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Thread: I do not understand taxes at all.

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    Default I do not understand taxes at all.

    Before anyone tells me to run a search - I have, and nothing has been helpful to me.

    I've filed once in my life, which was easy, back when I worked in retail. I did not file for 2013 because I made under $5000 that year. I started dancing full time in Jan 2014, and stayed at one club until September, when I moved on to a new club. I never heard of or got any sort of tax form from either of these clubs, and never expected one. I have no idea where to go about getting what I need. I have zero idea about how to do taxes as a dancer. What do I do first?

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    Default Re: I do not understand taxes at all.

    Do you know how much money you made?

    IF you have no dependents or do not own a house, I am going to guess that a full 1040 is a waste of time. Download a 1040A and the instructions and start reading.

    You owe a lot more than you think you do[don't we all]

    If the form makes no sense to you, head down to HR Block or somesuch and talk to them.

    As a starting point for income, don't think about any number that is lower than your total bank deposits.

    You are probably going to be looking at a number like 30 percent of your gross income as tax and social security

    Start thinking about becoming a business so you can get write offs to lower your tax liability for next year
    Last edited by oldster; 02-14-2015 at 07:38 AM.

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    Default Re: I do not understand taxes at all.

    ^^^ actually, unless the club actually treated her as an 'employee' dancer ... being paid tipped minimum wage etc. and year end issuance of a W2 form ... she'll need to file as a 'sole proprietor business' whether or not any official business registration has been made. This means completing Schedule C 'profit or loss from a business', as well as filing a 1040 long form ( to properly handle the 'self-employment' tax and resulting partial adjustment to 'personal' income level ).

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    Default Re: I do not understand taxes at all.

    You report income based on your own records. Keep in mind that any business expenses, such as outfits, jewelry, phone, computer, transportation costs (cab fare, or gas mileage), beauty care above what is required by a non dancing job (hair extensions, tanning, mani-pedis required by the club), and meals or lodging when performing out of town, any expenses associated with dancing at the club (house fees and tip outs) are all tax deductible.

    Your bank statements can help you assemble this information if you didn't keep a formal record before now.

    You need to file as it is your only proof of income for future credit ratings. Ask around your club for references on accountants. I've used a wonderful lady for years now who helps a lot of the dancers in my area and is good with staying on top of tax law.

    Even better, anything you pay to your Tax Accountant is also tax deductible.

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    Default Re: I do not understand taxes at all.

    Taxes boil down to a pretty simple concept. The IRS wants to know how much money you made, and they want to know how much money you spent on business expenses (make sure to keep receipts for costumes, keep track of how many miles you drove that year to get to work as a rough estimate, etc.). Obviously if you're claiming anything other than "dancer / performer," you'll need to be careful about what you claim as a business expense. We have some great threads on here about what can and can't be claimed as legitimate expenses on taxes...

    H&R Block has a great student rate if you're a current student.

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    Default Re: I do not understand taxes at all.

    I suggest going to a tax professional. Are there any dancers at your club that you can ask where they get their taxes done? When my friend was dancing, a lot of the dancers at her club went to the same person for taxes.

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    Default Re: I do not understand taxes at all.

    so i know per year you should put aside 30% total, but per payment how much is that? like if i take home $500 one night, how much or what percent of that do i take aside for taxes?

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    Default Re: I do not understand taxes at all.

    Thanks for posting this.. taxes confuse me too (I always got a W-2 sent in the mail from 'vanilla' jobs or clubs and now I don't idk what to do!)

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    Default Re: I do not understand taxes at all.

    Have anyone actually been to H&R block and had good experience with them?

    I've had the same accountant for 3 years, he was referred to me by a manager at the previous club where I used to work. Not only did I realize I was being overcharged but almost had to pay thousands in fines because of a mistake he made but did not tell me about it. When I told him to fix it he didn't and almost caused me even more problems because he kept saying he sent in my documents but never did so I kept receiving notices from the government but did not understand why.

    I need to find a new accountant but don't talk much to the girls at the current club where I work and from the conversations I overheard, a lot of them don't file their taxes. I've been told by my previous manager (the one who referred that terrible accountant to me) that the H&R block frowns upon sex workers and can actually report to the government on top of overcharging, but I don't know if any of this is true...

    I know nothing about taxes either, it was so much easier at the end of the year to file my taxes when I just received pay checks, I could go to any accountant lol. I guess I could learn to do it myself but it sounds so troublesome I just want to pay someone to do it for me, and do it right!

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by alibby View Post
    so i know per year you should put aside 30% total, but per payment how much is that? like if i take home $500 one night, how much or what percent of that do i take aside for taxes?
    What is 30% of $500? $150. That's a good estimate with some cushioning room.

