Results 1 to 9 of 9

Thread: ANOTHER tax thread...Is dancing worth it in the end?

  1. #1
    Member Femtexan23's Avatar
    Joined
    Jun 2006
    Location
    Utah for now but Dallas soon!
    Posts
    15
    Thanks
    0
    Thanked 0 Times in 0 Posts

    ANOTHER tax thread...Is dancing worth it in the end?

    Hello everyone. I have been reading through the dollar den for hours now and the more I read, the more frustrated and confused I get. You all seem very very educated about these tax issues so maybe you can shed some light on my confusion...lol.

    I'm in Utah now and haven't started dancing yet because I don't see much of a market for it here...lol. Not to mention pasties aren't that appealing to me...Instead, I plan to move back to Dallas, TX and try it there. I've seen a bunch of info about NY and taxes but not much on Texas.

    Where can I get more information on the tax laws for Texas?

    Are most clubs' "estimated earnings" more or less than you actually make? I was a cocktail waitress in two SC's in TX and they always assumed I made a bit more than I actually did. Maybe other waitstaff made more but a majority of our nights as a whole weren't very lucrative (overstaffing, slow nights).

    Say the club I work at considers me a indepenent contractor. Lets also assume I did this as straight as possible and reported everything I made as best I could. Taking into consideration TX laws, what all would I need to come up with at the end of the year? SSI? Medicare? What else? Is it all supposed to be paid in a lump sum? If so, is it more than what I'd be paying at a regular job where it's taken out of each paycheck over the course of the year?

    After coming up with ALL that extra lump sum stuff, is dancing even worth it? Do I really come out farther ahead than if I had a regular, everyday, Average-Joe job?

    All this tax crap, paperwork and receipt-keeping sure worries me. I'm so afraid that I'll get audited if I make a mistake and with my luck, I probably would! Please help! I'm still deciding if dancing is for me or not and this is certainly something I'd need to get clarified before I take the plunge!

    -K-

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    At all of the clubs I have ever worked at in Texas, they all treat dancers as independent contractors. None withheld any tips or reported any dancer income directly. However a few did issue receipts for 'locker rent' i.e. the fee dancers were expected to pay to the club on a nightly basis.

    The good news (if there is ever any good news in a thread about taxes) is that Texas does not have a personal income tax. While Texas has proposed leveeing income taxes for businesses, sole proprietor businesses will be exempt while LLC's, corporations etc. will not (per Gov. Perry's original bill anyhow). Thus dancers working as sole proprietor independent contractors in Texas clubs won't owe any taxes to the state of Texas.

    The bad news of course is that, just like dancing in every other state, dancers in Texas clubs will owe Federal income tax plus Self-Employment tax ( = both the employer's and the employee's share of Social Security taxes). The self-employment tax runs at a flat 15.3% of total earnings. The federal income tax goes in brackets, with part time dancers earning less than $20k per year owing essentially nothing, to dancers earning $40k per year owing perhaps 10% of their total earnings, to dancers earning $60k per year owing perhaps 20% of their total earnings, and onward and upward from there to a maximum of something like 33% on a $100k+ annual income. There are a ton of other factors affecting the federal tax rates too i.e. single vs married, homeowner vs renter, kids as dependents etc.

    Figuring out and filing total earnings is done on IRS Schedule C 'Profit or Loss from a Business'. Fortunately, unlike employees independent contractor businesses are allowed to take a 100% write-off for business related expenses. So it pays to keep receipts, or at least to keep a nigfhtly record of earnings, payouts, and expenses with Quicken !

    Because there isn't any employer that will be withholding money from weekly paychecks and sending it in to the IRS on your behalf, independent contractors need to do this themselves. Fortunately, the IRS only requires independent contractor businesses to send in a check for payment of 'estimated taxes' once every three months. The amount of the 'estimated tax' payments' doesn't need to be super-accurate, but enough to keep the IRS placated. If you plan on dancing full time, something like 25-35% of your earnings will probably be in the right 'ballpark' given the 15% self-employment tax.

