Results 1 to 12 of 12

Thread: follow up questions on taxes, money orders, etc.

  1. #1
    Member shinychar's Avatar
    Joined
    Sep 2004
    Location
    los angeles
    Posts
    15
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default follow up questions on taxes, money orders, etc.

    Hi everyone!!! I am a new member and this is my first post. I've been reading the forums and have found them very rich with information, especially regarding financial issues.

    So here's my situation and here are my questions for now... (I'm sure I will have many more to come!)

    This year will be my first year filing taxes independently because it was my first year out of college. I'm living in Los Angeles now, but went to school and worked as a dancer off an on briefly for "emergency" purposes in South Florida. I recently started dancing again in addition to my other jobs for extra money here in LA. Half of my taxes will already be as an employee and half of them as an independent contractor. I have several different forms of income from several different places. Since I will already be paying taxes (have already filed estimated for other jobs this year and will continue to do so), I'd like to avoid paying taxes on my dancing. I am considered an independent contractor at the club I work at and they did not have me fill out tax forms. I do plan on making (or at least it's my goal to be making) around $10,000 by the end of this year from dancing. I know a lot of people get away with not claiming all of their income, so I am trying to figure out how to successfully avoid paying taxes for my dancing. As I said before, I already will be paying taxes for other jobs.

    In another thread from a few months back, Melonie spoke about money orders. Melonie, where did you get your information about the IRS being notified if a money order is written for over $1,000 as well as being notified if more than one money order is purchased at the same financial institution on the same day? I am just hoping for a few good money resources to look at.... where do you get all of your knowledge?!?! The idea of spending cash and money orders on utility bills, rent ($900), etc. is enticing if it will help me avoid depositing money into my account that is traceable. In turn, can you Melonie, or anyone else who does this, tell me more about how and why you use cash and money orders as a frequent method of payment? Is it to pay less taxes due to claiming a lower annual income?

    I don't like being a dishonest person, but if there are ways of me avoiding so many taxes, I'd like to take advantage of them if the risk isn't too high. Ideally, I'd rather just skip paying for the dancing income portion all together, but I wonder about the risk factor.
    Who else has been faced with this issue?

    One last question: What is the difference between a cashiers check and money order and why chose a money order over a cashiers check as a method of payment?

    Any insight into these matters would be greatly appreciated.

    P.S. This is an awesome site!!!!

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re:follow up questions on taxes, money orders, etc.

    Char, if you are dancing in California, you potentially face a number of surprises next January as a result of California's recently passed and not yet actually enforced "employee dancer" law (which reportedly adds California dancers to the category of "statutory employees").

    There is a large amount of commotion behind the scenes over this law, nobody is sure exactly what it means, it has yet to be tested in court etc. However, because this law carries the potential of causing California clubs to issue 1099 forms to dancers by the thousands next January, my accountant basically ordered me to avoid dancing in California clubs until the ramifications become clearer. Under the circumstances, if you are dancing in California you should probably play the tax reporting issue fairly conservatively as insurance against your club dumping a fat 1099 report of miscellaneous income on you, the IRS, and the Cal State tax people next January. If you do get 1099'd by your club in late January 2005, and you haven't paid estimated taxes in 2004 to cover the amount reported on the 1099, you'll be a pretty good candidate for IRS penalties as well as an increased chance of audit. IRS computers are stupid when it comes to investigations, but they are very smart about comparing one official tax document against other official tax documents (or the lack thereof!).

    I initially got involved with the money order issue because my ex was causing trouble in family court, and I did not want to create a financial paper trail of my checking account deposits and expenditures which could become an open book of my personal finances. I discovered the reporting requirements from a friend who happens to be a small town postmaster (who sells postal money orders) and from a club customer who also happens to be an asst manager at a WalMart ( who sells commercial money orders). Both have told me the same "story", and I have seen the reporting form they are required to fill out and send in if the amount of money orders purchased exceeds $1000 from the same customer on the same day. Of course, I can buy $950 in money orders at the post office, and then drive straight to WalMart and buy another $950 in money orders, and no reports are generated !

