institution is required to close the account. It’s the law.”(snip)

    from

    This new law was obviously a big deal for we 'way south of the border' ex-pats ! Fortunately, most of us already had accounts opened in local banks that do NOT have US branches, based on our legal residency and local address in that 'south of the border' country, prior to the passage of this new law.

    In real world terms, this means that if a US citizen with a US permanent address were able to open a foreign bank account and deposit say $10,000 ( which will be immediately reported to the US IRS ) ... and later attempts to withdraw that $10,000 ... the foreign bank could only allow them to withdraw $7,000 of their own money. The other $3,000 must be withheld by the foreign bank ( and probably transferred to the IRS ) in anticipation of the IRS discovering additional taxes due on the money originally deposited in the foreign bank account. In other words, since this new law was passed, the IRS essentially assumes that every American with a foreign bank account is a tax cheat ... with the IRS automatically 'grabbing' 30% of all funds withdrawn by an American from their foreign bank account ... and with that American then being forced to file complete 'international' tax return information the following April in order to get back any portion of their foreign bank account money that the IRS previously 'grabbed'.

    As I said earlier, even if the American bank account holder is 100% on the level with their foreign bank account transactions, the foreign banks see these reporting requirements, withholding requirements etc. as an expensive 'ass pain'. As such, foreign bank policy has changed such that any 'visiting' American attempting to open a new foreign bank account is going to be refused, unless the amount of their deposit ( and thus the amount of resulting foreign bank profits ) far exceeds these new costs of reporting and withholding ... which is now in the 1 million dollar ballpark !!!

    ~
    Last edited by Melonie; 02-09-2011 at 04:32 PM.

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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by hockeybobby View Post
    Have you considered reporting all....? This way you can contribute to the general welfare of your country, build a solid financial base, and not have to be constantly looking over your shoulder, and covering your tracks.....
    This is certainly the adult, responsible thing to do. On the other hand there are a LOT of people who can only think of their own personal benefits. John Smith (old 1700s book) was wrong; people need to think of not only themselves, but also the society in which they live. To the extent people don't, they just make future trouble for themselves and existing and future friends/family. WE DO NOT LIVE BY OURSELVES ALONE.
    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.

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    Banned Eric Stoner's Avatar
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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by threlayer View Post
    This is certainly the adult, responsible thing to do. On the other hand there are a LOT of people who can only think of their own personal benefits. John Smith (old 1700s book) was wrong; people need to think of not only themselves, but also the society in which they live. To the extent people don't, they just make future trouble for themselves and existing and future friends/family. WE DO NOT LIVE BY OURSELVES ALONE.
    Please stop with the "politics" !!!!!

    I'm not aware of any exception to the rules that applies only to you.

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    Banned Melonie's Avatar
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    Default Re: Sugar Daddy Money Questions

    Politics aside, since this thread was originally posted there have been some significant developments.

    First is that the IRS has reached 'settlements' with Swiss, Lichtenstein and other foreign gov'ts and banks. Those 'settlements' now involve extensive IRS automatic reporting requirements by these foreign banks regarding the existance / activity of accounts held in the name of US citizens. The associated bank costs to comply with these new IRS automatic reporting requirements has also had the de-facto effect of these foreign banks simply closing down existing accounts, and refusing to open new accounts, for US citizens with less than $1 million involved.

    Second is the imminent institution of an 'expatriation withholding tax' equal to 30% of the equivalent cash value of any assets currently held within the USA by US citizens that will be moved outside the USA after January 1. This strongly implies that the IRS is closely monitoring every single dollar that is being transferred into or out of the US banking system via foreign banks.

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    God/dess Zofia's Avatar
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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by Melonie View Post
    Politics aside, since this thread was originally posted there have been some significant developments.

    ...

