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Thread: Can someone please confirm all my tax/money/legal info is correct?? please!!!

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    Angry Can someone please confirm all my tax/money/legal info is correct?? please!!!

    I've spent hours on hours reading posts, and I think I got it all down, but don't want to get in any legal/IRS trouble if I missed anything!!!!!!

    I am a college student but took a health leave for a year.. as a result, I am ineligible for financial aid for one semester and have to save 30k for when I go back. I began dancing February. I had NO idea I had to pay taxes- I'm young and inexperienced. My dancing follows the guidelines for being an I/C. It's like a pop-up "strip club" in NYC at various venues. I have to pay a house fee that goes to tipping the house moms and bouncers, and I keep all the money I make-20$ per dance. (ALSO- I get no 1099 or W2---- does this matter?? )
    I've been depositing all of my money into my personal bank account. My mom gave me 3,000 cash for my birthday, and I have a written note for it. Other than that, all my cash deposits are income. I have been afraid to reach a 10,000 limit, but then I realized I could pay taxes and it would be okay (i must pay school via check).
    My main concern is being audited/finding myself doing something illegal accidentally due to lack of knowledge. A dance-knowledgeable accountant I found is on vacation for a month.
    SO, based on scouring this board, I do not need to worry about the law if I properly file taxes, meaning:
    • I file as an I/C, I can label myself as "entertainer", save 30% for taxes, have an accountant help me for my first time
    • If I make more than my parents only, they cannot claim me as a dependent on their taxes; I am still dependent in terms of FAFSA, but next time I file FAFSA, the income is mine+parents'
    • I can deposit all of my earnings in my bank account even after depositing over 10k in a short time span, as long as my 2015 April 15 annual taxes match to my 2014 bank deposits, and won't be audited due to suspicious activity (this is honestly my main concern. Aren't my cash deposits right now suspicious? How can I keep depositing my income till Sept. 15? ... I keep a detailed record of my nightly earnings in an ink-hand written log book. Yesterday I began to apply for an EIN to maybe open a business bank account because apparently that's more legitimate and deposit into that instead, but they asked what service my business (sole proprietor ?) provides and I didn't know how to answer haha. But should I even worry about opening a business account if every dollar of my cash deposits will be reported when I file taxes? That's enough if I get audited, right?)
    • My financial aid may be effected (although my parents are DIRT poor, and if I made 30k in addition to their income, I would still qualify for full aid through my school)
    • I pay quarterly taxes, and do an annual one by April 15, and everything in the end has to match up. (But I've missed my first quarter, April 15!! )
    Is this all correct? And is this all the info I need to know?
    Also, I'm not sure if you've heard of it, but I work with Saint Venus Theater in nyc... its been running for years, the cops come in from time to time to check in, and they're very very strict with not allowing illegal things to happen. So, my profession is legal....but is there any chance that I can be thrown with illegal accusations if anyone there gets in trouble??
    Thank you SO MUCH !!!!!

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    Banned Melonie's Avatar
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    Lightbulb Re: Can someone please confirm all my tax/money/legal info is correct?? please!!!

    bullet 1 - correct ... although the 30% total may be a bit anemic given that you will owe NY state and NY city income taxes on top of federal taxes, and also assuming that as a student you may legally still considered to be a 'dependent' of your parents ( meaning that they may get a ~$3000 tax break, but also meaning that you may not get a similar $3,000 tax break on your own tax return ). But 25% federal + 5% NY state ( which includes NYC ) estimated tax payments are a reasonable starting point.

    bullet 2 - conditionally correct - depending on relative incomes as well as a 51% 'support' calculation. And yes the FAFSA application must use 'total household income'

    bullet 3 - audit risk will depend on what your NY bank chooses to report to the NY state tax dep't and/or IRS in the way of 'cash transaction' reports, 'suspicious activity' reports, etc. The size of the bank balance doesn't really matter. It is the size of the individual cash transactions, or a pattern of repeated cash transactions over a short period of time, that prompts the reports. Also, non-cash deposits aren't considered ( i.e. hopefully your mom handed you a $3,000 check not cash )

    on the separate topic of an EIN, in your situation it probably won't make any difference given that you have already begun using your personal account to deposit your earnings. But yes opening a separate busiess bank account to accept your deposited earnings does help 'credibility' if and when you are audited ... even if your are operating under your own name ( vs a registered business name ) and your SS# ( vs an EIN ). Also, opening a separate business bank account may reduce the likelihood of your NY bank issuing transaction reports, since the existence of the separate business account provides the bank with the inherent knowledge that your cash deposits are stemming from business operations.

    bullet 4 - yes financial aid is based on 'total household income', so if you'll be adding $30k to that 'total household income' your future grant eligibility may be affected

    bullet 5 - yes quarterly federal and NY state estimated tax payments go hand in hand with operating a 'sole proprietor' business. It's no big deal that you missed the 1Q2014 due date ... just send in the 2Q2014 estimated tax payment by the June 15th due date. Also another reason not to complicate things by getting an EIN and registering a business given that June 15th is just over a week away.

    In regard to the risk of a (bogus) bust, that's always a possibility. However, NYC is pretty low risk.
    Last edited by Melonie; 06-05-2014 at 08:14 AM.

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    Default Re: Can someone please confirm all my tax/money/legal info is correct?? please!!!

    You need to get a tax accountant or CPA and review your situation in detail and file all required taxes, which also need to be disclosed in full in any application for financial aid. the general rule is that all income, including tips, are reported as income for tax purposes and are subject to federal, New York State, and New York City income tax purposes, as well as self-employment taxes.

    You indicated that you work for Saint Venus Theater which is a lap dance club. The general rule is that topless dancing is legal. However, Vice Enforcement may investigate this club and its dancers for prostitution.

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    Curious Guest PlatinumNYC's Avatar
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    Post Re: Can someone please confirm all my tax/money/legal info is correct?? please!!!

    You need to get a tax accountant or CPA and review your situation in detail and file all required taxes, which also need to be disclosed in full in any application for financial aid. the general rule is that all income, including tips, are reported as income for tax purposes and are subject to federal, New York State, and New York City income tax purposes, as well as self-employment taxes.

    You indicated that you work for Saint Venus Theater which is a lap dance club. The general rule is that topless dancing is legal. However, Vice Enforcement may investigate this club and its dancers for prostitution.

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