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Thread: rent and bills paid in cash

  1. #1
    Veteran Member rain's Avatar
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    Default rent and bills paid in cash

    I live with five other people. One of my roommates pays the rent with a personal check from her checking account and we just pay her the cash we owe. Another roommate takes care of the bills, making a total and dividing it to see how much each person owes.

    I'm claiming 100% accurate income come Jan. 15 when I file my first quarterly estimate.

    Should I be concerned at all about paying for rent and bills in cash?
    There is no salvation in becoming adapted to a world which is crazy.
    Henry Miller

  2. #2
    God/dess VenusGoddess's Avatar
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    Default Re: rent and bills paid in cash

    No, but aside from having absolutely NO PROOF that you paid this stuff should anything happen...

    You should ALWAYS pay your rent in Check or money order. Not only does it cover your ass if you get into a bad situation with your roommate, but if you need to find a new place, you have "rental" history via your check/money order receipts.

    Never, ever pay your rent in cash.

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    Featured Member scorpio's Avatar
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    Default Re: rent and bills paid in cash

    what V said!

  4. #4
    Banned Melonie's Avatar
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    Default Re: rent and bills paid in cash

    There's actually another important reason that dancers will want to keep 'proof of payment' for rent, utilities and other major expenditures. This is a bit convoluted ....

    Most dancers have no authoritative proof of how much money they earned. But this also means that most dancers have no authoritative proof of how much money they did NOT earn. Given recent publicity in the Scores credit card case - i.e. dancers stating to the media that they are earning $1000 a night, the IRS might indeed make an assumption that all dancers earn a great deal of money. Thus if an individual dancer is audited, and the IRS doesn't believe her reported income (or God forbid she didn't bother to report any income), then there's nothing from technically preventing the IRS from pulling an estimated annual income figure out of the air for this individual dancer and attempting to charge the individual dancer a whole lot of income tax on that estimated annual income. Having receipts proving how much money a dancer is actually spending for things like rent could serve as evidence to question any unrealistic IRS annual income estimates.

    To provide a specific example, suppose the IRS audits a dancer at random, finds her past tax returns and financial records to be a mess, such that the IRS pulls an estimated $100,000 per year estimated income figure out of thin air and attempts to charge the dancer $50,000 in back taxes for the past 3 years. Being able to produce receipts showing that the dancer was actually spending money according to a $30,000 per year lifestyle would go a long way to preventing the IRS from getting away with their overblown $100,000 income estimate and back tax bill at the auditor level, rather than having to make an expensive legal appeal before an IRS judge.

  5. #5
    PhillyDancer1982
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    Default Re: rent and bills paid in cash

    Melonie, that is a great idea!! I never thought of that, but it makes a lot of sense. It would suck if a dancer got audited, and the IRS wrongly assumed that she made like $100,000/yr+ when in fact she only pulled in $50,000/yr or so...that'd be a lot of back taxes and penalties to pay back, and for money she didn't even earn! It's bad enough when loser guys at work assume that we make more money than we do(guys who are cheap and say, "But you make plenty of money here, what do you make, like $300,000/yr?" yeah right, I f-ing wish!!! and as luck would have it, guys usually say these things on the really bad nights!)...but for the IRS to wrongly assume we make more money? Even worse!

    When I pay for things, I make it a point to pay for some stuff with cash, and others with credit cards. For example, I put all of my gas expenses on my Shell credit card...this makes for a very quick and handy way to calculate my transportation expenses and for personal reasons, to also track how much gas I'm using; I simply just print out all of my year's credit card statements straight from the internet.

    I also put tax- deductible items on credit card, such as "business expenses"(costumes, make-up, shoes), charity donations, or things subject tax saving incentives, such as mass transit train passes. Either way, these things are going to ultimately be deducted at the end of the year on my taxes but at least the IRS sees that I'm making SOMETHING and reporting SOMETHING so that they aren't as suspicious. I also put a lot of my living expenses on credit card or pay with check, such as rent or car insurance, because that shows the IRS that I am making something and reporting something. If I didn't show any income or purchases at all but records showed that I was living by myself in a very nice apartment, they might get suspicious, you know?

    However, admittedly there are a few things that I will pay for in cash to avoid a paper trail. For example, buying a $700 designer chair(although any purchase not much bigger than this might be obligatorily reported by the store! so it doesn't work for huge purchases). This is obviously a "want" item, not tax-deductible, and certainly not a business expense. Same for little useless things such as CDs, video games, some neighborhood kid mowing the lawn for you and charging simple cash, or McDonalds food. These things do not contribute to my living necessities(rent, electric, phone, car insurance, etc), or to business expenses. Maybe I am wrong here? I don't know.

  6. #6
    God/dess anomar's Avatar
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    Default Re: rent and bills paid in cash

    Do you have a budget? Every month I estimate about $600 for all of my living expenses (rent, food, utilities, groceries, etc) and make sure that it's in my checking account and goes through my debit card (I make a point not to pay with cash there). Additionally, I'm pouring money into my credit card debt to get rid of it asap before I start focusing on my student loans. Everything else (entertainment, fancy clothes, non tax-deductible expenses) I pay for in cash, with some $$ in CDs, some $$ simply in money orders made out to myself. My income can be estimated from the sum of my paper/electronic trail (budgeted living expenses, credit card debt, student loan debt, and bank assets).

    If that $600/mo were to also be paid for in cash, it'd be a lot harder to claim that I was making that $7,200 base income with no paper trail. A living expenses budget (do you track your earnings in excel/quicken? If not, start now!) should definitely leave a trail; this makes your petty cash tracking more malleable.

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