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Thread: Taxes and Private Contractor

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    Default Taxes and Private Contractor

    I am starting a club which I will be a private contractor and not a employee like at my current club. I was wondering how I go about claiming taxes. Do I put a certain amount of money away and then pay in at the end of the year? Kinda confusing and I don't know the first thing about going about it.

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    Default Re:Taxes and Private Contractor

    You might want to check out the thread called "saving for taxes" on the first page of this forum

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    Default Re:Taxes and Private Contractor

    Basically, where as an employee your employer withheld money from your paycheck every week and sent it to the IRS on your behalf, you now have to do this yourself. Fortunately, you only have to send them a check every 3 months.

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    Default Re:Taxes and Private Contractor

    Melonie thank you so much for simplifing it for me. So how much should I send them? I heard 30% is a good amount, is that right? Also is there a specific adress I should send it to? Are there any forms to fill out?

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    Default Re:Taxes and Private Contractor


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    Default Re:Taxes and Private Contractor

    Monty's links are good for federal estimated taxes. However, if you live in a state which levees state income taxes, you'll have to send them an estimated tax form and a check every 3 months as well.

    lists the different state income tax percentage brackets for all the states. If you live in a state where that percentage isn't zero, then do a search for 'state_name estimated tax' and it should turn up something to help you find the appropriate forms.

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    Default Re: Taxes and Private Contractor

    First of all I would like to thank Melonie and Montythegeek for their help. Thanks guys!! Ok, I think I understand this estimated tax thing a little bit. Basically I total all of what I made for the yearly quarter. But what percentage of that do I send in every three months? I am a little confused how do I know what percentage of my estimated tax to make my check out for?

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    Default Re: Taxes and Private Contractor

    The actual percentage in taxes that you will owe to the IRS varies with the amount of income you actually earn, as well as your filing status (single, married, head of household). A wild guess for a dancer who grosses $1500 a week would be the 25% ballpark, or $375 a week. This would equate to about a $4,500 quarterly estimated tax payment to the IRS. The amount you may owe in state income taxes varies widely from state to state, with NV and TX being zero up to NY and CA being 7%

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    Default Re: Taxes and Private Contractor

    One of the important things to remember is that as a contractor, you can deduct certain expenses from your tax liability.

    For example, this may not apply, but, any mileage outside of a direct route to or from work, you can deduct.

    if you have a room in your house that you can use as an office, you can deduct the percentage of the room out of your bills.


    My office for example, makes up 17% of my house ( based on square footage )
    so 17% of my tax liabilty can be deducted

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    Default Re: Taxes and Private Contractor

    Here's some information for the Australians (since I am one of them)]

    As a dancer in Australia, you generally fall under the self-employed/independant contractor status for employment. You also fall under the Personal and Other Services Industry as well. The "nature" of your business is Sales and Entertainment.

    Now.. to be a legitmate dancer you will need to acquire your own ABN - Australian Business Number. This is easy and can be done via the internet. (Go to http://www.ato.gov.au > left side menu "For Businesses" > "Apply for an ABN")

    Now you have to determine how much a year you actually earn (turnover/gross income) so that you can determine whether or not you need to now register for GST (Goods and Services Tax). If your turnover is over $50,000 - you will need to register. If your turnover is less, do not worry.

    [ Guide to registering for the new tax system ] < If you want to know more about registering for an ABN and GST... about why you need to and much more information... go to that page.

    Here's a exercept:
    How do you register for GST?
    Registering is as simple as filling in one form. You can register for GST and an ABN on the application that comes with this registration package.

    You can register electronically through the Business Entry Point at www.business.gov.au or send your completed application to the ATO. Your tax agent can also lodge your application through the Electronic Lodgment System.

    All entities registering for GST will receive a detailed Guide to GST for Business and a record keeping guide.
    When you are registered to pay GST you will have the option to pay monthly or quarterly - I would advise you to approach your accountant to find out the pro's and con's about paying monthly vs quarterly. Any competant account will know this information so you personally can make up your own mind. I personally opted to pay quarterly.

    You will also be paying on a cash basis NOT accurred. You are a cash based business.

    Now that you are registered for everything:

    Acquire the latest Income Tax Table (your column is the "tax free threshold with no leave loading" unless advised otherwise by your accountant) so you'll know how much to put aside each week. On top of this tax is the GST you will need to also put aside.

    To calculate how much GST you will need to put aside: $ gross earnings (before you take out expenses such as house fees and so forth - what you actually earnt that week) divide by 11 equals how much GST you "owe".