    At the end of the year you have to file a 1040 long form with Schedule C, which calculates the precise amount of total tax you owe. You then compare this amount to the amount you have previously sent in via quarterly 'estimated tax' payments, and either pay more if your estimated payments were light or get a refund if your estimated payments were heavy. If your estimated payments were very light (or non-existant) then IRS 'underwithholding' penalties and interest kick in.

    After dancing for a couple of months, many 'new' dancers decide to pony up a couple of hundred dollars for an accountant to help them set up their 'first year' bookkeeping and tax payments. This is often smart money spent because the accountant can also point out all of the things that might qualify as deductible business expenses to reduce the amount of taxes you'll actually wind up paying. However, with programs available like Quicken and TurboTax, there really isn't a huge reason to keep paying an accountant to prepare future year taxes unless you don't want to bother yourself.

    As to your original question as to whether or not dancing in Texas is 'worth it', that's a very personal judgement. Some clubs in some Texas cities provide fantastic earnings potential. Other clubs and other Texas cities provide pretty mediocre earnings potential (or at least mediocre if all you want to do is dance). Even so, from what little I know of 'straight job' pay rates in Texas it's not likely that you're going to earn anywhere near as much money working at a low/medium skill 'straight job' as the Clubs can provide - and you would still wind up paying federal income tax plus the 'employee's share of Social Security tax on that income (in other words, the only 'extra' tax which must be paid by independent contractor businesses versus 'straight job' employees is the 7.6% 'employer's' share of Social Security/Medicare taxes).

    Regarding risk of IRS Audit, there are two schools of thought. The good news is that, because Texas does not have a state income tax, they also do not have 10,000 bean counters in a state office building figuring out who to audit for state tax payments the way that NY and CA and about 35 other states do. Thus if the IRS doesn't choose to audit you, there's no additional risk that the state might audit you instead (and then share whatever they find with the IRS anyhow). The bad news is that many Texas cities require dancers to be licensed ... which creates a public record of the fact that a girl named XXX with Social Security Number YYY is working as a dancer. In today's interconnected world, it's a pretty safe bet to assume that the IRS computers are automatically running down the Texas dancer's license record lists and trying to match up income tax returns from girls with the same names and Social Security numbers.
    !~
    Last edited by Melonie; 06-25-2006 at 05:16 AM.

  3. #3
    Member Femtexan23's Avatar
    Joined
    Jun 2006
    Location
    Utah for now but Dallas soon!
    Posts
    15
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    Hello! Thank you for responding so quickly to my post and for providing so much info! You are so helpful!

    All that taxation is so unfair. I understand having to pay the employee's share of Social Security taxes but not the employers share. I realize that technically I would be the employer and the employee but still, I'm only one person and shouldn't have to pay twice! lol. They should make an allowance for that but why would they? Why not bilk as many people as they can? Goodness...lol. I hate giving up hard earned money.

    Ballpark, how much do you think a hustling newb like me could make over the course of my first year? (I'm 5'4'' with a toned, sporty, athletic build, D cup boobs, great conversational skills and long blonde hair) Thanks again for all your help!

    -K-

  4. #4
    mermaidnz
    Guest

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    Quote Originally Posted by Melonie
    The self-employment tax runs at a flat 15.3% of total earnings. The federal income tax goes in brackets, with part time dancers earning less than $20k per year owing essentially nothing, to dancers earning $40k per year owing perhaps 10% of their total earnings, to dancers earning $60k per year owing perhaps 20% of their total earnings, and onward and upward from there to a maximum of something like 33% on a $100k+ annual income.
    geez americans have tax easy. i pay 30% regardless id love to only pay 20%!!


    femtexan, something you have to understand,is that NO one can give you a rough estimate of earnings,esp without knowing you. income varies depending on clubs, type of customers, what you look like, how you interact, how many hours a week you work,time of the year, etc etc...im sure you can understand there is no ballpark figure.

    theres experianced dancers working making $200usd a night,while there are other dancers claiming to make $800+ consistantly a night.

    theres alot of variables in a dancers income.