    When I calculated my taxes owed it came out to about 27% so that's 3% left over; if you set it aside and forget about it except to file quarterlies, you basically get a small refund to yourself since, being earmarked for taxes, it's like you never had the money to begin with.
    "People jack off with the left hand and point with the right."

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by Melonie View Post
    ^^^ actually, unless the club actually treated her as an 'employee' dancer ... being paid tipped minimum wage etc. and year end issuance of a W2 form ... she'll need to file as a 'sole proprietor business' whether or not any official business registration has been made. This means completing Schedule C 'profit or loss from a business', as well as filing a 1040 long form ( to properly handle the 'self-employment' tax and resulting partial adjustment to 'personal' income level ).

    ...and Schedule SE, too.





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    Default Re: I do not understand taxes at all.

    ^^^ considering that these sort of questions come rapid fire this time of year, let me try a very basic overview.

    Plain vanilla jobs, and an extreme few dancing 'jobs' ( which pay dancers a tipped minimum wage paycheck ), fall under the 'employer' + 'employee' model. The IRS requires employers to withhold from each 'employee' paycheck 7.65% of social security / medicare taxes, and also withhold additional moneys to cover federal ( and if applicable, state and local income taxes ). 'Employees' see this withholding from their paychecks. But 'employees' do not see the facts that A. their 'employer' files and sends to the IRS monthly estimated tax payments on their employee's behalf ( i.e. the money the employers withheld from employee paychecks ), and B. that their 'employer' must also pay a matching 7.65% social security / medicare tax contribution out of the employer's own pocket.

    As a self-employed 'business' entity, dancers and camgirls essentially are required to fill the roles of both 'employer' and employee'. The first consequence is being required to pay 2 * 7.65% = 15.3% in social security / medicare tax. The second consequence is being required to withhold estimated tax money from their earnings, and file / make estimated tax payments to the IRS on a quarterly basis.

    Beyond the social security / medicare tax, there is also an issue of federal and state income taxes. These are highly proportional to total annual income level. They are likely to require little or nothing in the way of additional tax payment at a $20k per year ( total ) income level, may amount to a few percent in additional taxes at a $35k per year ( total ) income level, may amount to 10%+ in additional taxes at a $50k income level, but may rise to 20%+ in additional taxes at a $100k per year ( total ) income level. Lots of individual variables affect the income tax calculation.

    There is also a new tax to deal with i.e. the IRS 'penalty' tax for failing to purchase qualified health insurance. For 2014 that new tax adds 1% ... but for 2015 that new tax adds 2%

    I would also mention that, for girls who have vanilla job income PLUS self-employed dancing / camming income, the estimated tax withholding performed by their vanilla job employers is going to be insufficient to cover the actual taxes due on their vanilla paycheck's contribution to total combined income ... because the vanilla job employer is unaware that additional dancing / camming income exists.

    In terms of tax filings, April 15th is the deadline for ACTUAL taxes due on income earned between January and December of 2014 ... via filing of an annual 1040 tax return with Schedule C and Schedule SE plus the necessary check. April 15th is also the deadline for ESTIMATED taxes due on income earned between January and March of 2015 ... via filing a form 1040ES ( first quarter ) plus the necessary check. Also, if you live in a state that levees its own income tax, state tax returns and state estimated tax filings will also be due by April 15th.

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by Melonie View Post
    Plain vanilla jobs, and an extreme few dancing 'jobs' ( which pay dancers a tipped minimum wage paycheck ), fall under the 'employer' + 'employee' model. The IRS requires employers to withhold from each 'employee' paycheck 7.65% of social security / medicare taxes, and also withhold additional moneys to cover federal ( and if applicable, state and local income taxes ). 'Employees' see this withholding from their paychecks. But 'employees' do not see the facts that A. their 'employer' files and sends to the IRS monthly estimated tax payments on their employee's behalf ( i.e. the money the employers withheld from employee paychecks ), and B. that their 'employer' must also pay a matching 7.65% social security / medicare tax contribution out of the employer's own pocket.
    Sorry to threadjack, but if a dancer works at a club that consists its entertainers employees and issues a W2 and fills out a Form 4137 for Unreported Tip Income, won't said dancer be penalized for not reporting tip income to their employer (even though clubs don't let their dancers report their tip income thru them...isn't that illegal?)? How can a dancer avoid this penalty for something that was really the club's fault (even though the IRS considers this the employee's responsibility) when she is really just trying to do the legal thing and report her income?
    More specifically, how does one provide a statement to the IRS showing reasonable cause for not reporting tips to their employer -- just include a note on a slip of paper in their tax return??

