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    Default In need of some advice on taxes

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    Last edited by SuckMyKiss; 02-17-2012 at 01:29 PM.

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    Default Re: In need of some advice on taxes

    ^^^ there are several threads in Dollar Den on the topic of independent contractor taxes.

    The 20% amount you had withheld as an employee reflects the fact that the 15.3% social security / medicare tax was split between 7.7% paid by your employer and the other 7.7% paid by yourself. As an independent contractor business operator, you are required to pay the entire 15.3% yourself. Thus 28% withholding is probably more accurate.

    If this is the first year you've been working as an independent contractor, I would encourage you to seek out a local CPA who specializes in small businesses. The H&R Blocks / Jackson Hewitts etc. are geared to employee tax returns, where the CPA will be much more familiar with small business tax issues. The other thing the CPA can provide you is how to best 'structure' your business finances versus personal finances to minimize tax liability.

    As far as deductibility goes, generally you can write off anything that survives the 'housewife' test. In other words the IRS will balk if you attempt to write off something that housewives routinely buy with absolutely no business purpose ( like panties ). The costs of a new laptop and internet service can be split depending on the proportion used for business purposes versus the proportion used for personal purposes.

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    Default Re: In need of some advice on taxes

    I would recommend going to an accountant - but I haven't always had the best experiences with H&R block when it comes to more complicated taxes..

    I would also NOT lie about what you do!!! Any decent accountant is not going to have a problem about it, and you don't want to be lying on your taxes....

    As for write offs, I know some people who write off pretty much everything in their life, and others who only write off items that would not be bought or used if you were not camming...and many people in between! Its a good idea to talk to your accountant (once you find one) about what they think that you will be able to include. Personally, I stick mostly to sex toys, actual cams (a new laptop might work) and costumes - I know people who have tried to write off beauty products, hair cuts, etc, but as a general rule, any deductions have to pass the "housewife test"; if they are a normal part life, they would not be an allowed deductions. Obviously, you need receipts for all deductions.

    Just find a good accountant and check with them.
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    Default Re: In need of some advice on taxes

    Ha! I had to step away from my computer for a couple hours and didn't check to see if anything else was posted since I started to write my reply!

    Listen to Melonie...when it comes to finances, she really knows her stuff!
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    Default Re: In need of some advice on taxes

    ^^^ Absolutely. H&R block charges stupid amounts for anything more than your super basic taxes, and they will NOT help you with finding loopholes or ways to claim money back. I had NO IDEA I was losing hundreds of dollars by not claiming prescriptions (seriously, my prescriptions hit over a grand every year....thanks psorasis and experimental treatments) until I got a real accountant....
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    Default Re: In need of some advice on taxes

    Quote Originally Posted by SuckMyKiss View Post
    If you don't mind my asking, how much do you pay for your accountant? I'm clueless as to what their rates are...I imagine each one is different (like lawyers). I found a couple local CPA's I'm going to give a call on monday to see what the deal is
    I don't mind you asking at all! But I'm afraid that I won't be much help...my accountant is my future mother-in-law...so she does taxes for my boyfriend and I for free! Sorry I couldn't be more help with pricing..
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    Default Re: In need of some advice on taxes

    Wow thanks! Damn 28%. Does this mean that at the end of each quarter, I'll be paying 28% of my income in taxes? Holy crap that's a lot.
    Not wanting to get too cynical, but in the past a lot of exotic dancers and webcam girls were able to avoid having to face the ( full ) consequences of having to pay 'business income taxes'. However, between increased 1099 automatic income reporting requirements, plus more automatic reporting on the 'spending' side, plus the formation of a dedicated cash business IRS enforcement unit, for webcam girls at least, it's no longer possible to 'evade' the issue ( pun intended ). See

    As far as basic US business income tax withholding, as I said earlier there is a 15.3% SSI tax due on every dollar earned ( which was temporarily lowered to 13.3% for 2011 only by the newest US congress ). There is then a US federal income tax due that ranges from 0% to 36% depending on amount of income, filing status, dependents, deductions etc. For a single girl who does not have children, who is not a homeowner, that is earning $50,000 a year, the 'effective' income tax rate is likely to be near 15%. Then if you happen to live in a state / city that assesses their own income tax, this can tack on another 3-6% ( although some of this is offset via a federal income tax deduction for state income taxes paid ). This means that a $1000 per week income level single camgirl with no children who lives in say NY or CA or IL could easily face an overall effective tax rate of 30-33%.

    And yes the IRS requires that estimated tax vouchers and payment checks be sent in every three months. The next due date is January 15th for income earned from September 1st through December 31st. Again, there are a bunch of Dollar Den threads discussing 'independent contractor' sole proprietor business taxes.

    I would take a wild guess that first year services from a 'small business' CPA will run somewhere in the $350 ballpark. However, that CPA may very well be able to identify legitimate tax deductions and/or legal tax minimization ideas that could save a greater amount on taxes due. Subsequent years are liable to be less expensive since the initial 'setup' work won't need to be repeated. Also, once you get some experience with filing 'small business' taxes, you can probably switch to using TurboTax Premier or other tax software ( that can do Schedule C 'profit or loss from a business' ) in lieu of using an accountant.