    Second is the imminent institution of an 'expatriation withholding tax' equal to 30% of the equivalent cash value of any assets currently held within the USA by US citizens that will be moved outside the USA after January 1. This strongly implies that the IRS is closely monitoring every single dollar that is being transferred into or out of the US banking system via foreign banks.
    There you go making things up again. The truth is different. The expatriation tax provisions under Section 877 and Section 877A of the Internal Revenue Code (IRC) apply to US citizens who have renounced their citizenship and long-term residents (as defined in IRC 877(e)) who have ended their US resident status for federal tax purposes.



    Z

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    Default Re: Sugar Daddy Money Questions

    ^^^ before you again jump to conclusions and start nitpicking technically correct but irrelevant details, I was speaking of HR3056 ... which has been already proposed but narrowly defeated. With strong gov't deficit motivation plus a willingness to tax the 'rich', it's reintroduction next year is a certainty and it's imminent passage extremely likely. Skirting the politics ban to explain, if current plans to increase taxes on the 'rich' / millionaires are put into effect ... which is a virtual certainty ... then passage of HR3056 is a necessary adjunct to dissuade those 'rich' / millionaires from 'picking up their marbles' and leaving versus remaining in the US and paying the higher taxes !


    (snip)"What the Almost Passed Legislation Would Have Done – First off let us just get into the general details. If you wish to read the whole bill here is a link: H.R. 3056 .

    The fine details are meaningless since when the bill is reintroduced it will undoubtedly be different but the general scope of the bill will be the same and that general scope is to deter expatriation and make it economically painful as well. The basic idea was to discourage people from leaving the USA and to collect more taxes. They were imposing a tax of 30% on all assets valued over $600,000 lumped together. This was to be based on fair market value at the time of the expatriation. This 30% would have applied to any unrealized gains from IRA's, pensions plans etc. If you gifted assets same 30% would apply. They also had income levels for past five years and a figure of total indebtedness. Essentially they were saying if you paid this new tax you would not have to be paying IRS taxes for 10 years which is the way it is for expatriates now who renounce their citizenship. The proposed bill would tax those not giving up their citizenships just leaving.

    They also were addressing people who still remain USA citizens but just reside out of the USA long term. The actual formulas for years spent outside the USA, dollar amounts etc are not worth much except since they will be different in the next bill but they do show you the direction it is going generally speaking. These things change every time legislation is reintroduced. The way the real estate market is dropping may cause them to reduce the amount from $600,000 to $350,000. We do not know.

    They are also going after people who are not USA citizens but lived there eight of the fifteen years before they leave long term. This would be green card holders but could also include those on work visas, long-term college and graduate school students and other types of people may be affected. There are a lot of people who were born in the USA and never lived there as adults or never lived there at all. They may be citizens or green card holders and there is talk of making sure they pay taxes. The penalty is never being able to return to the USA again. So they seem to be imposing some sort of ruling regarding your taxes had to be paid for the past five years (paid not filed).

    There are a lot of people outside the USA who have passports from the USA who never ever filed a US Tax Return. This will hit them hard. We are told that 63% of Americans residing abroad never file any tax returns. We can expect an IRS procedure to be part of the process when leaving or entering the USA when this is enacted and they will have power to block your entrance or departure. It is coming just a question of when. Perhaps they will go to full exit visas, which require an IRS clearance. Imagine your friendly IRS agent knowledgeable in all the applicable laws and regulations having power over whether or not you can leave the country.(snip)

    from


    The reasons that I cited this at all were to respond to the OP's questions regarding physical expatriation of funds without IRS scrutiny ... which is steadily becoming more difficult, and with the imminent passage of HR3056 will essentially become impossible ... as well as to point out that the IRS is already paying very close attention to all non-physical international funds transfers.

    I would also point out that the 'brains' behind this bill are covering all the bases ... including a 30% tax on the equivalent cash value of UNREALIZED CAPITAL GAINS ( i.e. still owned US real estate, US stock shares ), a 30% tax on gains from supposedly tax exempt IRA's and gov't bonds, etc.

    ~
    Last edited by Melonie; 11-09-2011 at 02:44 AM.

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    Default Re: Sugar Daddy Money Questions

    Damn just the thought of the IRS coming to get me is scary!

