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Thread: claiming earnings as "gifts"

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    Featured Member screaminpeachez's Avatar
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    Default claiming earnings as "gifts"

    was curious how much you can claim as a gift and not have it taxed? this girl said that she claims $4000 as a gift and doesn't get taxed for it.
    any experience with using this angle
    "may your work like you don't need the money, love like you've never been hurt, dance like no-one is watching, screw like your being filmed and drink like a true Irishman "--anonymous
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    God/dess Emily's Avatar
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    Default Re: claiming earnings as "gifts"

    you can claim up to $11,000 as a gift, but if you get audited, you will have to prove it was a gift

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    God/dess VenusGoddess's Avatar
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    Default Re: claiming earnings as "gifts"

    ^ Yes...that means proving there was an actual person giving it to you. If you claim it was your parents, they'll need to show proof that they gave you the money...and you'd better hope that their finances can allow for that.

    It's better to just be honest on your taxes. You may feel that you pay a lot now...but if you get caught...you'll be liable for back taxes...interest on those taxes (which is HIGH) and then penalties on top of that. No fun.

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    tampafldancer
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    Default Re: claiming earnings as "gifts"

    emily, that pic is sooo cute!

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    Banned Melonie's Avatar
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    Default Re: claiming earnings as "gifts"

    Yes...that means proving there was an actual person giving it to you.
    Yes, and even then, if the IRS chooses to audit you and discovers a pattern of you receiving several sizeable 'gifts' from several different 'strangers' (i.e. people not related to you, people who don't live or work near you etc.) the official status of money you received being considered a gift may be questioned. I have heard of cases where gifts from 'sugar daddies' have been disallowed as gifts, with the IRS interpreting the money as being payment for 'services rendered' thus taxable income.

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    Member HIJACKER's Avatar
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    Default Re: claiming earnings as "gifts"

    I have heard of cases where gifts from 'sugar daddies' have been disallowed as gifts, with the IRS interpreting the money as being payment for 'services rendered' thus taxable income.

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    God/dess GoldCoastGirl's Avatar
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    Default Re: claiming earnings as "gifts"

    I totally agree with Venus in that it is best to stay safe with your taxes instead of playing around with the figures.

    I would think that the only time that one can kinda "get away with" sizeable "gifts" of money is those times of year where giving of money and gifts of any kind are generally accepted like Christmas time.

    For instance, last christmas (and this is legitmate) I was "gifted" by many customers money as a christmas present.... anything from $100 to $300... so add those gifts of money up with the gifts of money I received from family and friends... and I actually had a sizable "gift" of money in total that Christmas.

    All my family and friends know that it is best to just give me the money that they would've spent on a present to me than an actual present. It is easier and practical. Then again my family gives me a mixuture of cash and actual items for presents.

    Okay... I got a little off topic there.. however I think I've illustrated my point well enough.


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    Default Re: claiming earnings as "gifts"

    Quote Originally Posted by Emily
    you can claim up to $11,000 as a gift, but if you get audited, you will have to prove it was a gift
    you are allowed to receive an unlimited amount of gifts each year. recipients of gifts are not taxed on those gifts. The person doing the giving can give as much as he or she wants to anyone every year. However, if you give in excess of $11,000 to any one individual in one year, you are required to file a gift tax return with the IRS. Gifts are, generally, not taxed but the gifts that exceed $11,000 reduce your estate tax credit.

    If your income tax return is audited and your reported income doesn't match your deposits, and you claim the difference is all gifts, you will have to prove each gift, no matter how many or how small. Using the gift excuse might work but you can bet your g string that the agent will want to see the year before and after the initial audit year and, if those "gifts" are there again, you will not get away with it.

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    God/dess Emily's Avatar
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    Default Re: claiming earnings as "gifts"

    why would having gifts before or after matter?

    I used to get legitimate gifts up to the max every year from my grandfather. His idea was that it was better than him giving it to us all at his death and us being taxed on it.

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    Default Re: claiming earnings as "gifts"

    iI was pointing out that claiming several thousand of your income as gifts might actually fly with the IRS once but you try and claim that every year they won't buy into it. In the case she referred to, she was implying that the girl was claiming income to be gifts.

    In the case of your grandfather, that is easily dealt with. He can sign an affadavit attesting to the gifts. In a case where you are trying to claim gifts that are really tips and other income, you will need to find accomplices to corraborate your story.

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    God/dess Emily's Avatar
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    Default Re: claiming earnings as "gifts"

    right....that was the message in this thread

    but you said that you can't get away with doing it year after year. You can. If you're mucking around with IRS exemptions, then it really doesn't matter how many years you do it. You're screwed if you try it once and get caught.

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    Default Re: claiming earnings as "gifts"

    if you continually claim earnings to be gifts, you are already being audited. If they are auditing your income they will ask for bank statements. When the deposits are more than the reported income they assume you are hiding income. they will ask what it is. You say gifts. They say from whom (ok, they won't say whom, they aren't that linguistically advanced). You say who they are from and they ask for proof. You are then stuck getting signed (and often notarized) affadavits from these people. Now, when you ask a friend or a relative to swear to something that is a complete lie, you are askingthem to break a law for you. If the amount of "gifts" is minimal the agent might overlook it once. If it is there for more than one year, they will be suspicious. They usually know, in advance, what type of things to look for when they audit someone. If you don't put something down in the job description line, they will ask what you do. Once they hear dancer, the tip recipient alarm goes off. If you don't have any tips they will know you are hiding something. Imagine a waitress, bartender or anyone else who lives primarily on their tips not reporting tip income. They will know something is fishy.