    Open an ING Direct Savings Maximiser account ( http://www.ingdirect.com.au ) so you have a place to 'park' your tax money whilst also earning interest on it until you need to pay it. Your tax money is money you canNOT touch under any circumstances - it is not your money anymore... it is for the Government. Only withdraw from your tax Savings Maximiser account when you need to pay your tax.

    In your first year of declaring, you will only need to pay your INCOME tax once a year - after 31 June. In your second (and subsequent) year of declaring, you will be paying quarterly installments alongside your GST. If you are not registered for GST, you will only be filling out a IAS (Income Activity Statement) once every quarter instead of a BAS.

    If you have no clue how to do your BAS, have your accountant show you how to submit your first BAS. After you've done your first BAS, you should be able to do your subsequent ones without any problems.


    Basically, it is a bitch being legitmate as you are doubly taxed - income tax as well as GST. You won't ever get the GST you pay back however any money you pay in re: quarterly income tax payments... you possibly can "get back" at the end of the financial year (every 31 June).

    There are a hellava lot of things that you can claim as legitmate tax/business deductions - any competant account will be able to tell you exactly which items you can claim and how much of it.. and so forth.

    The great thing about declaring your income is that you will now be able to apply for loans and so forth without having to break a sweat (worry-ing about the ATO being "on your arse"). This means.. you will be ahead in the end compared to those dancers who are "playing around" with their earnings.

    Hope all this will help another fellow Australian dancer out there....


    enter: E3167322D9 for your 10% discount

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    Default Re: Taxes and Private Contractor

    Quote Originally Posted by bloodyfun
    One of the important things to remember is that as a contractor, you can deduct certain expenses from your tax liability.

    For example, this may not apply, but, any mileage outside of a direct route to or from work, you can deduct.

    if you have a room in your house that you can use as an office, you can deduct the percentage of the room out of your bills.


    My office for example, makes up 17% of my house ( based on square footage )
    so 17% of my tax liabilty can be deducted
    I think you are confusing deductions from income and tax credits. An independent contractor can deduct all her ordinary and necessary business expenses from business income, if she files a Schedule C. Tax credits, are direct deductions from your tax liability. They are fewer. For example, if you have a child, or children you get a tax credit. There are certain credits for oil exploration and job creation. The last two rarely apply to us.

    HTH
    Z

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    Default Re: Taxes and Private Contractor

    I suggest, if you can, incorporate yourself.

    Declare your entertaining as a small business and get an accountant.

    Keep reciepts galore.
    Last edited by Tigerlilly; 10-26-2004 at 01:00 PM.

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    Default Re: Taxes and Private Contractor

    You're better off getting an accountant who is familiar with the "dancer scenario". You could most certainly deduct for having a home office...however, since you do not work from home and have no reason to have a home office, then that would send a BIG RED FLAG to the IRS...those flags usually are followed by an audit.

    As an IC, there are plenty of deductions that you can take: your safest bet, however, is having an accountant who understands the tax code and the law complete the forms for you and keep yourself under the radar.

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    Default Re: Taxes and Private Contractor

    Quote Originally Posted by Zofia
    I think you are confusing deductions from income and tax credits. An independent contractor can deduct all her ordinary and necessary business expenses from business income, if she files a Schedule C. Tax credits, are direct deductions from your tax liability. They are fewer. For example, if you have a child, or children you get a tax credit. There are certain credits for oil exploration and job creation. The last two rarely apply to us.

    HTH
    Z
    perhaps we differ on the definition, but the premise is the same.

    there are ways to lower your tax burden as a contractor so that you can keep more of the money.

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    Default Re: Taxes and Private Contractor

    Basically the IRS gives you two ways to compute your quarterly estimated taxes.

    1) Take the amount of your prior year tax liability shown on line 60 of form 1040 or line 10 of form 1040-EZ and divide it by 4. (Note if you make more than $150k then take the amount multiple by 1.1 and then divide by four)

    2) Take your quartely earnings for the period multiply by four and then compute the amount of tax you would have to pay on those earnings and then divide it by four.

    If your prior tax year had less then 12 months of earnings then you must use method 2.

    Unless you believe that you are going to make substantially less in the current year than in the prior year you are better off to use the first method in computing your quarterly estimated tax payment.

    Most states, but not all, use a similar method for computing the amount of quarterly estimated taxes due to the state. It is advised that you consult with a tax advisor in your area.

