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Thread: Paying taxes vs. not paying taxes

  1. #26
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    Default Re: Paying taxes vs. not paying taxes

    I have several clients who are adult entertainers/performers. You don't need to hire an accountant necessarily, but you do have to realize you are a self employed person and are running your own business. If you are willing to learn what it takes to comply with all the aspects of running a business then by all means DIY. In most cases I would say to do what you know & enjoy and let somone else handle what they know.

    Consider that your "business" was landscaping...or whtever else. You have income from that Biz...and lots of expenses. From a bookeeping point of view you are always trying to make your taxable (net) income as low as possible. Whether you do that legally/honestly/ethically is up to your own personal standards.

    I always tell my clients I only want to know about the income that is going on their tax return (hopefully...that is 100% of what they receive...but again....their choice)

    I have them set up a bank account with a debit card and I ask them to make regular deposits to that account after every day they work. Whatever they deposit into that account is what I report as revenue on their schedule "C". Sure...they may be earning more than that amount but I encourage them to show as much of their income as possible.

    On the expense side....I see no problem with being fairly aggressive on taking deductions. I have them use their debit card for all of their business expenses. Costumes...of course I deduct them. These are not things you would wear anywhere else. Make-up, Haircare, Nails, healthclub membership, dance lessons, etc I would usually pro-rate 50-50%. Cell phone, pager, website, ofice expences, professional fees (lawyer, accountant, etc.) Driving to your usual place of employment is not deductible, however for other appearences at other locations (private parties?) you can take a mileage deduction. If you pay a DJ, driver, etc.

    I encourage my clients to make investments: mutual funds, real estate, etc. The income shown on your return is usually high enough to qualify for mortgages on income producing property and since you are depositing large amounts of cash the down payments will not cause you any problems.

    It all comes down to how honest you want to be. If you choose to not report any income you will eventually be caught...no doubt about it. There are ways to avoid a paper-trail......for a while but who wants to live that way. And the penalties when you get caught are very big. If you "under-report" your income you can usually get away with it for a while too. If you make $100K and report $90K it will be almost impossible for the IRS to "prove".....but I still don't recommend it. I would rather have you put the full $100K on your tax return and then take all of the deductions you are legally entitled to to bring your income down to $50K and then pay the tax on it like everyone else does.

    This is a LEGAL business....why turn it illegal by not fully reporting your income?

    A lot of my clients pay me in cash. They always get a receipt so they can deduct my fees. I always report the income on my return so I'm legal too.

  2. #27
    Banned Melonie's Avatar
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    Default Re: Paying taxes vs. not paying taxes

    If you choose to not report any income you will eventually be caught...no doubt about it. There are ways to avoid a paper-trail......for a while but who wants to live that way. And the penalties when you get caught are very big.
    This is the bottom line on the subject of dancers not reporting income and not paying taxes. With every passing year, there are more and more automatic reporting requirements being put in place on the 'expenditure' side of the equation. Already it's impossible to buy and register the deed to a house, and it's impossible to buy and register the title to a car, without the IRS being informed of the fact that a person with no reported income (based on the IRS computers' previous tax return database) just spent umpteen thousand dollars. It's virtually impossible for a person to have an investment account, retirement account, or even a sizeable bank account without the IRS being informed of the interest/dividends paid on those accounts (which leads to an easy calculation of the magnitude of the balance which produced that interest and dividends). It's also virtually impossible to spend $10,000 on anything at all (and even less in some states, NY is $3,000) without the state tax people and IRS being automatically informed of that fact.

    Thus trying to live without creating a paper trail today leaves the person with a ton of green paper in their mattress - green paper which can only be spent on things which cost less than $10,000, green paper which cannot be spent on anything which requires an official registration of any kind (house, car, boat, motorcycle, business, collectibles), green paper which cannot be deposited with financial institutions in any sizeable amounts, green paper that you can't even give away in amounts greater than $10,000 (gift tax), and green paper which is even more likely to be questioned in regard to its origin with every passing year. Today, trying to live life without creating a paper trail essentially requires that you live like a criminal (which, ironically, is exactly what the IRS will consider you to be if and when they ever catch up with you).

  3. #28
    Veteran Member Lovespell's Avatar
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    Default Re: Paying taxes vs. not paying taxes

    House fee's are a deduction, right? So I should be saving my reciepts from the club to use on my taxes? And reciepts from when I buy costumes?

    How do you go about finding a good accountant who works with dancers in your area?

  4. #29
    Featured Member GnBeret's Avatar
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    Default Re: Paying taxes vs. not paying taxes

    Quote Originally Posted by NVJosh
    Also, I'm guessing that if your income goes down (say you break your leg and can't dance for 6 months) and then the mortgage company goes to foreclose and finds you were fraudulent on your initial application, there could be severe (possibly criminal) consequences.
    Aja... Bank Fraud; if you signed under oath, Perjury; and if you sent application/loan documents back and forth to lender via fax (which invariably occurs at some point in the process) Wire Fraud. And depending upon which state you're in and the lender's charterer, there are probably another 2-6 state statutes that might well be applicable.

    Bottom line: ain't nothing you're ever going to get through falsifying documents such as loan applications that's worth the risk you'll be taking by doing so.
    "That's your answer Old Man? I guess you're a Hard Case too...."
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