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Thread: TAXES?! So confused...

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    Dizzy TAXES?! So confused...

    So I just started dancing this year, 2011, and am registered as an independent contractor at the club I work at. I worked at one other club for a few weeks as well. I am wondering how taxes are filled for us and how to get around paying a ton of money at the end of the year. I heard that anything over $600 of reported income will be taxed 30% and that I had to report some amount of tips or they would automatically estimate a large amount on their own. Does anyone know how it all works and how to get to keep the most and pay the least? I feel a little lost on this subject. Oh, and I live in California btw. Thank you!

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    Default Re: TAXES?! So confused...

    http://forum.stripperweb.com/showthread.php?t=136654

    My popular thread about taxes. Stickied in the Dollar Den section.
    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: TAXES?! So confused...

    If your club has your SS and address, they probably intend to send you a 1099 form at the beginning of 2012. Deja Vu is on their toes with this stuff. I'm guessing that they tote up your cut from all the lapdances and VIPs you did, and put that on the 1099 form. Don't know for sure - I moved around a lot when dancing and never got my 1099s. It will be obvious to the IRS that you are in a tip-based business if your club 1099s you, so you should report a respectable amount for that too.

    BTW, have you been making your quarterly tax payments? As an independent contractor, you pay not once but four times a year - April, June, September and December. You can look up the exact due dates online. This is called an estimated tax. Throughout 2011, you estimate your total 2011 income and send them 25% of that amount each quarter. Of course, it will be slightly off so when you file in April 2012, you can report your actual 2011 income and either pay a bit more or ask for a refund as the case may be.

    The thread linked above has some really useful info about filing, which you will do in April 2012. I am not sure if you should use a 1040 or if you can get away with the 1040A or EZ. You file your own taxes - the club does nothing beyond sending you the 1099. Unlike an employee, you pay all of your own Social Security/Medicare (15.3% of income) as well as income tax (% dependent on your tax bracket). It's steep, that's why they make you break it down into quarterly payments.

    DON'T forget about state income tax! CA has its own stacks of forms for you to deal with, and you have to pay estimated tax to them too. The main form you'll use in April is the 540. I remember from last year that I couldn't use the 540A because of the quarterly tax payments. Both federal and state will make you attach extra forms for various things.

    You can't get away with paying less than required based on the income shown on your 1099 (which also gets sent to the government) and your self-reported tips. If you want to get breaks on your taxes, the government usually sets up a few credits every year that you might qualify for based on income and whether you're in school. If you are in school, you also have the option of deducting a certain % of school expenses but probably can't do that and also take an education credit. 2011 credits probably aren't finalized yet but they should be out and available for you to look at later this year.

    Also, you can pay attention to your tax bracket and try to keep your income such that you are at the top of a lower tax bracket, not at the bottom of a higher one.

    Oh, and it's possible that your club won't 1099 you if it's a smaller, non-corporate club. You could try asking the manager. If they're going to 1099 you, they should tell you. If they're not planning on it, then they'll usually be all shifty and evasive. Either way, keep track of your earnings - write them down every night so that you have a record of what you make, both for yourself and for the IRS in case (heaven forfend!) you ever get audited.

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    Default Re: TAXES?! So confused...

    I would add that as an independent contractor dancer you are actually responsible for filing estimated tax vouchers and sending in estimated tax checks to the IRS as well as to the Cal Franchise Tax Board every 3 months. The last due date was June 15th for taxes due on income earned in April and May. The next due date is September 15th for taxes due on income earned in June, July and August. Regardless of the amount of dancer income reported by the club, at minimum every dancer will owe 15.3% Social Security / Medicare tax to the IRS on every dollar earned. Then depending on income level and personal circumstances, some amount of income taxes will also be due to the IRS ( perhaps 15% ) and to the Cal FTB ( perhaps 5% ).

    The kicker of course is that you won't receive a copy of the club's 1099 dancer income report to the IRS and Cal FTB until february of 2012, but the estimated tax payments are due now ! And hopefully you have been setting aside 35% of your nightly income to cover these estimated tax payments.

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    Last edited by Melonie; 07-13-2011 at 02:56 PM.

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    Default Re: TAXES?! So confused...

    If you ever get audited, they are likely to look at your bank accounts deposits, so make sure they don't reflect more income coming in than what you are reporting.
    Last edited by jack0177057; 07-14-2011 at 01:19 PM.
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    Default Re: TAXES?! So confused...

    Not checking the pink side link I'm going to assume it's pretty complete. To cover basics Melonies quarterly info is essential.

    You should keep a log of the income you intend to report as an independent contractor. You need to retain receipts for any qualified expenses you intend to report. Estimate your Net business income calculate income taxes from that and don't forget to add on your self-employment taxes (social security and Medicare about 15.3% of income before taxes)

    Please pay quarterly. Way too many independent contractor get a big year end tax bill due to forgetting SE taxes and end up oweing way more than they can come up with on April15th.

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    Default Re: TAXES?! So confused...

    Way too many independent contractor get a big year end tax bill due to forgetting SE taxes and end up oweing way more than they can come up with on April15th.
    While I don't want to get into an in depth discussion of independent contractor taxes outside of Dollar Den, let me say this. Legally speaking, the IRS considers tax payments to be due on a quarterly basis. Thus for the quarter just ended, if a dancer earned say $10,000 during the second quarter she 'owed' somewhere around $1,500 in Social Security tax plus perhaps $2,000 in IRS income taxes plus perhaps $500 in state income taxes on June 15th. If that estimated tax money wasn't paid by that date, the IRS and state tax agency essentially start charging interest on the unpaid balance. Put another way, if the dancer waits until the following April to make payment, she will still owe the original $4,000 in second quarter taxes plus an additional ~$200 in accrued interest. Additionally, if the dancer has been dancing for a while and thus cannot take the first year exemption, IRS penalties can also be assessed for under-withholding which could add yet another $400 or more to the total amount due next April.

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