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Thread: Paying taxes for the first time.

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    Default Paying taxes for the first time.

    Sooo, long story short I need to file my taxes but have been confused about the process for a long time. But I heard people talking about the September tax deadline which is coming up pretty soon.

    I've never deposited any money. I've only ever kept my cash in a shoebox hidden away in a closet.

    Anyway, I am completely lost with the process and confused about the timeline. I started dancing in January of this year (2014) and I'm trying to work out what I owe, when I pay, ect. I've heard from some sources you pay taxes in April, but then I've heard from others it's quarterly, which is really confusing to me. I just don't really know where to start, how to send the money, ect..Does it depend on which tax form you use?

    Also, what do clubs report? None of the clubs I have worked at have ever had my SSN, just my real name, address, ect.

    I'm mainly just scared of an IRS audit, and because I'm applying for my citizenship soon I want to have a clean record and show that I'm an honest person

    Sorry for starting another thread, but I've had a bunch of concerns lately that I need to figure out with dancing before April gets here and I find out I owe a bunch of money I don't have or something haha.

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    Default Re: Paying taxes for the first time.

    If I were in your shoes, I'd get an accountant for your first time around. Otherwise, there's already a ton of information on here about , so browse/search through Dollar Den.

    The thread on taxes on Camming Connection is also full of great info even for dancers: https://www.stripperweb.com/forum/sh...still-worth-it

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    Default Re: Paying taxes for the first time.

    +1 for get an accountant.

    You don't really need to make your quarterly estimates this year. But, you'll have to next year. That's one reason it's easiest to get a CPA now. She'll set you up so you don't really have to go back and see her every quarter.

    I would open a business account and start making deposits. Businesses do that and you are a business. I'd put about 30% of my gross aside for taxes. I'd write myself a regular check. In the self-employed world, it's called a draw. But, really treat it like a pay check. Make it big enough that you can live on it. If you want and have the discipline, open a savings account at the same time and put a regular portion of your draw in the savings account. I put 10% in until I met my first savings goal. (Six months of expenses in savings.) Then I started investing. But, I always made sure I kept six months of expenses in my savings account.

    Pay your business expenses from the business account. For example if you go on the road to dance, reimburse yourself for your credit card charges for the hotel. Pay yourself mileage for business trips, not commuting though. If you buy costumes at a costume shop or from a costume lady, pay her with a check from the business account and of course record the expense as "costumes." Same deal for "theatrical makeup." If you cannot buy with a check from the business, use your credit card and reimburse yourself. Make sure the receipt says "costumes" or "theatrical makeup" if you have to pay with your personal credit card. And record the reimbursement in the "costumes" or "theatrical makeup" columns on your ledger. As soon as your business is going strong enough to get on, get a business credit card.

    Good luck,

    XOXO
    Z

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    Default Re: Paying taxes for the first time.

    +2 for getting an accountant.

    On top of the 'self-employed' aspect, this coming April's annual tax returns are also going to include new ACA related tax calculations / penalty taxes for the first time. Thus having a CPA make recommendations as to how you can best 'structure' your business activities from the 'beginning' could very well save you a fair amount of tax money over time.


    but I've had a bunch of concerns lately that I need to figure out with dancing before April gets here and I find out I owe a bunch of money I don't have or something
    Going back to basics, at minimum you will owe 15.3% Social Security tax on every dollar you earned in 2014. Depending on your actual income level, you may owe an additional 5-15% in federal income tax, plus an additional 3-8% in state / city income tax if you live in a state / city that levees such a tax, plus a 1% ACA penalty if you don't have 'qualified' health insurance.

    Also keep in mind that, by next April 15th, you'll not only have to pay the actual tax due on all of your 2014 income, but also have to pay first quarter estimated taxes due on January thru March 2015 income. Together, these will amount to a SIZEABLE chunk of tax money !!!

    To pick an arbitrary example, say you average $1000 per week in earnings and your state does levee an income tax. The total amount of tax you could owe next April might amount to 52 * $1000 * ( .15 +.07 + .04 ) = ~$13,000 in actual taxes on 2014 income, plus another 13 * $1000 * ( .15 +.07 +.04 ) = ~$3,400 in estimated taxes due on your first quarter 2015 income, plus another 52 * $1000 * ( .01 ) = $ 500 in ACA penalty tax, thus a total of ~$17,000. Lots of individual variables ( filing status other than 'single', exemptions, deductions, tax credits etc. ) could result in lower taxes, obviously.

    The basic point is that the size of the likely total tax payments invoived by next April 15th's deadline will be substantial enough that a 'new' dancer / camgirl is likely to have great difficulty 'coughing up' all of this cash if she hasn't been regularly setting a portion of her earnings aside for this purpose throughout 2014.

    Indeed there is a September 15th quarterly estimated tax payment deadline approaching. Other quarterly estimated tax deadlines are June 15th, January 15th, and of course the April 15th mentioned above. As Zofia pointed out, the IRS does allow a 'first year in business' exemption from the potential IRS penalties and interest charges if 'new' businesses choose not to make quarterly estimated tax payments. But that 'first year in business' exemption obviously goes away once the second year of business operation begins ( which in your case is essentially January 1st 2015 ). And, even more obviously, that 'first year in business' exemption from paying estimated taxes without IRS penalty and interest charges accruing does NOT provide an exemption from having to pay the ACTUAL taxes due on the first year's income once the April 15th annual tax return deadline arrives.
    Last edited by Melonie; 09-09-2014 at 03:50 AM.

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    Default Re: Paying taxes for the first time.

    Thanks! That is really helpful. A little worried about coming up with that money. I've been trying to put some aside, but it's hard because my income has been so irregular and I've taken months off, ect. I have to go through and work out what I've earned or see an accountant about it. What do new dancers who haven't been setting aside the money usually do when the time comes to send in payments if they don't have the money?

    And because the year is until January that would mean I would have to file first on Jan 15th for the whole of 2014, right?

    Another thing: what do clubs report to the IRS about us? Do they send in our names, info, ect?
    Last edited by MelissaRenee; 09-09-2014 at 10:07 AM.

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    Default Re: Paying taxes for the first time.

    What do new dancers who haven't been setting aside the money usually do when the time comes to send in payments if they don't have the money?
    Option 1 - 'borrow' the tax money via charging it to a credit card, via a 'private sector' unsecured loan, etc. Pro is that there aren't any 'strings' attached. Con is that reasonably good credit is needed.

    Option 2 - Enter into a monthly payment plan agreement with the IRS. Pro is that, no matter your credit rating or available credit, the IRS will accept this option. Cons are several ...

    - the IRS will pay lots more attention to your future estimated tax payments and annual tax returns. This may result in 'iffy' tax deductions being disallowed, thus raising future tax bills, etc.

    - between the current quarter estimated tax payments and the monthly payment plan tax payments, ~50% of future gross dancing earnings may have to go toward tax payments for the duration of the payment plan term. That 50% might consist of 30% for estimated tax payments due on present earnings, plus 15% for overdue tax payments owed on 2014 income ( the same 30% but spread over a 2 year monthly repayment plan ), plus another potential 5% in accumulating IRS interest / penalty charges on unpaid balances for taxes not paid in full by April 15th.

    - if you default on your IRS payment plan payments ( meaning you can't work for a particular month thus can't make the required monthly IRS payment ) the IRS may immediately cancel the payment agreement and place liens against any personal assets ( bank account balances, car, etc. ), may immediately start seizing any incoming money out of your bank account before you can withdraw it or pay other bills with it, etc. While it doesn't usually apply to dancers, the IRS can also 'garnish' weekly paychecks to collect 'their' money before you can get your hands on it.

    - the IRS can obviously share the fact that you owe 'back taxes' with other gov't agencies ( like state dep't / immigration ) and private agencies ( like credit reporting bureaus ).

    Also, while it doesn't directly involve the IRS, owing 'back taxes' is one of the worst possible things to show up on a person's credit report, since from the viewpoint of banks and other lenders, the IRS has the authority to make sure you pay the IRS first while any and all other lenders / creditors get paid second.


    what do clubs report to the IRS about us? Do they send in our names, info, ect?
    Generally speaking, clubs are required to report to the IRS all 'customer money' that doesn't pass directly from the club customer's hand to the dancer's hand in the form of cash. This means customer credit card charges for private dances / VIP's where a portion is later paid out to the dancer by the club, this means customer purchased 'funny money' where a portion is later paid out to the dancer by the club, etc. The official IRS reporting document ( form 1099-misc ) will include the business name and ID# of the club, the real name + real address + real SS# of the dancer, the total amount paid to the dancer over the course of the entire year, etc.

    The kicker, of course, is that dancers never really know what to expect in terms of club 1099 reporting until the February or March following the year for which the 1099 is being issued. So in your specific case, you won't really know until next February or March how much of your dancing income since last January will actually be reported.

    And because the year is until January that would mean I would have to file first on Jan 15th for the whole of 2014, right?
    The January 15th estimated tax deadline is for taxes due on income earned from October 1 through December 31 of 2014. Given your 'first year in business' exemption from IRS under-withholding penalties and interest charges, this is the last estimated tax deadline that you can elect to 'skip'. However, when the April 15th 'double' dealine rolls around, you must pay both ALL of the taxes due on 2014 income ( as calculated by filing a 1040 annual tax return ), PLUS the estimated taxes due on income earned from January 1 through March 31 of 2015 ( by filing a 1040-ES estimated tax voucher ).
    Last edited by Melonie; 09-09-2014 at 11:10 AM.

