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Thread: Question about US deductibles

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    Veteran Member ThatOneGirl's Avatar
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    Default Question about US deductibles

    Okay, so I know that purchases made for camming count as deductibles; my camera, certain bills, lingerie, make-up, etc. My question is, what if my live-in boyfriend makes a purchase for me? He wants to build me a stripper pole, and if it were my money going toward it, I know that it would count, but it'll be HIS money. How would that affect my taxes? I'm assuming that I'll still need to keep the receipts and ask the tax preparation guy about it next year (that'll be an interesting conversation), but I get very curious, and I like to know everything about my trade. How would it affect taxes if he buys all the materials? What if he gifts me the money, and I'm the one technically making the purchases? Does that change anything?



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    Default Re: Question about US deductibles

    First IRS condition for a business expense tax deduction is the 'housewife test'. If housewives buy lingerie, dep't store makeup etc. with absolutely no reason for doing so, attempting to claim 100% of the cost of such expenses may prompt the IRS to disallow the deduction. Typically, for expenses that fail the 'housewife test', you're 'safe' deducting 50% of the cost ( with the other 50% being non-deductible 'personal' use )

    Your camera should be 100% deductible as a business expense provided that you have another camera available for 'personal' use.

    As to deducting 'certain bills', this gets complicated in a hurry. You can deduct 100% of a high speed internet connection bill for business use providing that you have some other internet connection available for personal use.

    In regard to the stripper pole, if the receipt is in your bf's name then you can't claim the deduction. If your name is on the receipt than you CAN claim the deduction.

    As to waiting until next year to talk with your tax prep guy, as an independent contractor camgirl you are required to pay estimated taxes quarterly. Taxes due on camming money you earned from the beginning of January through the end of March were due to be paid last April 17th. Taxes due on camming money you earned in April and May were due to be paid last friday, June 15th.

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    Default Re: Question about US deductibles

    The service has a straight forward rule for business expenses. Those that are ordinary and necessary can be deducted. Ordinary and necessary expenses are for those expenses which are likely to cause the generation of revenue. To that end, uniforms, cameras and high speed internet connections are of course deductible. Yours is one of those few businesses that can justify the home office deduction. You actually need a studio for camming. Thus, putting in a stripper pole, some lights and some LAN cabling is safely deductible. Now to costumes. The IRS has some letter rulings that say costumes are deductible and lingerie is not. Thus, at the very least, write on the memo line "costumes." Better, buy your lingerie from someplace other than Victoria's Secret or Frederick's of Hollywood. A costume shop is a better choice.

    HTH
    Z

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    Veteran Member ThatOneGirl's Avatar
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    Default Re: Question about US deductibles

    Thanks guys. I did not know about the quarterly tax payment. Yikes! Guess I'd better look into that pronto. My knowledge at this point is very basic. From information gathered from this forum and AC, and very basic knowledge about tax deductible business expenses (I have a close family member who has his own business and so knows about the tax deductible stuff, but I can't tell him that I cam), I knew that I could claim deductions on stuff directly related to the business, though naturally they would be partial deductions in the case of things that I also use for personal use. Our Internet, for example, is used for both business and personal use. Someone said that since I cam from home, that electric and rent could be partially deducted, though I'm not entirely sure about that. As for lingerie and make-up, thanks for letting me know that I'm better off writing them off as "costumes", which technically they are, since I don't use them for personal use. If I didn't cam, I would not own lingerie OR make-up, since I use neither for personal use.

    As for the receipt on the stripper pole items, what if it's paid in cash? There's no name on the receipt then, so how would that be handled?

    Naturally, I'll be contacting someone very soon to ask all this from someone who works with the ins and outs of tax preparation. Thanks for the responses. Much appreciated! :-)



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    Default Re: Question about US deductibles

    Someone said that since I cam from home, that electric and rent could be partially deducted, though I'm not entirely sure about that.

    As Zofia already pointed out, this is the 'Home Office' tax deduction. If one area of your residence is EXCLUSIVELY used for business purposes, you are allowed to deduct a portion of your mortgage (rent) payment, electric / heating bills, insurance costs etc. as a business expense. The deductible amount is proportional to the square foot area of your 'Home Office' versus the total square foot area of your home (apartment). However, it needs to be pointed out that this particular deduction has been the focus of a LOT of IRS audit attention.


    As for the receipt on the stripper pole items, what if it's paid in cash? There's no name on the receipt then, so how would that be handled?
    If the receipts are 'official' i.e. cash register print-outs from Home Depot then 'possession' of the receipt should be sufficient.

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    God/dess Zofia's Avatar
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    Default Re: Question about US deductibles

    Quote Originally Posted by ThatOneGirl View Post
    As for the receipt on the stripper pole items, what if it's paid in cash? There's no name on the receipt then, so how would that be handled?

    Naturally, I'll be contacting someone very soon to ask all this from someone who works with the ins and outs of tax preparation. Thanks for the responses. Much appreciated! :-)
    Petty cash out - receipt in. I would write by the entry on your petty cash ledger what it was for. Businesses have ledgers. If you audited and you show up with a box of receipts, you will not impress the auditor. However, if you show up with an account book, or printouts from your accounting program, showing contemporaneous entries, the auditor will view your claim more favorably, the auditor's handbooks says so.

    HTH
    Z

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    Default Re: Question about US deductibles

    ^^^ Zofia's comments about IRS 'impressions' regarding the 'professionalism' with which you operate your dancing / camming business is indeed the case. The bottom line is that much of the financial information relating to your independent contractor business activities is 'self-generated'. Thus there is a credibility factor involved if you should ever be audited. Or to make the point a different way, where strip clubs and some webcam hosts are concerned, there won't be any complete documentation provided by said strip clubs and webcam hosts to prove how much money in total that you actually earned ( or did NOT actually earn ). Thus the professionalism with which your business accounting / records are kept goes a long way toward convincing the IRS that, for example, if you have $25k worth of 1099's from strip clubs and/or webcam hosts, plus you reported another $10k of tip / gift card / other income without full documentation, that you in fact earned $35k ... as opposed to the IRS claiming that you actually earned $75k ( and expecting taxes to be paid at a $75k income level ) leaving you with no real way to prove that you did NOT earn that much money. Same point applies to business expense tax deductions versus a disorganized box of receipts.

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