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    Default Re: Taxes and Private Contractor

    Quote Originally Posted by bloodyfun
    perhaps we differ on the definition, but the premise is the same.

    there are ways to lower your tax burden as a contractor so that you can keep more of the money.
    It's not that we differ in definition, the IRS differs. It is also important to note the a credit is only available if you have a tax liability at all. Thus, if your tax rate is zero, no matter how many children you have, your child tax credit is lost. However, if you are entitiled to a deduction, it is available so long as you have income, subject to the alternative minimum tax. So you see, they are very different issues.

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    Default Re: Taxes and Private Contractor

    NOT True Zofia. I Know several dancers who (last year) recieved a refund in excess of thier payments due to the Earned Income Credit. One who recieved $600 more..... and she had ZERO Tax liability..... got all her witheld FED back in addition to $600 free money. You DO have to have EARNED INCOME (and several kids) to qualify for this but most IC's do.
    14 years working in Strip Clubs. "What a long strange trip it&#039;s been"

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    Default Re: Taxes and Private Contractor

    ^ Who did this dancer's taxes? Did she do them herself or did she have a knowledgable accountant do them?

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    Default Re: Taxes and Private Contractor

    CPA ..... He is a customer but he understands the Entertainment industry and does local accounting for some music heavies .... Nelly for one.

    Why?
    14 years working in Strip Clubs. "What a long strange trip it&#039;s been"

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    Default Re: Taxes and Private Contractor

    Being an IC...seems that the $600 would off-set what she needed to pay...unless she claimed a lot less than what she made. Seems that the IC's I know claim everything under the sun and still end up having to pay SOMETHING...

    Maybe my accountant is an idiot...but EIC is supposed to be for people who make below a certain dollar amount per year and have 1 or more children. The MAJORITY of dancers easily fall out of this category...unless, of course, as I said before, the dancer is claiming "peanuts".

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    Default Re: Taxes and Private Contractor

    I don't think you have to have any children to qualify for EIC. I actually qualified last year. That will be the first and last year I qualified LOL!

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    Default Re: Taxes and Private Contractor

    Well, if you don't have a child, then you would have had to made LESS than $11,000 last year. I hardly think that most of the dancers here earned less than that...in fact, I hardly think that ANY dancer would have made less than that.

    Otherwise, you would have had to earn less than $29,000 with one child, $33,000 for two or more children, and under $11,000 if you have no qualifying children...

    So...as I said before, most of the dancers I know who claimed EIC...claimed much, much less in their taxes than what they made. It's gonna bite them in the ass...especially if they are living WAY above the means that they're claiming.

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    Default Re: Taxes and Private Contractor

    I think we need to identify the AVERAGE Dancer because most of the "Dancers" here at stripperweb are NOT average.

    The Average Dancer
    has 2 or more kids and NO husband.
    has no bank account and no credit
    lives with a guy who has a menial (or NO) job
    spends her cash income at walmart, MALL-mart or at the corner amatuer pharmacy. All un-traceable transactions in cash.
    drives a NICE car that is in someone elses name (co-signor)
    quits stripping at least once a year and earns 5-8K in WAGES before returning to stripping.

    Of course there are many dancers who skip a few of these (like the Wage producing Job and the NICE Car) but for the most part ..... The IRS just doesn't audit people like this and even if they DID ....what are they going to find? Nobody is writing off 100K a year in PARTY Favors paid for in cash. They just arent claiming the CASH income they used to buy the stuff.

    IF you live like Joe and Joan Average Employee ...then HELL YEAH the IRS will audit yer ass if ya deduct her housewife Implants but IF you never claim that money at all .... well thats twice as good bottom line. Until big brother finds a way to track $100 bills OR eliminate cash altogether ...... maybe its better to KEEP your secrets?
    14 years working in Strip Clubs. "What a long strange trip it&#039;s been"

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    Default Re: Taxes and Private Contractor

    DJ the new wrinkle is of course that the IRS can now check on the expenditure side. You can rest assured that if someone registers a new car or files a real estate title transfer that the IRS will automatically be informed of the amount of money spent by that person.

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    Default Re: Taxes and Private Contractor

    Most dancers rent thier houses/apartments or live with the person who's name is on the lease (and pay His rent in cash) and drive cars that are registered to a co-signor while making (or NOT making) outrageous payments due to 18% interest rates. A computer seems to think that if you are late or just don't make payments it has to be because you don't have the money. Hmmmmm.

    I agree that if they BUY a house or a car for cash HELL yeah it will red flag an IRS computer. Most dancers that I know spend 80% of thier cash income on Clothes clubbing and "party favors" and these huge ticket items don't show up at the IRS.

    It's NOT the right way but is is the common way. I apply the military theory of Don't ask ...don't tell.
    14 years working in Strip Clubs. "What a long strange trip it&#039;s been"

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