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    Default Re: Sugar Daddy Money Questions

    ^^^ actually, I'd be more fearful of the NY State / NY City income tax dept's. They actually expend far more resources ( per capita ) on investigations and audits than the IRS does at the federal level.

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    God/dess Zofia's Avatar
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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by Melonie View Post
    ^^^ before you again jump to conclusions and start nitpicking technically correct but irrelevant details, I was speaking of HR3056 ... which has been already proposed but narrowly defeated. With strong gov't deficit motivation plus a willingness to tax the 'rich', it's reintroduction next year is a certainty and it's imminent passage extremely likely. Skirting the politics ban to explain, if current plans to increase taxes on the 'rich' / millionaires are put into effect ... which is a virtual certainty ... then passage of HR3056 is a necessary adjunct to dissuade those 'rich' / millionaires from 'picking up their marbles' and leaving versus remaining in the US and paying the higher taxes !
    You're the one making things up to support your fantasy.

    Z

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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by Eric Stoner View Post
    Please stop with the "politics" !!!!!

    I'm not aware of any exception to the rules that applies only to you.
    Since when is saying that people should pay taxes on their earnings a "political" statement?

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    Banned Melonie's Avatar
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    Default Re: Sugar Daddy Money Questions

    ^^^ actually, the poster went well beyond simply discussing the payment of required taxes ( a law enforcement issue ), and raised the issue of the supposed duty of productive people to pay ( higher ) taxes for the benefit of others / society ( a political issue ). Even though the basic point has ( major ) economic aspects, Stripperweb's owner has banned all discussions that touch on the political / gov't policy aspects.

  20. #19
    Featured Member Vamp's Avatar
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    Default Re: Sugar Daddy Money Questions

    Quote Originally Posted by Melonie View Post
    ^^^ before you again jump to conclusions and start nitpicking technically correct but irrelevant details, I was speaking of HR3056 ... which has been already proposed but narrowly defeated. With strong gov't deficit motivation plus a willingness to tax the 'rich', it's reintroduction next year is a certainty and it's imminent passage extremely likely. Skirting the politics ban to explain, if current plans to increase taxes on the 'rich' / millionaires are put into effect ... which is a virtual certainty ... then passage of HR3056 is a necessary adjunct to dissuade those 'rich' / millionaires from 'picking up their marbles' and leaving versus remaining in the US and paying the higher taxes !
    ~
    I think there is some credence to this and i will show you why .... click attached image ... couldnt get it to embed properly ...

    http://taxprof.typepad.com/taxprof_b...patriates.html

    If you look at the link you will also see 2011 is on track to be a higher number then 2010.

    But it isnt just about the rich tax. I think it is beginning of an issue that will be broadened for anyone who leaves. Canada and European countries seem to be tightening their immigration requirements for Americans. I think it is safe to say some see the writing on the wall for a larger exodus from America because the economy.
    Last edited by Vamp; 11-11-2011 at 05:00 AM.
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    Default Re: Sugar Daddy Money Questions

    ^^^ yup ... and that data is only considering US ex-pats who officially renounce their US citizenships with no plans to return to America in the future. For every one 'full' ex-pat, there are undoubtedly 99 other semi-ex-pats who only wish to expatriate their retirement money / passive earnings / capital gains in order to minimize taxes due. Existing IRS laws already address the 1 'full' ex-pat. HR3056 attempts to address the 99 others, by applying a 30% tax to that retirement money / passive earnings / capital gains before it can 'escape' the USA. If/when enacted, this will give a whole new meaning to the phrase 'you can't take it with you' !!!

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    Default Re: Sugar Daddy Money Questions

    Hockey bobby is right.
    Go to an accountant or tax attorney, depending on the amounts.
    In your case probably the accountant.
    You can interview them because you have the money.
    See what they say. Compare and contrast. Get referrals. Don't hire a crook.
    You could go to prison for some of the suggestions on this forum.
    Money is not as valuable as things that make money.
    None of it is worth your freedom.

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