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Thread: Taxes as a student/independent contractor/dependent

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    Senior Member dianadixon's Avatar
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    Dizzy Taxes as a student/independent contractor/dependent

    I'm completely confused about taxes. I've never filed before because I've always been a student and claimed as a dependent by my mom. The only jobs I've ever had have been work-study jobs, federally or state funded. I haven't ever filled out W2s or tax forms or had deductions taken from my paychecks for these jobs. It seems like once a year, I receive tax forms about my tuition, I guess for people that do work and select that tuition exemption (I warned you, I'm clueless about all things tax-related). I started dancing in August of 2011, but my mom is still going to claim me as a dependent for 2011 (she's super poor and relies heavily on her tax return as a part of her income). I was a student for all of 2011. I made about $12k from dancing in 2011, most of it went straight to my savings account (I want to pay off my student loans [$10k] in one swoop when my grace period ends in June of 2012). I kept precise records of how much I made, and what I spent on work expenses (including receipts).

    So, what forms do I need? Do I even need to file taxes, since I don't even exist in the IRS world yet? I know that's a bad idea... I guess I'm joking about that. How much should I expect to have to pay? Will my mom still be able to claim me as a dependent if I file and claim an income greater than her own? I really don't want to screw up my mom's tax return. How does being a student play into this? Does my bank report the money I deposit to the IRS? I don't understand any of it...

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    Senior Member dianadixon's Avatar
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    Default Re: Taxes as a student/independent contractor/dependent

    Two more things: my club doesn't do any kind of forms, 1099 or anything (I just learned about those on wikipedia!), and I really want to do things the right way...I just have no idea how.

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    Default Re: Taxes as a student/independent contractor/dependent

    I am not a tax professional, but here is the advice I can offer...if your mom is going to claim you as a dependent, you should check out the following IRS publication:



    You must file a return if you made more that $5,800 in 2011. As far as your income...since it is not documented (i.e. no 1099 or W-2)...that is up to you. There are some people here that will tell you to file on what you actually made...there are others that will tell you that you don't have to file. As far as the law is concerned, you must file based on income earned in the calendar year.

    Hopefully this is a good start to your questions...if you have any other questions, or need clarification, don't be afraid to ask!

  4. #4
    Banned Melonie's Avatar
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    Default Re: Taxes as a student/independent contractor/dependent

    I'm also not a tax professional. However, I'm pretty confident about the following ...

    - as a 'self employed' independent business operator, the IRS actually requires you to file a tax return if you earned more than $600 ! The $5,800 figure applies to 'employees' ... who have ( estimated ) taxes withheld from their weekly paychecks and sent to the IRS by their employer.

    - because you are a full time student and under the age of 24, there won't be an issue regarding your 'dependent' status. The IRS / Sallie Mae / college Bursars etc. all employ a concept of 'emancipation', and put simply you are 'unemancipated'. The 'good' side of this is that your mother will be able to claim you as a dependent on 2011 taxes even though you had $12k of dancing income in 2011. The 'bad' side is that your 2012 student grant / loan applications are based on 'household' income ... which must include both your mother's expected income and your own expected income in 2012 ... and the higher combined income may negatively affect your grant / loan eligibility.

    - As far as income tax filings, since you are still a 'dependent' you will not be able to claim personal exemptions on your own tax return ( your mother claims your personal exemption on HER tax return instead - and also presumably claims college tuition payment related tax credits ). With $12k in 2011 income, this most probably means that you will owe 15% Social Security / medicare tax plus perhaps 5% federal income tax on your $12k of 2011 earnings = $ 2,400. Fortunately, your home state of Texas does not levee an additional income tax. Now for a bit more 'somewhat bad' news. That $2,400 in tax money is actually due to be paid in the form of an estimated tax payment THIS TUESDAY i.e. January 17th ( thanks to MLK holiday ). However, if you complete and file your 2011 tax return by January 31st, the IRS grants an automatic 'extension' of the January 17th estimated tax filing / payment deadline.

    - As far as tax preparation goes, without any other complicating issues requiring additional forms, you need to file a 1040 long form tax return plus Schedule C profit or loss from a business. Many dancers and camgirls use TurboTax for Home and Business to prepare their tax returns, which is has the ability to do the Schedule C business income stuff.

    In the future, if you are going to continue dancing, and in the process earn $25-$30k of dancing income in 2012, you may want to have some serious discussions with your mother about the 'emancipation' issue. The reason of course is that the 'cash value' of your personal exemption and college tuition related tax deductions are going to be far higher on YOUR tax return than they will be on HER tax return.

    Also, be aware that, with an estimated $25-$30k worth of dancing income being earned in 2012, you will need to file your next estimated tax voucher and payment by April 17th ... which must include a payment for 15% social security / medicare taxes plus 5-10% federal income taxes on the expected $6-7k in dancing earnings you'll earn in January, February and March. So make sure that you set another $1,200 - $1,500 or so aside to make this next estimated tax payment. In case you are wondering, estimated tax filings by self-employed business persons are roughly equivalent to employer ( estimated ) tax withholding from employee weekly paychecks ... but for self-employed business persons estimated taxes only have to be filed / paid once every three months. However, where employees never 'see' the money from their paychecks that their employer is withholding and sending to the IRS on their behalf every week, self employed business persons DO 'see' that money ... and must withhold a portion of that money and send it to the IRS themselves every 3 months !
    Last edited by Melonie; 01-15-2012 at 04:53 AM.

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    God/dess Zofia's Avatar
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    Default Re: Taxes as a student/independent contractor/dependent

    For 2011, you will probably owe federal tax of $535 on your income with no dependents, including yourself. Your self employment tax, after the self employment tax credit should be about $1575. That would bring your total for all federal taxes to $2010. Your state may also impose a tax. Assuming you made no state or federal tax payments during 2011, you'll owe it all by April 17, 2012. In terms of forms, I prefer Turbo-Tax, but efile.com looks like a good program and they claim to be cheaper than Turbo-tax. If I were you, I might try both efile and Turbo-tax to see which one works better for you.

    HTH
    Z

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    Default Re: Taxes as a student/independent contractor/dependent

    ^ would add that Zofia is making use of an IRS 'first year exemption' regarding estimated tax filings, which would allow you to forego a January estimated tax payment on 2011 income since 2011 was the first year that your 'dancing business' existed.

    What Zofia did not mention is that, if you wait until April 17th to file and pay your 2011 taxes, you will indeed escape interest and penalty charges because you have not yet been dancing for a year. However, on the very same April 17th date, if you continue dancing in 2012, you will also owe an estimated tax payment of somewhere around $1,200 for income earned in January, February and March of 2012. That $1,200 will be IN ADDITION TO the $2,200 or so you will owe in relation to your 2011 income.

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