    My primary motivation for using money orders isn't to hide my income, but to simply exercise my constitutional right to make my ex-husband, the family court, the IRS etc. spend as much time and money and aggravation as possible if they want to delve into the financial details of my personal life. Bank checking account statements, credit card company statements etc. are basically a pre-sorted summary report of a person's financial transactions which are available at the drop of a subpoena (or mere fax request), which makes their task way too easy.

    In point of fact, I'm a stickler about reporting all of my income from all of the various sources. Most of my income is already documented via 1099's in any case (website, webcam, modeling fees, stock dividends etc.). Plus I want to be free to invest my money, which essentially requires that every dollar must be declared as income first ! With the number of automatic information interchanges between the IRS/State income tax agencies and banks, brokerage houses, state property title and motor vehicle title offices, credit card companies, utility companies, even large retail businesses, it's simply too risky to create paper trails of having invested or spent large amounts of money that you didn't officially earn first !

    In regard to cashier's checks, in order to have the check drawn the bank will first deposit your cash into your savings or checking account, and then debit the account for the amount of the check. From a paper trail standpoint, this is essentially no different than writing a personal check since the transaction is entered into your account records at your bank. From a financial standpoint, the bank guarantees that their cashier's check will not bounce, while your personal check carries no such guarantee.

  3. #3
    Member shinychar's Avatar
    Joined
    Sep 2004
    Location
    los angeles
    Posts
    15
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re:follow up questions on taxes, money orders, etc.

    You should write a book on your life Melonie. 1. You are obviously good at writing and well spoken. 2. How inspiring for the world to see a woman in the adult industry, with your unique "assets", be such an intelligent, seemingly well put together, successful business woman! I think it'd be quite fascinating for men and women alike to have a peek into. Especially because it would break down some stereotypes if you know what I mean.

    Anyhow.... I digress back to the subject originally at hand. This is where I stand after reading all you had to say.

    As far as the next 3.5 months, I am going to spend as much of my cash money on certain costs without depositing it into my checking account first....meaning I'll either pay for stuff in cash or money order. I am refering to my rent, groceries, gas, and other things that aren't likely to make a paper trail. I was planning on paying for credit card bills from my checking account because I knew that would be obvious.

    You said that information goes back and forth between utility companies, but my checking account shows that I make enough from my other jobs to cover those costs. So why should I worry if I pay for those (phone company, gas, water and power, cable) with cash or money order at the walk up places over the next three months as well? Why would they pick me out of the other millions of people who may use this method of payment to investigate just for three months worth... especially since the total amounts I'd be spending won't be significant?!

    I figure that if I keep track of what I make and try to spend the cash on certain things before depositing it, I'll avoid having to pay taxes on that particular money.

    Any thoughts on this idea??

    I will also talk to the managers of the club about the possibility of them issuing the 1099s at the end of January. If they suggest there is a possibility of issuing the forms, I can prepare myself financially to cover the estimated taxes I would owe in total (dancing included) for Jan. 15 if indeed they do decide by the new year that they have to do this. By the way, what is the significance of the club possibly issuing 1099s at the end of January? Why at that time and not earlier or later?

    As far as the prospective new California dancer "statutory employee" law, what a bummer! At least I'll try and see what I can do about the remainder of this year's income. Oh and one more thing, what is the difference between an employee, statutory employee, and independent contractor? If statutory employees receive 1099s versus W-2s, then what is the difference between the three of them??

    Thanks again for the lengthy response Melonie. Anyone else can chirp in too. I am curious about other people's experiences.

  4. #4
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re:follow up questions on taxes, money orders, etc.

    Thanks for the vote of confidence. But in the final analysis I'm still just a blonde stripper with big tits, not an attorney or an accountant !

    I hesitate to be too specific in regard to your line of questioning. Suffice it to say that if a person's reported income more or less matches a person's documented expenditures that a computer program looking for gross discrepancies probably won't fine anything out of the ordinary.

    On the subject of businesses issuing 1099's, by law they are required to send them out before the end of January - however sometimes businesses don't get their end of year accounting wrapped up in the alloted time and the 1099's arrive in February.