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    Default Re: Paying taxes for the first time.

    Thanks! This is all really new info so it's a little overwhelming. You've helped a lot I do think I'm gonna see an accountant though. Does anyone know the best way to find one that specializes in this kind of stuff/will be non judgmental ect.? I tried googling "Chicago accountant exotic dancer" and nothing really came up...

    And you say the clubs you worked for are meant to mail your 1099?
    Last edited by MelissaRenee; 09-09-2014 at 01:56 PM.

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    Default Re: Paying taxes for the first time.

    You could ask around your club if you're close to any of the dancers. Personal recommendation is definitely the best way to find someone. Otherwise, maybe PM a lady on here who is located in Chicago if she can recommend someone? If you can't find someone specifically for the adult industry, look for someone who specializes in filing for small businesses/independent contractors because the same principles apply.

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    Default Re: Paying taxes for the first time.

    Quote Originally Posted by MelissaRenee View Post
    Does anyone know the best way to find one that specializes in this kind of stuff/will be non judgmental ect.? I tried googling "Chicago accountant exotic dancer" and nothing really came up...
    Don't worry about an accountant being judgmental. The vast majority don't care what you do, so long as you pay their fee. A good regional firm is Blue & Company. They are from Indianapolis, but very good. Closer to Chicago is McMahon & Associates in Munster. Good local CPAs, by reputation. Unfortunately, I don't know any small or regional firms in Chicago proper.

    And you say the clubs you worked for are meant to mail your 1099?
    They are required to.

    HTH
    Z

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    Default Re: Paying taxes for the first time.

    That makes things easier if they mail out a 1099! I guess now I'm just gonna have to put aside more of my earnings for taxes and saving my receipts.

    One last question: does the name of the club the dancer works at show up on her "record" so to speak? I know there was talk on here of people putting other things under their occupation but I wasn't sure how that would work if a club is sending in info about you making money there too?

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    Default Re: Paying taxes for the first time.

    does the name of the club the dancer works at show up on her "record" so to speak?
    The 1099 form will include the payer's 'business name' and Employer ID #, as well as the total amount of money the club paid out to you during the previous year. That 'business name' can be anything from an innocuous 'XYZ Restaurant Corp.' to an obvious 'Scores' or 'DejaVu'. However, undoubtedly, a cross-reference exists which links Employer ID #'s with the actual business activities conducted by the payer ... meaning that any in-depth background check is likely to become aware that 'XYZ Restaurant Corp.' is in fact a strip club.

    In terms of who might actually see this record, release of IRS records for an in-depth background check requires that the person named in those records sign a permission form called a 4506T. Typically, this will only be required by state professional licensing agencies and 'high profile' straight job employers.


    That makes things easier if they mail out a 1099! I guess now I'm just gonna have to put aside more of my earnings for taxes and saving my receipts.
    indeed !!! The problem, of course, is that your copy of the 1099 the club sent to the IRS won't actually arrive by snail mail until late February or early March ... which in turn only leaves a few weeks before the April 15th 'double' deadline to prepare your annual tax return for the previous year, as well as filing first quarter estimated taxes for the current year ... i.e. coughing up all of the income tax money due on 15 months worth of earnings.
    Last edited by Melonie; 09-10-2014 at 01:13 PM. Reason: ou

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    Default Re: Paying taxes for the first time.

    Sorry to be all over the place, but I think I have it figured out after reading a crazy amount of IRS documents and threads on here

    So I won't show up as owing back taxes currently? And I won't if I pay on April 15th the tax on all I owed this year plus my quarterly estimated payment.

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    Default Re: Paying taxes for the first time.

    ^^^ The IRS provides a 'first year in business' exemption from penalty charges for failing to file and pay quarterly estimated taxes. However, once the first of January rolls around, that exemption arguably disappears. This means that by the April 15th 2015 deadline ...

    - you'll have to pay 20-25 or whatever percent 'effective' tax rate in SSI and income taxes due on income you earned during 2014 when filing your 2014 tax return ( with zero estimated tax payment 'credits' )

    - you'll also have to pay 25-30 or whatever percent 'effective' tax rate on income earned between January 1st and April 1st 2015 in the form of your first quarter estimated tax voucher / payment.

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    Default Re: Paying taxes for the first time.

    Got it. Thanks! Just wanted to make sure no IRS computers would show up right now that I'm not paying taxes.

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