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Thread: Taxes? What to do, what not to do?

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    Curious Guest _divine_infekt_'s Avatar
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    Default Taxes? What to do, what not to do?

    So, I have only been dancing for a year. I bought myself a new car, with just enough money down for having little to no credit at all. Most of my earnings at the end of the night go directly into my bank account. I've read up to 20 threads on how you girls file your taxes. I'm confused on what I should do. I haven't kept track of ANY of my earnings, besides what goes in and out of my bank account, and the things I spend money on. Should I even file for a dancer my first year? I've filed taxes before. Those were all W2 forms that other companies sent me, when I worked for them prior. What should I do? I know the IRS can see how much goes in and out of my bank account, although, I don't want to screw myself over when it comes to tax time. I guess next year I know what to do with my taxes.


    Anyone have any advice????

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    Senior Member DanMorris95156's Avatar
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    Default Re: Taxes? What to do, what not to do?

    Divine -

    This is straight forward. You need to file. Using your bank records as the minimium, you need to reconstruct your transactions and history - to the best of your knowledge. Do it starting today while the memories are fresh. Don't worry about the deductibility or not today, categorize your income by date/type and your expenses by date/type - estimate where necessary. Failure to file a correct return (and correct can be your best return based upon your records/memory/etc - but note not having records suggests that you weren't behaving in a 'business' type manner and can provide a door through which the IRS and other tax authorities can "recalculate" what they think you earned and trust me, that will be worse then your actual reality.) is a grave mistake.

    Regards,

    Dan Morris
    Daniel D. Morris, CPA
    [email protected]

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    Banned Melonie's Avatar
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    Default Re: Taxes? What to do, what not to do?

    Dan has brought up an extremely relevant point regarding IRS authority versus Independent Contractor dancers who do not keep books/file taxes in a 'businesslike' manner. I'm going to try and state this principle in as blunt a fashion as possible to get the point across. Dan or others please jump in if I'm in error or over-dramatizing.

    The basic assumption the IRS proceeds upon in regard to business income and business tax returns is that the business is operating lawfully, that the business is keeping books in good faith, and that the records of that business can more or less be relied upon in regard to accuracy for determining actual income levels and actual taxes due. However, when the IRS receives a business tax return (including a dancer's Schedule C) or audits a business' books (including a dancer's earnings and expense records) which clearly do not conform to 'standard' business recordkeeping requirements, the IRS can adopt a position that the business is being operated in an 'un-businesslike' manner. As such, the IRS outlook then changes from an assumption that the financial info the business has provided being essentially correct, to an assumption that the financial info the business has provided is incomplete and/or incorrect. As Dan posted, an 'un-businesslike' determination then opens the door for the IRS to essentially disregard the actual financial information provided by that business, and to instead start 'estimating' / 'reconstructing' / 'recalculating' the probable real income for that business. An IRS 'estimate' / 'reconstruction' / 'recalculation' can be based on cash flows through bank accounts, large ticket item purchases, new car/home title registrations, monthly payment cash flows, observed personal possessions during an audit, or even news media stories of dancers stating that they earn $1000 a night !

    The point here is that if your tax return info appears inconsistent and/or unprofessional, it is likely to attract extra IRS attention. If an IRS audit shows via lack of business records, lack of receipts or other documentation, lack of quarterly estimated tax filings etc. that your independent contractor business is not being operated 'professionally', the IRS can then totally disregard the amount of income that you claimed you actually earned, and instead apply an IRS calculated 'estimate' of your earnings - an 'estimate' which can be many thousands of dollars higher than the amount you claimed that you actually earned. Unfortunately, as an independent contractor, you have no legal way to conclusively prove that you did NOT actually earn the amount that the IRS may 'estimate' that you earned - meaning that you may find yourself receiving a huge bill for additional taxes on money that you didn't really earn.

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    Curious Guest _divine_infekt_'s Avatar
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    Default Re: Taxes? What to do, what not to do?

    Im trying not to do that to myself. Meaning, having the IRS bill me thousands of dollars when tax time comes. Im kinda unsure on what to do. Im only 20 years old, and can't really ask my mother for assistance for she is under the assumption that im not a dancer. I guess what I should do maybe is calculate the the price of my car, the amount of deposits made in the past year, and then, use all the things that I have bought such as shoes, clothing, makeup, skin care products ect, and use that as a " write off " per sau. Someone also tells me that under $16,000 a year is poverty, and you don't have to pay taxes. They told me that if your giving the IRS money, their less likely to audit, or really mess around with your taxes. They told me my best bet, after calculating how much i've made, and if its under $30,000, then just claim $30,000 a year, even though I might have to pay $3,000 this year to the IRS.


    Again, I have no idea what im doing, and im trying to figure out the best way to go about doing this. I don't want to get to an accountant and everything get screwed up.



    I was not organized at all this year. Like I said in my thread before, I've never had to do something like this.

    I guess im pretty much screwed.

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    Banned Melonie's Avatar
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    Default Re: Taxes? What to do, what not to do?

    Well, for a fact, if your actual adjusted gross income is only $16K, you won't actually have to pay much of anything in taxes. However, this does NOT mean that you don't have to file a tax return - anyone who earned more than $700 last year must file a tax return.

    You're not screwed by any means. At least you WANT to file a tax return. You've also already formulated a pretty good plan as to how to start. I'd recommend getting a copy of all of your bank statements for starters - which should show all of the amounts and dates of the deposits you made. I'd then recommend setting up a spreadsheet on your computer with the deposit dates going down the leftmost column ... then enter the deposit amounts you made in another column ... then enter any expenses you made towards costumes, shoes, or anything else business related in yet another column. This will at least give you a starting point towards estimating your income and business expense tax deductions.

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    Curious Guest _divine_infekt_'s Avatar
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    Default Re: Taxes? What to do, what not to do?

    Thank you for all your help. The spreadsheet is a great idea. It atleast shows that im "somewhat" organized. I should get started on all my tax stuff now while I still have some time. Next year, I know exactly what to do.


    Again, Thank You!

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    God/dess VenusGoddess's Avatar
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    Default Re: Taxes? What to do, what not to do?

    I would suggest getting a notebook and for every day that you work, write down the date, the hours you worked, how much you made BEFORE you paid anything out, how much you paid for house, tip-outs, etc. and then how much you came home with. When you buy stuff for work, write in the notebook what it was and how much it was. Staple the receipt to that page. It makes it much easier to track your stuff. I had my stuff in the same notebook, but in two separate sections (my income in the front half and my expenses in the back half).

    Good luck!

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    God/dess Jenny's Avatar
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    Default Re: Taxes? What to do, what not to do?

    Okay - I do just go to an accountant. I keep a spreadsheet of all of earnings and expenses (she LOVES it by the way - PM or email me and I will send you a template) with all possible information, and I let her sort it out (it's in a spreadsheet - it's all orderly and stuff, but it's everything I can think of that I can put in there, including stuff that is sheerly for my own edification). You can't deduct any expenses for which you don't have a receipt of some kind, so keep your receipts and number them. VG has a great low-tech method, but I prefer to let excel do my multiplying for me because, well, I'm not that smart and let to my own devices would inevitably make clerical errors.

    Someone was saying before that we need our own "pink pages" - wouldn't it be awesome if we could have a listing of dancer friendly professionals?
    I have taught that the sky in all its zones is mortal and its substance was formed by a process of birth

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