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Thread: Tax questions (sorry!)

  1. #1
    Veteran Member rain's Avatar
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    Tax questions (sorry!)

    I know I've asked a lot of naive newbie questions on here, but here's some more. I bought TurboTax, but I have some additional questions until I get it in December. Thanks. Don't know what I would do without this site...

    So here goes:

    1. Started dancing in July. Didn't keep track of nightly earnings until Nov. 1. Started bank account July 20. Should I just report taxes based on my bank statement? That's the best I can do right now.

    2. Since starting in July, I've worked at 3 clubs. Can I rely on these clubs to send me my 1099s? I need these to file, right? Should I contact the clubs and make sure they're going to send them to me?

    3. Should I get receipts of rent payments from my landlord?





    Also, should I get receipts for rent now?

    I know I should become a stickler about this...I'm workin' on it!

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    Banned Melonie's Avatar
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    Default Re: Tax questions (sorry!)

    So here goes on some easy answers ...

    1. your reported income must reflect not only the amount of your bank deposits from July 20th, but enough additional income to cover things like your rent, food, any car payments or credit card payments etc. which did not flow through your bank account. The IRS maintains cost of living data for every zip code, and IRS computers will attempt to statistically calculate whether or not the amount of income you reported is realistic compared to your local cost of living plus any specific financial obligations you may have (like car purchase/loan)

    2. Unfortunately, there is no hard and fast rule in regard to clubs actually sending out 1099's. You do not need 1099's to file your taxes, you can file based on your own financial records. However, what you DO need to be sure of is that if/when any 1099's arrive next February or March that you have listed and reported that amount of income on the tax return that you DID file. Because of the fact that you really won't know about 1099's until they show up in your mailbox, I'd recommend not filing your 2005 return until the end of March at the earliest.

    3. it is NOT a good idea to start questioning clubs about 1099's !!!!! While there are a few clubs out there which do follow the 'letter of the law' and GAAP accounting principles, the vast majority operate in, shall we say, a 'gray area' in regard to the club's own bookkeeping. Mentioning the subject of 1099's may elicit a 'fear' reaction on the part of the clubowner and/or club accountant. Trust me, you really don't want to go there ! Life is much simpler if you simply let 'sleeping dogs lie', wait them out until late March 2006, and if a 1099 hasn't shown up by then it's pretty safe to assume that it never will show up.

    4. Don't forget about paying estimated taxes. While you're somewhat protected by the 'first year loophole', you should seriously think about making an estimated tax payment by the January 15th deadline at least.

    5. Asking about receipts for rent payments leaves me mystified. Rent is not tax deductible. Only mortgage payments are tax deductible. The receipts you really need are for things like costumes, shoes etc. which can be deducted as a business expense.

  3. #3
    God/dess VenusGoddess's Avatar
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    Default Re: Tax questions (sorry!)

    If you opened your put ALL of your earnings into your bank account, then yes, you could use your bank statements to help you file your taxes. You do not need a 1099 to file your taxes.

    You cannot write off the rent, but if you are paying your rent in cash...STOP THAT RIGHT NOW. You have a bank account; use the checks to pay the rent. If you don't want to use checks, get a money order. But, do NOT pay your rent in cash! Not only can paying in cash work against you, but having proof of ontime rent payments can come in handy some day.

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    God/dess montythegeek's Avatar
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    Default Re: Tax questions (sorry!)

    Melonie,
    In some states you can take a portion of your rent as a deduction against STATE income taxes. Massachusetts id one of them where it is 50% of rent up to $2500. (Bizarre thing is you can not deduct realestate taxes in MA)

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    Veteran Member rain's Avatar
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    Default Re: Tax questions (sorry!)

    I was concerned about the rent receipts for the same reason Venus asked me about them, because I pay rent in cash. But, now I know to pay that rent in checks. Thanks, Venus.

    I think I'm going to start putting all my earnings into my bank account, just to help me keep track of how much money I've earned.

    Sincere thanks. I'm much less worried about the IRS now.

  6. #6
    God/dess Emily's Avatar
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    Default Re: Tax questions (sorry!)

    I think you should get a receipt for anything you pay for in cash, but not for tax reasons.

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