What exactly do the clubs report on a 1099 form?
I work in a club that collects a house fee instead of a fee from every dance.
Would a club that collects house fees report the total amount of house fee dollars you have paid them for the year?
What exactly do the clubs report on a 1099 form?
I work in a club that collects a house fee instead of a fee from every dance.
Would a club that collects house fees report the total amount of house fee dollars you have paid them for the year?
They're supposed to report the amount they paid you - which, theoretically, at least, ought to be the difference between what they paid you and what you paid back in fees. But, as they have a vested interest in maximizing amount shown as paid out to you for purposes of their own tax liability, my guess is they're just going to show amount paid to you without any adjustment for fees you paid to them. In any event, you should go ahead and ask them so you'll know what's coming.
"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
2 exceptions to this that might apply:
1) 1099's are not needed to report compensation to corporations. So, if you dance as an independant contractor under an S corp, for instance, notify the club's payroll dept. so they don't 1099 you (your S corp). This exception has exceptions, including doctor's and lawyer's S corp equivalent entities (personal service corps); to my knowledge none of these apply here. Also, the club accountant will probably request your corp Tax-ID number to demonstrate due dilligence in verifying your status as a corp.
[Edit: confirmed to be accurate - see i1099 page GEN-13 section L]
2) If your accumulated earnings over the tax year is under $600 from a single entity (club), that club does not need to report it to the IRS by 1099. If this is the case, I'd ask the club not to send you a 1099. I think it remains their perogative, however.
[Edit: corrected $1500 to $600. See page GEN-16 of i1099]
These exceptions may have changed. I'll check for the specifics.
I'm unclear what the rules are for LLC's.
[Edit: Single member LLC's get 1099 reporting in most cases. A bit messy.]
I believe Melonie has discussed this topic and recommended sending out 1099's to report payouts to various service provides you plan to deduct as business expense. Like I said above, I don't believe this is required if the service costs were under $600 for the year. However, reporting the expense this way will force you to keep good records and make a clean paper trail for the IRS should you get audited.
[Edit: All payments to attorneys must be reported]
If you have any questions, I highly recommend calling the IRS. Always a good CYA move. Be sure to note the date, time, IRS contact person, and summary of the conversation in writing for your records.
GB and Mel, does this match your understanding?
i1099 reporting instructions:
http://www.irs.gov/pub/irs-pdf/i1099.pdf (93 pages)
Last edited by stant; 10-19-2004 at 03:11 AM. Reason: LLC rules





some of the types of dancer income that a club COULD report on a 1099 ...
cash paid by club to dancer for her "share" of customer private dance money
cash paid by club to dancer for her "share" of customer champagne room money
cash paid by club to dancer for customer tips charged to a credit card
estimated or "reported" dancer stage tips
I believe that the legal limit for reporting via 1099 is only $700 of income per person per year, not $1500.
As far as dancers issuing 1099's rather than receiving them, this situation would only apply where large amounts of money are being paid to a single person who is NOT an employee of the club, i.e. the DJ, bouncers etc. However, to do this requires that the dancer know the person's real name, address and SS# and also requires that the dancer keep records which total over $700 in payments over the course of one year. If such persons are not employees of the club, and the dancer does not issue them a 1099, then any money paid to such persons by a dancer is legally considered a non tax deductible "gift".
Payments to a DJ or other person who is an employee of the club would be considered a business expense like paying stage fees or buying costumes.
From what I've seen to date in this forum re tax matters, think I'm going to have to defer to both you and Mel when it comes to specific matters like this - my goal re tax law has always been to make sure I know enough to know when I need to kick something to the tax lawyer down the hall, not to practice same. Consequently, my knowledge in this area limited, and more in the nature of a "macro" understanding.Originally Posted by stant
"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
[Attempt at a clear answer, sorry if I sound patronizing]Originally Posted by tinygirl
An IRS 1099 form is what is known as an "information return". The IRS has way to many such forms (see the above linked document), including a form to report any transaction of greater than $10,000 in cash. It's one of the many methods the IRS uses to track money and spot potential tax fraud. Since individuals and businesses are already required to report income to the IRS on their tax return, this is a means for checking for mismatches in reporting. The payer and payee have competing interests in reporting; if they agree, things are probably cool. If not..... you get the idea.
