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Thread: Taxes

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    Default Taxes

    How do taxes work when you're an exotic dancer? How do you report $ earned...what money do you report? If you could, I'd really appreciate if you could explain the whole process...
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    [boobies] [moon] [lightup]

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    Default Re: Taxes

    Earned moneys are to be claimed but you first must know a few things. You can claim all or some, its your call and there is no way for them to tell you "you made more" so you decide. But lets talk deductions. First off your most likely not getting paid by the club which makes you a CONTRACTOR! All moneys you pay to the house (stage fee, tip-out, dj, bouncers) is all a deduction as it is a cost of you doing business. ALL outfits, shoes, make-up, tanning, ect is a deduction as long as it is needed for you to work (read that as makes you money) so keep your reciepts. If you travel more than 20 miles to work..as in do the circuit..you can deduct milage so keep track of it. Hotels and food can be deducted. Pay monthly gym dues..a deduction. Get breasts done..a deduction. Seeing a pattern? As a contractor..and dancer..you are givin alot of options on taxes. Best would be to purchase a tax program loke Money 2002 or something that figgures out your taxes for you and allows you to input items such as deductions. We help alot of dancers become aware of things like this, so dont think anything about no knowing. If you have any questions please ask away! Best of luck!!

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    God/dess britneyireland's Avatar
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    Default Re: Taxes

    In a nutshell:

    You file as an independent contractor using the schedule C. You have to file Federal tax, state tax (if your state has it), pay a self employment tax AND since you are your own employer you have to pay all your Social Security (when you are an employee your boss pays half)

    Since most clubs don't give you receipts for cash dances, its pretty much the honor system for all cash transactions.

    However, many clubs (especially in CA since the new tax bill 2504 passed in Jan 2001) are now required to report any earnings you make on funny money. So not only does the club take 10% from you when you turn it in, they also report that amount to the IRS. At the end of the year, you will get a 1099 stating the total amount of money you earned via funny money.

    It is a tedious process, I used HRBlock last year. You are able to write off a lot of your expenses, but last year I found that the standard deduction was more than my total receipts for costumes, makeup, and other work related expenses.

    You also have to be careful when writing off your expenses because you don't want to write off too much...that will send a red flag to the IRS for an audit. Think about it....you can't write off 15K if your total income was only 20K.

    Hope this helps!
    b
    Rebecca Avalon







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    Default Re: Taxes

    Most girls only report money which thy know was reported to the IRS. Dances bought on credit cards are SOMETIMES reported.

    I'm just being straight up with you. Dancing is basically like working under the table, but you will need to learn how to provide some type of documeted income and employment to rent an apartmnt or buy a vehicle until you have an establushed solid enough credit rating where you will be granted those items on the merits of your credit history alone.

    I would never list on a credit app that you are a dancer. You should set up a business front for that.

    The reality in the trenches is that most girls report nothing that hasn't been reported to the IRS, and most clubs report nothing (check with the clubs you work at regarding dances paid on tabs)so most dancers don't even file.

    The choice is yours on what you do.

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    Default Re: Taxes - the goal of filing a Schedule C

    I have yet to see a club withhold 10%

    most clubs only track the money you make in the VIP room

    ....anyway

    The goal of filing a Schedule C (if you're really doing it as a side job, working through school, etc etc) is to get your net income (income after expenses) below $400. Income above this magic amount is subject to self-employment tax (social security and medicare tax) in addition to income taxes.

    I only reccomend reporting more if you think you may need proof of income sometime over the next 2 years (buying a house).