    The truth is, they audit less than 1% of all returns. Of all the audits I've seen in the past 5 years, there has been ample reason for the audits. Either the retuurns were a few years late or there was something out of the ordinary on the return. Can you do it for years and get away with it? Absolutley. However, if they catch you hiding income they can go back as far as they want and audit all of your returns.The 3 year rule goes out the window when you mess with the income.

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    Featured Member exotica17's Avatar
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    Default Re: claiming earnings as "gifts"

    One of my associates makes money up the wazoo, and she told me that she claims ALL of her earnings as gifts! Hope she never gets audited.

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    Banned Melonie's Avatar
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    Default Re: claiming earnings as "gifts"

    The truth is, they audit less than 1% of all returns. Of all the audits I've seen in the past 5 years, there has been ample reason for the audits. Either the retuurns were a few years late or there was something out of the ordinary on the return. Can you do it for years and get away with it? Absolutley. However, if they catch you hiding income they can go back as far as they want and audit all of your returns.The 3 year rule goes out the window when you mess with the income.
    Actually, in the last couple of years the overall percentage of audits has risen to 1.5%, which doesn't sound like much of an increase but actually represents close to an additional 1 million people being audited. Also, those 'random' audits don't happen totally at random either. When the IRS decides to perform 'random' audits, it still prioritizes the choice of which audits will be more likely to identify unpaid taxes. And the 'random' audits are separate from any targeted audits - with targeted audits meaning that the IRS has chosen to make a concerted effort to investigate people involved in a chosen type of business. In the last couple of years the IRS has started a targeted audited program of businesses which involve large amounts of cash tips and transactions, starting with casino dealers/waitstaff and cabdrivers so far.

    My first point here is that by requiring that a business code be entered on everyone's Schedule C, the IRS immediately knows that some tax returns are much more likely than other tax returns to be involved in a business where large cash tips and transactions are expected. Thus while it may be true that 1.5% of all tax returns will be audited, it is NOT safe to assume that the percentage of tax returns audited which bear the 'entertainer' code will be anywhere near that low.

    My second point is that the IRS isn't stupid. They understand how virtually all types of businesses actually work. When they see a tax return by an 'entertainer' which includes large disparaties between reported income and actual saving and spending patterns, and when that 'entertainer' attempts to explain the source of that money as being 'gifts', they are going to be much more inclined to suspicious regarding the legitimacy of such gifts as opposed to the same gifts being claimed by a college student or by a WalMart employee.

    My third point, which I tried to make earlier, is that even if a dancer makes legitimate claims of receiving large amounts of money as gifts, and even if the dancer can produce documentation proving the source of those gifts to be guys who have properly reported and paid gift tax on the money they have given to dancers, the IRS still has the authority to interpret these transactions as 'payment for services rendered' instead of gifts. This interpretation then makes the 'gift money' taxable income for the girl. This IRS interpretation becomes more likely when the girl is a dancer, becomes even more likely when the 'gift' amounts are substantial and come from several sources who are not otherwise related to the dancer, and become even more likely when a clear multiple year pattern of receiving 'gifts' emerges.

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    Default Re: claiming earnings as "gifts"

    Quote Originally Posted by Melonie
    My third point, which I tried to make earlier, is that even if a dancer makes legitimate claims of receiving large amounts of money as gifts, and even if the dancer can produce documentation proving the source of those gifts to be guys who have properly reported and paid gift tax on the money they have given to dancers, the IRS still has the authority to interpret these transactions as 'payment for services rendered' instead of gifts. This interpretation then makes the 'gift money' taxable income for the girl. This IRS interpretation becomes more likely when the girl is a dancer, becomes even more likely when the 'gift' amounts are substantial and come from several sources who are not otherwise related to the dancer, and become even more likely when a clear multiple year pattern of receiving 'gifts' emerges.
    all true (along with the first three points) but the only way they will have the opportunity to make this interpretation is if they pull the return for audit. Otherwise, there is no record of gifts on the tax return. Like I said, repeating the claim year in and year out is going to make an agent a bit more wary of the claim and the likelihood of them rejecting the claim will increase.

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    Member PrincessPatti618's Avatar
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    Default Re: claiming earnings as "gifts"

    Okay, the number of posts on taxes is out of control... but my question is if you arn't paid directly by your club, what do you claim on your taxes, additional revenue? In other words, do you have to claim that your 'additional' income is from stripping?

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    Banned Melonie's Avatar
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    Default Re: claiming earnings as "gifts"

    Basically, since you have no 'employer' by definition you are self-employed. Unless you incorporate, form an LLC etc. this leaves you with one option - filing Schedule C Profit or Loss from a Business. An entry required on Schedule C is a code number for the type of business you are engaged in, and the closest one is "artist, performer". You don't need to be any more specific than that if you don't want to. However, if you also want to deduct the costs of costumes, shoes, tipouts to DJ's and bouncers etc. as business expenses, there is going to need to be some correlation to the fact that your business is exotic dancing.

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    Member PrincessPatti618's Avatar
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    Default Re: claiming earnings as "gifts"

    Awesome. Thank you very much!

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