Employees are sent W-2's (another information return), in a similar way.
Since you are not an employee, but providing services under an independant contractor agreement, the club does not keep witholding taxes and other payroll deductions from what they pay you. A 1099-misc is the form required for reporting such payments to service providers (you are entertaining their customers). Unless you are a corporation (or the total is under $600), the club must send both you and the IRS a sworn accounting summary of money paid to you on form 1099-misc (Yours must be sent by 1/31, and the IRS copy by 2/28 ) .
Likewise, you have a responsibility to report payments to individuals and (non-corp) businesses for services provided to your business as a dancer. If the club you work in is a corporation you need not file a 1099 return to report money paid to them, whether for services of not. If the club is not a corporation, the 1099 reporting rules come into play, but I see no payments that could trigger a 1099 filing requirement by you. House fees are (typically) categorized as a general business fee for providing services and a suitable environment for you to conduct business. All club services to you are provided by employees. All of these fees may and should be reported and deducted as business expenses on your tax return. All tipout money for club employees is in this category. This money should similarly be included in the employee's wages on the W2 (the club's reporting responsibility).
You may, however, need to file 1099 returns for other service providers. Attorneys, accountants, body guards, astrologers, personal trainers, stylists and makeup artists, and physisicians treating job related injury or illness. ANY attorney services charged to your biz require a 1099. All others need only be reported for total sums over the year above $600. Every penny should be deducted as business expenses.
I hope this clarifies the process for you. I would say most importantly to save all receipts for anything concievably related to your job, and keep a daily log of tipouts and house fees you pay. (If a tip you pay on a given night is unusually high, note the reason in the log).
--
What do you think Mel? I wanted to get a clear picture on this for my SO, who keeps bugging me about the tipout issue. This seems pretty reasonable to me.





The only area I see where there may be a discrepancy is your assumption that DJ's, bouncers, house moms etc. are employees of the club, and based on that assumption any payments a dancer makes to them can be classified as a business expense and deducted as such on Schedule C. In point of fact, a major portion of the DJ's, bouncers, house moms working in clubs are also working in an independent contractor capacity where their income is derived from tipouts paid to them by dancers. If this is the case, then one can try to deduct these tipouts as a business expense. However, if audited, the IRS is going to ask why the dancer didn't generate 1099's for these payments to other independent contractors as the law requires if she tries to deduct them. Again, legally speaking, if a dancer pays out more than $700 per year to a particular DJ who works as an independent contractor to the club and the dancer does NOT file a 1099 showing this payment was made to the DJ, then this payment is legally considered to be a gift and will not be allowed as a legitimate tax deduction if the dancer is audited.What do you think Mel? I wanted to get a clear picture on this for my SO, who keeps bugging me about the tipout issue. This seems pretty reasonable to me.
In regard to stage fees paid to the club or mandatory tipouts paid to DJ's, bouncers, housemoms etc who ARE legally considered to be employees of the club, I just make the assumption that all clubs are incorporated and claim all of these as a business expense without further documentation (other than my own ledger entries).
Back to the original question, clubs have mixed motives for sending out 1099-misc reports of dancer income. Obviously if the club intends to account for 100% of money customers spend on private dances through the club's cash register, then legally speaking 100% of that money must be reported and taxed. If the club pays out say 50% of that money to dancers without issuing 1099's to the dancers reporting those payments, then the money paid by the club to the dancers for their "share" of private dances is arguably a "gift" from the club. But the more likely scenario is that the dancer and not the club's cash register collects 100% of the customer's private dance money, part of which she then hands over to the club - in which case there is a gray area as wide as the Mississippi as to who's income the customer's payment contributes to !
The fact of the matter is that many clubowners don't account for the 50% of private dance money paid by the dancers to the club *wink*, nor do many of the dancers for that matter. This of course can lead to an explosive situation if the club and all dancers working at that club are audited and if massive discrepancies are found in regard to who is reporting how much of what income !!!
Last edited by Melonie; 10-19-2004 at 01:29 PM.
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