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Thread: Filing taxes as a dependent student

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    Default Filing taxes as a dependent student

    I've been lurking and can't seem to find any threads dealing with my specific situation:

    1) I'm currently a student and my parents claim me as a dependent on their tax return.
    2) I work a part time retail job as well for which I receive no tips and an hourly wage, and I receive a W-2 to file taxes.

    How does this factor in to how I would file taxes with the added stripping? Do I file it all under one tax return on the W-2? Could this be useful in keeping my stripping more of a "secret"

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    Default Re: Filing taxes as a dependent student

    Could this be useful in keeping my stripping more of a "secret"
    Actually, it's the opposite situation. Your FAFSA student aid application, which is filled out by your parents, must include 'total household income'. This means both your parents' income, as well as your own income. And since FAFSA, college bursars offices, and the IRS all share information, if you don't provide your parents with your total income amount to submit on your FAFSA form, both FAFSA and the IRS may wind up investigating both you AND your parents !!!

    To directly answer your question, with both 'straight job' and dancing income, you'll need to file a 1040 long form. You report the W2 'straight job' earnings on the 1040 itself, and you report your dancing earnings ( with or without an IRS form 1099 being issued by the club ) via Schedule C 'Profit or Loss from a Business'.

    As you may or may not know, since you are still legally considered to be a dependent of your parents, THEY get to claim your personal tax exemption, your tuition tax credits, etc. ... and you get to claim essentially nothing. As such, the effective tax rate that will apply to both your 'straight job' earnings as well as your dancing earnings will be significantly higher ... perhaps 25%+ of total earnings depending on how much total money you earn. The estimated taxes being withheld from your 'straight job' paychecks is not enough to cover this since your employer's payroll system doesn't know about your dancing income. Thus be prepared to set aside ~25% of your dancing earnings, plus perhaps 10% of your 'straight job' earnings, for making quarterly estimated tax payments to the IRS. The next quarterly estimated tax filing deadline is June 15th.

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    Default Re: Filing taxes as a dependent student

    It sounds like your parents file your taxes and you're hoping to keep it hidden from them? The reality is that if you're depositing your stripping income in the bank and/or using it for big ticket purchases, the IRS could find out and come knocking for their cut. How likely that is depends on how likely your expenses could be covered by how much your parents could realistically be contributing in the eyes of the IRS with how much you earn from your part-time retail job. If it sounds like a stretch to you and I'm right about your parents filing for you, you've gotta sit down and have a talk with them.

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    Default Re: Filing taxes as a dependent student

    ^^^ for better or worse, with 1 TRILLION dollars worth of FAFSA student loans out there, with a significant percentage of those loans already being in default, with FAFSA receiving scrutiny regarding 'improper' approval of student loan and grant money to illegal immigrants, etc., FAFSA is paying more attention than ever to eligibility requirements. And eligibility relies on 'total household income' being reported on the FAFSA form ... which includes both the parents' income plus the student's income.

    If, for example, you 'forget' to report your dancing income to the IRS and/or your parents don't report your camming income to FAFSA, as soon as the IRS receives a 1099 form from the club with your name and SS# on it IRS computers will attempt to cross-check / investigate tax returns also showing that same name and SS#. This means that both your own tax return, and your parents' tax return, could be audited, since your parents' tax return also lists your name and SS# as a dependent. Additionally, the IRS will inform FAFSA. As a result, it's possible that FAFSA could then threaten your parents with 'fraud' if they filed a FAFSA form which did not include your dancing income. At the very least, FAFSA will expect immediate repayment of any student grant money that the student would NOT have been eligible for had the correct 'total household income' been entered on the FAFSA student loan / grant application form your parents submitted on your behalf.

    Thus attempting to keep your dancing earnings a 'secret' from your parents could have all sorts of negative repurcussions !

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    Default Re: Filing taxes as a dependent student

    Wow, thanks for all of the information.

    However, I actually fill out the FAFSA myself, and I have every year (so I wouldn't need to lie to my parents, I would just correct the amount on my own right?). I don't get any grant money, and at most I get about 7000 a year in unsubsidized government loans (thats actually why I'm considering dancing… to help pay off my loans).

    Taxes are automatically taken out of my part-time job, but how do I go about sending dancing taxes in quarterly? If I started dancing in late May, would I still send some in in June? Since I wouldn't have been dancing long, how much would I send in? I guess the 25% would be divided between the quarterly installments based on kind of an "average" of what I think I'd make, and then if I owed more the IRS would let me know when I file my return?

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    Default Re: Filing taxes as a dependent student

    ^^^ if you are the one filing the FAFSA form, then that will avoid the potential problem I posted about earlier.

    If you are just starting to earn money from dancing, I would wait until the September 15th estimated tax due date before sending in an estimated tax payment. By then you will have a far better idea what your 'typical' dancing income level is going to be like. Even so, I would recommend setting aside 25% of your dancing earnings from the first night you start working as a dancer, so that you'll have the money available to make the payment when September 15th rolls around.