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    Banned Melonie's Avatar
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    Default Re: Taxes

    While it's true that in years past that some dancers were able to skirt the issue of taxes because they received all of their tips and private dance money from the customers in cash, this situation is rapidly changing. Besides new laws such as CA2054 which requires clubs to report financial information about dancers to the state authorities (and therefore to the IRS), the "chain clubs" have discovered that if they use a funny money system where customers must purchase the funny money thru the club's cash register and later the club pays out cash for the funny money dancers turn in, the club can claim a business expense for itself if it reports these payouts as dancers' income. Similarly, chain clubs have discovered that if they collect the price of private dances through the club's cash register and later the club pays out cash to dancers for their portion of the private dances each dancer did, the club can also claim a business expense for itself if it reports these payouts as dancers' income also. This can greatly increase the club's after tax income. Also, any dancers working for clubs where they are legally considered employees, i.e. receiving a cash or check payment for hourly pay, federal law also requires that these payments be reported as income. I'm betting that many many dancers are going to receive a nasty surprise this month as W2's and 1099-misc's from clubs start showing up in their mailboxes.

    Besides the direct income reporting, the IRS has spent absolutely tons of money developing computer data sharing with banks, brokerages, property title registrations, motor vehicle registrations, credit card companies, even issuers of money orders and travellers checks. This is supposedly an outgrowth of terrorist money-laundering investigations etc. but it can be used for anyone and everyone. As a result, the IRS receives information regarding a person's bank account, investments, property purchases, motor vehicle purchases, credit card spending habits etc. The IRS computers can now automatically determine how much money a person is saving and spending (other than actual cash - and even then there are laws requiring the reporting of large cash transactions). The IRS computers will then automatically try to match a tax return under the same name/SS# to this saving and spending. If the IRS records show that someone registered condo or a new $20,000 car but can't find a tax return to show where that sort of income came from, or if IRS records show that someone is running $ 2,500 a month through a bank checking account or a credit card but can't find a matching tax return, or if someone has deposited tens of thousands in a bank account or an investment account with no tax return to show for it, RED FLAG for audit!

    This means that even if a girl is still working in a club where all of her income is received directly from customers in cash, and could therefore forget to file a tax return without worrying about W2's or 1099's reporting the income for her, she also has to worry about her spending or saving that cash being reported these days. Unless a dancer is prepared to never own a home or a condo, to never buy a new car, to never have a bank account with more than a couple of thousand dollars in it, to never open an investment account, and to never spend more than a few hundred dollars at a time through a checking account or credit card, the odds are good that an audit will happen sooner or later if she 'forgets' to file a tax return or even if she fictionalizes the income on the tax return to the point where the level of reported income versus the level of actual spending or saving don't match.

    Even if a girl keeps all of her cash savings in a safe, rents an apartment and drives a used car to avoid the reporting, she can't spend that cash in any large amounts without triggering a cash transaction report. I don't know what the federal cash reporting requirement is, but I do know that if someone attempts to purchase money orders with cash at a post office or even at a WalMart that if the amount is over $1000 they start asking questions and filling out forms! This is a serious new issue to consider for any dancer thinking of "flying below the radar" to avoid reporting income and paying taxes.

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    Default Re: Taxes

    a timely resurrection of an old thread ! At any rate ...

    In theory, any transaction at the club that creates a paper trail can potentially be used by the IRS to prove you had income. This can include customer credit card cash advances, customer purchases of private dances / VIP room time at the club's cash register, customer purchases and dancer casn-ins of funny money. This can also include dancers' names being listed on club records of nightly dancer schedules, private dance / VIP room logs, nightly stage fee/tipout payments by dancers etc. Even if the club doesn't officially report your income to the IRS via a 1099 form, all of these records are potentially available to the IRS should they ever have a reason to audit the club or dancers working in the club.

    Also, the IRS can now track much of the money that a person spends, and can do a computer cross-check to see if the total amount of their expenditures compares reasonably with the amount of money they reported as income in the first place less the typical cost of living in their area. Things like property deed registrations, car title registrations, bank account interest (thus bank account balance), retirement or investment accounts, any cash purchase over $10,000 (less in some states ... NY is $3,000), any money order purchase over $1,500 (less in some states ... NY is $1,000) will all now cause an automatic report to be sent to the IRS. More than one dancer has been busted for non-payment of taxes as soon as she bought her first car, when the state motor vehicle office sent the title info to the IRS, and the IRS decided to check into just exactly where the money to pay for the car actually came from since it didn't appear on previous tax returns from the person with the same name and SS# shown on the car's title !