    In regard to the differences in tax law between independent contractor dancers and employee dancers, this is fundamental and massive. I wrote an article for another (now defunct) stripper website, but it can still be found at

    In regard to "statutory employee" treatment, this is a crossbreed which basically amounts to the person being treated as an independent contractor for tax purposes, but being treated as an employee for benefit purposes.

  5. #5
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re:follow up questions on taxes, money orders, etc.

    A certified check is your check that the bank guarantees is good by claiming the money immediately and taking it out of your account.

    A cashiers check is the banks check and the bank has to record the payee before they give it to you.

    A money order is kind of like a cashiers check but it is a low cost, bearer instrument. The bank does not care who it goes to, and unless there is demonstrable theft/fraud involved, like it was given to person A who had their purse stolen, the bank will not care who cashes it.
    A money order can be sold by anyone, and bearers will have to realize joe schmoos money order company may not be either real or safe.. It costs the issuer a three part form and an amount impression with a press, or almost squat.

    A cashiers check costs a form, the tellers time, the bank officers time to sign, and the time to type in the payees name, plus the cost of the bank to balance its account.

    A certified check costs a signature and some time to process it which is more complicated.

    Most banks charge from low to high, money order, certified check, cashiers check with a MO about a quarter of a certified check and a cashiers check twice that.

    Most banks will honor the deposit of a cashier check instantaneously (i.e. good as cash because banks keep track of bank check thefts). They know the money is there for a certified check, but is it a real check from a real account(?) so wait transit time. A money order is considered damn safe, but is more complicated to keep track of since it is a bearer instrument.

    If you buy money orders fill them out damn soon, cause it you lose them it is a major hassle to get your money back. A business will consider them all safe for payment of a bill without worrying if it will bounce for insufficient funds. Banks love to sell MOs cause they cost 10-20 cents to process and they get the float. Cashiers checks are a pain in the ass mechanically.

  6. #6
    God/dess Lena's Avatar
    Joined
    Jun 2002
    Location
    On a sweet muddy river.
    Posts
    6,399
    Thanks
    0
    Thanked 78 Times in 43 Posts

    Default Re:follow up questions on taxes, money orders, etc.


    Some people might say that if a person paid taxes on any money that went in the bank, that would likely satisfy the IRS.



  7. #7
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re:follow up questions on taxes, money orders, etc.

    Quote Originally Posted by Lena link=board=6;threadid=13521;start=msg176962#msg176 962 date=1095484293

    Some people might say that if a person paid taxes on any money that went in the bank, that would likely satisfy the IRS.
    Lena,
    What "satisfies" the IRS is you paying every dime the law says you owe.
    Paying taxes on money you put in the bank is like obeying the speed limit when you see a highway patrolman. It is true that it is easier for the IRS to catch tax cheats based on the money you put in your checking account, but the IRS computers are not constrained to that. It is not far-fetched to see a scenario where dancer A and spouse contractor-or-mechanic get audited, or club-owner B gets audited, even for activities only remotely related to a club. They find massive underreporting and decide to run the names of everyone associated--employees of the club and the contractor for special scrutiny.

    The IRS knows how people with income x,000 dollars spend money. Pay $1200 a month on a credit card bill, $300 on a student loan, $1500 on a mortgage or rent, $700 on health insurance, $600 on utilities and other such from your checking account, save $400, pay $450 on a car loan. Add in the "gottas" like eat and buy gasoline, buy some clothes, and you have a gross mismatch of "money deposited in checking" and probable income. IRS smells tax fraud and hauls your heine in and slaps you for back taxes auditing way back, plus penalties and give you a REAL big bill.

    Your checking account deposit rule works only if it is close enough to actaul income to be within the margin or error.

    PS My "estimates" are a based on a tiny fraction of the likely info available to the IRS. Based on what they do know they can come close to the rest. IF THEY LOOK-- and their ability to look goes up every year.

  8. #8
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re:follow up questions on taxes, money orders, etc.