    As to actually making the payment, simply clip the correct quarterly voucher from the end of IRS form and snail mail it ... along with your check ... to the IRS address for your particular state which is also shown on the same IRS form.

    If your particular state levees its own income tax, there will also be a similar state estimated tax form with vouchers for estimated state tax payments.

    Also note that the estimated taxes being taken out of your 'straight job' paychecks will NOT be sufficient to actually cover the income taxes due on that paycheck income ... because your 'straight job' payroll processor is basing the amount of tax money being withheld on the projected income tax bill resulting from your 'straight job' income alone. Since US tax rates are progressive with rising income level, the actual tax rate which will apply to your 'straight job' paycheck income ( plus your dancing income ) is going to be higher.

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    Default Re: Filing taxes as a dependent student

    Okay, to make things clear for myself: I need to calculate how much money I've made from dancing in the 4 months for quarterly payments and then send in around 25% of that for each payment? What about social security?

    Also, if i live in GA I can still send them estimated tax payments (same dates), but I'm not sure how much on top of the federal income tax I should be sending?

    And, how do I deal with the fact that the payments from my other job is not going to be "sufficient"? Should I send in MORE with my quarterly payments to make up for that or maybe be prepared to owe taxes at the end of the year?

    I'm trying to look into this and figure it out but it sure is confusing

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    Default Re: Filing taxes as a dependent student

    Okay, to make things clear for myself: I need to calculate how much money I've made from dancing in the 4 months for quarterly payments and then send in around 25% of that for each payment? What about social security?

    Also, if i live in GA I can still send them estimated tax payments (same dates), but I'm not sure how much on top of the federal income tax I should be sending?

    And, how do I deal with the fact that the payments from my other job is not going to be "sufficient"? Should I send in MORE with my quarterly payments to make up for that or maybe be prepared to owe taxes at the end of the year?

    I'm trying to look into this and figure it out but it sure is confusing

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    Default Re: Filing taxes as a dependent student

    ^^^ one of the inherent 'problems' with any new business ( and stripping is a sole proprietor business ) is that income is hard to predict. That's why the payments are called 'estimated' taxes. For starters, the 25% figure for federal taxes is literally 'close enough for gov't work' during your first year of dancing !!! If your first estimated tax payment will be made on September 15th, total up all of your dancing income earned through this coming September 1st - calculate 25% of that - and send a check for that amount as your 3rd quarter estimated federal tax payment.

    In regard to Georgia state estimated taxes, the top tax bracket ( which kicks in above $7,000 ) is 6%. However, between deductions and exemptions the effective tax rate is likely to be more like 5% ( given the under-withholding by your 'vanilla' employer ). So, as above, calculate 5% of your dancing earnings through September 1st - and send a check for that amount as your 3rd quarter Georgia estimated tax payment. The estimated tax form for Georgia can be found at

    Thanks to the 'first year in business' exemption from under-withholding penalties, for your first couple of estimated tax payments there's no penalty if you're 'wrong' on your estimated tax amounts. As long as your estimated tax payments are anywhere near close to the right 'ballpark', you'll be fine. After you make the 3rd quarter payment on September 15th ( for income earned through Sep 1st ) , and after you make your 4th quarter payment on January 15th ( for income earned between Sep 1st and Jan 1st ), you'll next file your 1040 annual federal tax return and annual Georgia IT-500 state tax return. At that point, you'll be able to see what your ACTUAL effective tax rates come out to be with your dancing income, your 'vanilla' job income and your 'vanilla' employer's tax withholding factored in. This in turn will allow you to adjust the initial 25% and 5% estimated tax rates on your dancing income up or down for more accurate future estimated tax payments.

    Again, the main purpose for making estimated tax payments soon after you start earning dancing income is to avoid a situation where, come next April 15th when your 2014 full year tax returns are due on 2014 income, PLUS your 1Q 2015 estimated tax payments are due on income earned from Jan 1 to April 1 of 2015, that you suddenly need to dig into your pocket to come up with $10,000+ in tax money which you don't have !!! This situation is all too common ... and results in not only a need to enter into a monthly payments plan with the IRS at a high interest rate, but also draws IRS attention to the 'fact' that you haven't been paying much attention to your tax compliance ( which increases the chance of a future IRS audit ).

    In regard to your Social Security question, the 25% estimated federal tax rate on your dancing income is actually made up of three components - a 7.65% 'employer's share' of SSI, plus another 7.65% 'employee's share' of SSI, plus a 10% federal income tax. Paychecks received from 'vanilla' employers show the 'employee's share' of SSI and the federal income tax, but do NOT show the extra 7.65% which the 'vanilla' employer pays to the IRS directly on behalf of the employee. Since dancing is a 'business', you are required to pay both the 'employer's share' AND the 'employee's share' of SSI tax. This 15.3% combination is also sometimes referred to as 'self-employment' tax.
    Last edited by Melonie; 05-23-2014 at 01:52 AM.

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