    ~
    Last edited by Melonie; 10-15-2011 at 06:14 PM.

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    Default Re: In need of some advice on taxes

    ^^ I'm so thrilled that I don't like in the US sometimes. As much as I would absolutely LOVE to live in ny (and intend to in the next few years) the tax system scares the bejeesus out of me! Accountants are worth their weight in GOLD
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    Default Re: In need of some advice on taxes

    ^^^ yup NYC is the worst because, besides the US federal income tax ( perhaps 15% ), and the comparatively high NY state income tax ( perhaps 6% ), there is also a NY CITY income tax ( perhaps 2% ) due on 'average' earnings. And where serious professional dancers / camgirls with $100,000+ incomes are concerned, the overall effective tax rate for girls living in NYC can top 40% ! This rivals Canadian income tax rates, but without the associated gov't benefits !!!

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    Default Re: In need of some advice on taxes

    Move to Nevada. No state tax. Saved 2k this year alone.
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    Default Re: In need of some advice on taxes

    Yay, no state income tax in Texas

    I have a question about reporting every 3 months. Is that only if you have your own website, or should I do this for my earnings on MFC every 3 months as well?

    Also, my fiance and I are formally getting married in March, but we thought about getting legally married here in a month or so, for tax purposes. Seeing as my income for this year will def be less than 50k since I just started in Aug, would that be a good decision?
    I will have 4 months of employment on my taxes from Cracker Barrel, and I did earn about 2k from SM during that time. Do I have to claim that too?

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    Default Re: In need of some advice on taxes

    I have a question about reporting every 3 months. Is that only if you have your own website, or should I do this for my earnings on MFC every 3 months as well?
    I don't want to delve too deeply into tax and finance issues outside of Dollar Den, but the 'quick' answer is that you should 'consolidate' all of your independent contractor business earnings and all of your business expenses ( i.e. write-offs against those business earnings ) every three months, then prepare the estimated tax voucher based on your 'best guess' and cut the check to the IRS. When April 15th rolls around, you then calculate the actual tax liability precisely, you file your annual tax return with Schedule C ( full year profit or loss from a business ), and you either pay in or get a refund based on the actual difference versus the estimated tax payments you made in previous quarters. Of course, April 15th is also the due date for estimated taxes for earnings from January through March of the new year, so in reality that last payment or refund on full year previous year earnings versus estimated taxes only increases or decreases your April 15th estimated tax payment.

    I will have 4 months of employment on my taxes from Cracker Barrel, and I did earn about 2k from SM during that time. Do I have to claim that too?
    I assume that your work at Cracker Barrel was as an employee, such that they already withheld and sent in 'estimated tax' payments from your weekly paychecks. Yes this needs to be reported on your annual tax return, but it is not part of the income you need to report on Schedule C. But the SM earnings are also 'business income' and do need to be included in both your estimated tax payment calculations and your annual tax return's Schedule C.

    we thought about getting legally married here in a month or so, for tax purposes. Seeing as my income for this year will def be less than 50k since I just started in Aug, would that be a good decision?
    The only answer I can give here is 'it depends'. The major consideration will be the expected ratio of your new husband's income versus your own income next year ... not what might happen as a one time event this year. If he earns a shit-load, and you earn a little, odds are being married will help. If you both wind up earning about the same amount, being married could hurt. And not wanting to get political, but there are MAJOR income tax changes in the pipeline for 2012 such that being married could hurt badly if you are both earning major bucks next year.

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    Default Re: In need of some advice on taxes

    Quote Originally Posted by SuckMyKiss View Post
    Yes I have searched the threads but I'm still a bit confused.

    For my first time doing taxes as a cam girl (MFC) I would like to have them done by a professional so that they can go over everything for me and then I'll start doing them myself once I feel comfortable. I've always filed my own taxes (with regular jobs) but I'm not sure what items I can write off, and how to do it.

    I started camming over a month ago and I'm making an average of $2000 per pay period (2 weeks). What would be cheaper... a tax place, or an accountant?

    I made an appointment for next week at H&R block (I have to get an ammendment form because my dad messed up on my income on last year's taxes) so while I'm there I'm going to ask about this. What should I say I do for work? When I said "private contractor" I know they will ask what type of work... graphic design??

    My internet bill is in my boyfriend's name, but I'll put it in my name if I can write it off on taxes. I am planning on getting a new laptop, can I write that off as well? Also, what type of clothing...anything I use for cam no matter how cheap (panties)?? I would think that the tax person would look at that like "wtf" lol

    Also, I started putting 20% of my earnings into a savings account (because that's usually how much taxes were taken out of my regular job checks) just in case.

    DON'T go to HR Block. You will be happy later that you didn't. For one, they are not very responsible with itemized filings. They are also reputable for getting people like us audited. Find a non-commercialized accountant to do your work. As for telling them what you do, all they need to know is the entertainer and performer tax code. You can look that up and have it with you. If they ask you details, tell them you wish to not discuss it. They do not need to know the details.

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    Default Re: In need of some advice on taxes

    Does the IRS go by the working date or the pay date? I hope I slid by missing the previous cut off date since this new one starts on Sept 1!!!
    Actually, you can adopt the 'convention' of booking income on the date that you actually deposit the check ... as long as the lag time between the check's date and the deposit date isn't more than a couple of weeks !

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    Default Re: In need of some advice on taxes

    Quote Originally Posted by Lusty Laken View Post
    DON'T go to HR Block. You will be happy later that you didn't. For one, they are not very responsible with itemized filings. They are also reputable for getting people like us audited. Find a non-commercialized accountant to do your work. As for telling them what you do, all they need to know is the entertainer and performer tax code. You can look that up and have it with you. If they ask you details, tell them you wish to not discuss it. They do not need to know the details.
    Do you know any good CPA in Philly? A cheap one for me to file my taxes because I don't make alot.

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    Default Re: In need of some advice on taxes

    OMG please do yourself a favor and never go to a place like H&R block... go to an accountant for sure.

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    Default Re: In need of some advice on taxes

    Quote Originally Posted by Melonie View Post
    ^^^ there are several threads in Dollar Den on the topic of independent contractor taxes.

    The 20% amount you had withheld as an employee reflects the fact that the 15.3% social security / medicare tax was split between 7.7% paid by your employer and the other 7.7% paid by yourself. As an independent contractor business operator, you are required to pay the entire 15.3% yourself. Thus 28% withholding is probably more accurate.

    If this is the first year you've been working as an independent contractor, I would encourage you to seek out a local CPA who specializes in small businesses. The H&R Blocks / Jackson Hewitts etc. are geared to employee tax returns, where the CPA will be much more familiar with small business tax issues. The other thing the CPA can provide you is how to best 'structure' your business finances versus personal finances to minimize tax liability.

    As far as deductibility goes, generally you can write off anything that survives the 'housewife' test. In other words the IRS will balk if you attempt to write off something that housewives routinely buy with absolutely no business purpose ( like panties ). The costs of a new laptop and internet service can be split depending on the proportion used for business purposes versus the proportion used for personal purposes.

    Just wanted to say that I am stoked that another woman actually knows of the "housewife" test. I use to try and tell these girls that it is not legit to claim 100% of your makeup, nails, tanning, or anything else that "normal" women purchase for themselves and nobody would listen. I quit telling trying to tell anybody about the housewife test.

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    Default Re: In need of some advice on taxes

    What about Turbo Tax?







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    Default Re: In need of some advice on taxes

    Awesome info ladies. Wish I had known all this the first time I tried to do my taxes after becoming a cam model. It was painful. H&R Block did a great job and I paid $40 b/c I did them myself, they checked them on the free Second Look day and fixed what needed to be fixed. I forget why I actually paid them at all. I ended up buying my H&R Block ladies flowers she was so nice and she was good too.

    Yes, pay every three months to avoid penalties and late fees. I pay around 35% taxes & my state does not have income tax. It varies person to person, but I don't itemize deductions. I was told that I could NOT split bills between personal and professional use, but I did it anyway with my internet. Except I just took the amount my bill increased when I upgraded my service and I claimed that. I do NOT claim lube, dildos, panties, bras, electricity, computer, etc. I DO claim the webcam, extra long USB cords, wireless mouse, etc.

    If you have a separate space for camming ONLY, you can claim some things under the home office section. I think that might include some of your home bills, but you'd have to double check that one. When I first started camming, I was only doing it for a few months when I filed. I should've made one payment and I didn't, but the penalty was only $40. Not a big deal. Also, the second year that you file, you're only required to make payments in the amount of the previous years' payments. You SHOULD be making large enough payments that you won't owe any extra when you file the following year. But technically, if you only paid $1500 per quarter last year, you only HAVE to pay $1500 per quarter this year, even if you SHOULD be paying $2000 per quarter. It's a "pay me now or pay me later" thing tho. While they won't charge you penalties for not paying that extra $500 per quarter, you'll have to come up with the whole $2000 when you file. It's better to just pay and get it out of the way.

    I had been doing my taxes for ten years when I started camming. It's a COMPLETELY different thing now that I'm self-employed. I really needed someone's help the first time. But I think I'll be doing them alone this year and I will pay someone to just pretend audit for me. Should cost me about $40 instead of $400.

    But I REALLY recommend that you don't do them on your own. Unless you've done your own taxes before, you're familiar with tax law, you have an extreme amount of patience, etc., I think it's safer to pay someone to do it for you. Also, it's worth it not to have to spend the time on it. While I could probably finish my taxes in a few hours, the first time I filed after starting camming, it took me 10 hours of printing forms, reading & doing calculations to realize that I was losing more money doing it myself and not being on cam than I would spend to pay someone to do it for me.

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    Default Re: In need of some advice on taxes

    Also, I didn't tell anyone what I do. SM didn't send a 1099. I filed under "Independent Performer" though if I change my tax code this year, I'll probably choose something a bit more ambiguous. I was going for accuracy last time, and there aren't as many options as one might think.

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