    My "estimates" are a based on a tiny fraction of the likely info available to the IRS. Based on what they do know they can come close to the rest. IF THEY LOOK-- and their ability to look goes up every year
    That is the bottom line question - what does it take to attract the attention of the IRS ? Obviously the first and most important thing is IRS computers doing automatic checks and comparisons, and finding that the reported income side doesn't come close to matching the savings and expenditure side. As Monty correctly points out, another is having your name swept up as part of some other investigation - which for dancers usually involves an investigation of the club or clubowner. This investigation may or may not have anything to do with income taxes initially, but some other club related issue such as complaints of fraudulent credit card charges or hiring dancers without green cards or 100 such possibilities. With the automatic information sharing between IRS computers and financial institutions, as well as shared law enforcement databases between the IRS, FBI, state and local cops etc. the odds have never been higher that something will eventually percolate up your name and social security number.

    Another "red flag" that the IRS is increasingly relying on is a cross check of one person's reported income versus the reported incomes of other persons who share the same "job code" and zip code. If, for example, the IRS receives 1000 tax returns from "entertainers" in your city, and their average amount of reported income is $50,000, and your own return reports $20,000, this increases the chances that your own return will be questioned.

  9. #9
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: follow up questions on taxes, money orders, etc.

    just bumping this thread back up to the top, in response to recent questions along similar lines.

  10. #10
    Featured Member GnBeret's Avatar
    Joined
    Jul 2004
    Posts
    796
    Thanks
    0
    Thanked 7 Times in 7 Posts

    Default Re: follow up questions on taxes, money orders, etc.

    Quote Originally Posted by shinychar
    I don't like being a dishonest person, but if there are ways of me avoiding so many taxes, I'd like to take advantage of them if the risk isn't too high. Ideally, I'd rather just skip paying for the dancing income portion all together, but I wonder about the risk factor.
    Who else has been faced with this issue?
    Shinychar - PLEASE READ PREVIOUS POST IN THIS FORUM RE "SMALL SUGGESTION"!!!
    "That's your answer Old Man? I guess you're a Hard Case too...."
    - Luke
    "Some men, you just can't reach...."
    - Boss, re Luke

    If there's one thing in my life these years have taught me,
    it's that you can always see it coming, but you can never stop it.
    -Cowboy Junkies

  11. #11
    Senior Member
    Joined
    Sep 2004
    Location
    Ontario,Canada
    Posts
    105
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Default Re: follow up questions on taxes, money orders, etc.

    It sure is interesting to see how dancers are taxed and the paper trail that is there in some states. In Ontario all the dancers I know are independent contractors and there are no w-2 or t4 slips as they are called up here. It is up to the individual themselves as to what they are going to report. The government is getting more power to investigate your financial situation in Canada. If you own a $300,000 house and have 3 cars but report no or little income it won't be hard for them to figure out you are getting money from somewhere. And besides if you go for a bank loan here they will almost always look at the income you reported on your tax return to decide if you are a risk or not.
    The first rule of Fight Club is you don't talk about Fight Club.

  12. #12
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: follow up questions on taxes, money orders, etc.

    While some "corporate" clubs in the US are starting to report employee dancer incomes to the IRS via form W2, and are starting to report independent contractor dancer "payouts" i.e. splits of private dance and/or Champagne Room money via form 1099-misc, for the most part US clubs do not generate a paper trail of dancer income either. However, in the USA or Canada, I'm sure that the government tax people have state/provincial real estate deed offices and motor vehicle offices wired in for automatic reporting. They probably have major banks and credit card companies wired in as well.

    Increasingly, government monitoring of the expenditure side of the equation is making it extremely difficult for a person to spend any significant amounts of money which were not first claimed as income and taxed without red flags going up for audit.

Similar Threads

  1. Money orders and IRS payments
    By Christyismyalias in forum Dollar Den
    Replies: 3
    Last Post: 03-15-2010, 03:01 PM
  2. lost money orders
    By MeanGirl in forum Dollar Den
    Replies: 1
    Last Post: 05-07-2008, 05:05 PM
  3. Follow the smart money...
    By StuartL in forum Dollar Den
    Replies: 1
    Last Post: 03-27-2008, 08:31 AM
  4. Sites that accept money orders
    By LuckiCharm in forum Body Business
    Replies: 4
    Last Post: 09-04-2007, 10:37 AM
  5. Money Orders and Cash Transfers
    By OCWizard in forum Dollar Den
    Replies: 4
    Last Post: 06-28-2006, 08:07 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •