This stems from my asking my accountant about questions in other threads ...
For a dancer to file as an 'employee' she must have received a W2 form from her club for her paycheck income and tax withholding. Per recent IRS interpretations and agreements with the Casino and Taxicab industries, legally speaking, any tips or other money which an 'employee' dancer receives directly from customers is supposed to have been turned back over to the club - at which point the club was supposed to record the extra income, withhold the appropriate taxes, and add the net amount to her paycheck. Employee dancers are technically not required to make estimated tax payments since the appropriate taxes should have been withheld on their behalf by the club on any income they earned. Employee dancers may only take Employee Business Expense tax deductions (which includes costumes and shoes but which does not include much else)
For a dancer to file as an 'independent contractor business' she must NOT have received a W2 form from her club, but instead should have received either a 1099-misc form or no paperwork at all from her club. Independent Contractors must file and pay estimated taxes quarterly, and report their own incomes using 1040 Schedule C Profit or Loss from a Business. Independent contractors are eligible to take any appropriate business expenses.
If a dancer has received both a W2 from one club and a 1099-misc (or multiple 1099-miscs) from other clubs, then she must very carefully segregate her employee income and expenses from her independent contractor income and expenses and file the W2 income under wages plus each 1099-misc income under a different schedule C.
If a dancer has received both a W2 and a 1099-misc from the same club this is technically not proper under recent IRS interpretations and settlement agreements. The dancer has no choice but to report the W2 income as if it were from one job and report the 1099-misc income as if it were from a different independent contractor business even though it isn't. However, this is likely to draw extra IRS attention simply because the W2 and 1099-misc forms will show the same business name and employer ID number.



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