    If you do wind up being audited, for whatever reason, the IRS can go back at least three years. If the IRS has reason to believe that you have been dealing in bad faith i.e. deliberately under-reporting your income, they have the authority to 'estimate' your actual income for the past 3 years and send you a bill for the unpaid taxes on that 'estimated' income plus interest plus penalties. The IRS also has the authority to prosecute for tax evasion if they choose to, as well as seize and liquidate all of your possessions and assets in satisfaction of unpaid taxes.

    I would also point out that the IRS has just completed a major reorganization of personnel and a major upgrade in computing power. The IRS has also announced that they have changed their former primary focus of verifying the validity of tax deductions to a new primary focus of identifying and collecting unreported income ... with particular emphasis on 'cash' businesses. Last year they focused on cab drivers and casino waitstaff. With all of the high profile publicity surrounding the Scores 1/4 million dollar customer credit card bills, it's entirely possible that 2006 will be the year they decide to focus on exotic dancers.

    There are tons of other threads here in Dollar Den on the same subject.
    Last edited by Melonie; 02-19-2006 at 01:51 AM.

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    Default Re: Taxes

    Quote Originally Posted by courtneyb
    what if i made a lot in funny money this past year i dont want to pay taxes on that will i get in trouble
    Well cry me a river, baby, nobody wants to pay taxes. But we want even less to get audited and have our assets seized, so suck it up.

  9. #9
    Senior Member DanMorris95156's Avatar
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    Default Re: Taxes

    As a gentle reminder - the active decision to not report taxable income is considered federal tax evasion and taxpayers are subject to both civil and criminal filings including federal prison terms.

    I caution you from writing about such acts - especially in an open forum where your privacy rights are non-existent and your words can be used against you to demonstrate criminal intent.

    Taxation, tax liabilities, and tax minimazation are complex and as your income increases your complextity generally follows your income.

    Your choice to select an appropriate advisor, read the tea leaves, select appropriate software are all personal. I would advise that all self-employed persons receive some level of competent financial and taxation advice on some form of regular basis and to avoid taking undue risk by openly discussing the conept of under-reporting your income.

    Regards,

    Dan Morris
    Daniel D. Morris, CPA
    [email protected]

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    Default Re: Taxes

    You can write boobs and gym memberships off as deductions?!?

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    Default Re: Taxes

    You can write off a boob job IF #1 the implants you get are 'professional sized' i.e. bigger than 1000cc each, and #2 you work in a profession where bigger breasts result in an increased income. The specific letter ruling to that effect is IRS vs. Cynthia Hess (a.k.a. Chesty Love). Outside of this letter ruling, the US congress has declared that ALL plastic surgery is non-deductible because it is primarily for personal benefit not professional.

    In other words, 300cc breast implants would be disallowed because they fail the 'housewife test' - meaning that tens of thousands of housewives got 300cc implants with no business reason whatsoever to justify their decision. On the other hand, essentially zero housewives got 1000cc + implants.

    The 'housewife test' arguably applies to all sorts of potential deductions i.e. the gym membership you mentioned. The IRS rationale is that if a housewife would spend money on something without having a business reason to do so (since she has no business), then that something must have been for personal benefit not business. If another girl spends money on exactly the same thing the housewife does it is therefore not a legitimate tax deduction even though the girl does have a business. Based on the 'housewife test', 6" stilettos are deductible, bikinis are not deductible, outrageous costumes are deductible, gym memberships are not deductible, theatrical makeup is deductible, dep't store makeup is not deductible ... you get the idea.

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    Default Re: Taxes

    Ahh. Damn.

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