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    Default Re: I do not understand taxes at all.

    ^^^ you've pointed out a very definite 'rock and a hard place' problem for dancers who are treated as W2 'employees' by their club. As the 'employer', the officially documented amount of money paid to a particular 'employee' dancer also sets the costs of the 7.65% 'employer's' share of social security / medicare tax, sets the cost of the 'employer's' state unemployment and disability insurance premiums paid on behalf of the 'employee' dancer etc. So the 'employer' club has a big vested interest in keeping the officially documented amount of money paid to 'employee' dancers to a minimum.

    From a 100% legal standpoint, employee dancers are supposed to be allowed to report their tip earnings via the club's payroll system. However, in 'real world' terms, this is usually not allowed. The clubs want to see total dancer earnings, including both minimum wage payouts to dancers and dancer tip incomes, to average something in the range of $8-10-12 per hour in order to minimize their own tax and insurance costs. The 'employee' dancers have no 3rd party verification that they actually earned X amount of tip money directly from club customers, which the 'employer' club can in turn use as an excuse to refuse to accept reported total earnings levels exceeding an $8-10-12 per hour 'average'.

    this situation basically leaves the employee dancer between a proverbial 'rock and a hard place'. On the one hand, she can go along with the employer club's position that she only earned a combined $8-10-12 per hour on the average ... ironically meaning a low risk of attracting IRS attention ... but also meaning she was complicit in under-reporting her income, lowering her verifiable income level for credit and other purposes, etc. On the other hand, she can report the additional tip income via Form 4137, wind up being subjected to higher taxes, and ironically increasing the risk of attracting IRS attention by doing so. This is yet one more reason that I would never work as an 'employee' dancer.
    Last edited by Melonie; 02-16-2015 at 02:52 PM.

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by Melonie View Post
    On the one hand, she can go along with the employer club's position that she only earned a combined $8-10-12 per hour on the average ... ironically meaning a low risk of attracting IRS attention ... but also meaning she was complicit in under-reporting her income, lowering her verifiable income level for credit and other purposes, etc.
    There were a few clubs in Newport News, Virginia, doing that. After all, a good night in that area is in the mid $300 range so the club owners could get away with underreporting employee taxes.





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    Default Re: I do not understand taxes at all.

    ^Since the customers that pay me do not hand me tax forms, and I work at the club as a contractor, does the IRS simply take it on faith that I say I make what I make? Why on earth would they do that?

    I know what I made in 2014, but no one gave me any official form that confirms it, since my club does not keep track and tracking down every customer I've had in the past year to fill out a form is not only impossible, but ridiculous, lol!

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    Default Re: I do not understand taxes at all.

    I'm filling out the Schedule C form, and I'm not sure what it means in Part 3, line 42 "cost of goods sold". Do I just put my income? I consider myself priceless, so...

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by NightGoddess View Post
    I'm filling out the Schedule C form, and I'm not sure what it means in Part 3, line 42 "cost of goods sold". Do I just put my income? I consider myself priceless, so...
    I believe that's looking to calculate the cost of any products you sold. So if you were a massage therapist who sold some essential oils and lotions during the fiscal year in addition to the massages you gave, you'd put the amount you made from those goods on that line.

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    Default Re: I do not understand taxes at all.

    So, my personal time doesn't count as a product, only physical goods like if I sold roses or something. Cool.

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by NightGoddess View Post
    So, my personal time doesn't count as a product, only physical goods like if I sold roses or something. Cool.
    Yeah, your personal time in the club is compensated through cash tips. So the IRS *definitely* cares about your personal time.

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    Default Re: I do not understand taxes at all.

    I would definitely suggest having an accountant look over your return before you send it in. You don't want to have any math errors or miscategorized info.
    "People jack off with the left hand and point with the right."

    "You can check out any time you like, but you can never leave."

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    Default Re: I do not understand taxes at all.

    Yeah, I gave myself an aneurysm trying to figure it all out, I'm using my mom's accountant who's based in Vegas.

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    Default Re: I do not understand taxes at all.

    Quote Originally Posted by NightGoddess View Post
    I'm filling out the Schedule C form, and I'm not sure what it means in Part 3, line 42 "cost of goods sold". Do I just put my income? I consider myself priceless, so...
    Line 42 is not applicable to service industry jobs. That's where your "inventory" goes. If you ran a retail or manufacturing business, you would have a lot of COGS.

    So, my personal time doesn't count as a product, only physical goods like if I sold roses or something. Cool.
    Right you are.

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    Default Re: I do not understand taxes at all.

    go buy youself a turbo tax. it will help you step by step. try to pay a few dollars tax every year.

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