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    ^^ unfortunately, the 20% federal income tax isn't the whole story for an American dancer earning say $60k per year. She also has to pay another 15.3% tax for 'self-employed' Social Security and Medicare taxes, for a total federal tax burden of 35%. Then some girls get to add on another 7% in tax to their state, and a few girls even get to add on another 3% in tax to their city. Thus a girl earning 60k a year in Manhattan winds up paying a combined tax rate of about 45%

    However, if a girl is earning $150k a year, her combined tax rate actually goes DOWN. The reason for this is that the Social Security tax tops out at a $90k annual income level. Thus the first $90k of a Manhattan dancer's earnings might be taxed at a combined rate of about 45%, but once she has earned $90k she no longer has to pay additional Social Security tax on any additional earnings through the end of the year. This is also true of Social Security taxes on high-earnings customer paychecks, meaning that their 'take home pay' may go up by $100-$200+ per week sometime during the latter half of the year - which also helps to explain the seasonal upswing in club business levels in high income cities during the latter half of the year.

  6. #6
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    Quote Originally Posted by Femtexan23
    Hello! Thank you for responding so quickly to my post and for providing so much info! You are so helpful!

    All that taxation is so unfair. I understand having to pay the employee's share of Social Security taxes but not the employers share. I realize that technically I would be the employer and the employee but still, I'm only one person and shouldn't have to pay twice! lol. They should make an allowance for that but why would they? Why not bilk as many people as they can? Goodness...lol. I hate giving up hard earned money.

    Ballpark, how much do you think a hustling newb like me could make over the course of my first year? (I'm 5'4'' with a toned, sporty, athletic build, D cup boobs, great conversational skills and long blonde hair) Thanks again for all your help!

    -K-
    Welcome to the cry of the small business person. Imagine owning a Subway or something like that!

    Lots of people don't realize that only half the taxes out there come out of their paycheck - which they don't even see to begin with!

    If people were writing checks out every month for taxes - I WOULD BET HOUSE WE WOULD SEE A BOATLOAD OF TAX REFORM.

  7. #7
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    Quote Originally Posted by mermaidnz
    geez americans have tax easy. i pay 30% regardless id love to only pay 20%!!

    That is only the federal tax.

    There have been studies showing that it is very likely most americans (the coasts) actually pay more taxes than europeans do. They are simply attached to everything so as to be unnoticeable in the grand scheme of things.

  8. #8
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    ^^^ yup, it's downright shocking. In New York, besides the federal + state + local income taxes and SSI/medicare taxes, you've got something like an 8-9% sales tax (varies by county) and something like a 55 cent per gallon tax on every gallon of gasoline. Then you've got the hidden 'gross receipts taxes' embedded in utility bills. You've got excise taxes on everything from tires to alcohol and cigarettes. You've got 'occupancy' taxes on hotel rooms. You've got 'airport' taxes embedded in plane ticket prices ... and on and on.

    Bottom line is that for a 'middle class' New Yorker, 50 cents of every dollar that you earn winds up being paid towards taxes in one form or another.

  9. #9
    mermaidnz
    Guest

    Default Re: ANOTHER tax thread...Is dancing worth it in the end?

    ^^^ wow! ok 45% tax. definatly not cool thats tough.

Similar Threads

  1. Replies: 4
    Last Post: 07-20-2011, 05:34 PM
  2. Replies: 40
    Last Post: 01-13-2009, 12:53 PM
  3. Tax Questions - Deduction Thread?
    By mark069 in forum Dollar Den
    Replies: 8
    Last Post: 03-14-2007, 01:29 AM
  4. when does the tax slump end?
    By fancygirl in forum Stripping (was Stripping General)
    Replies: 26
    Last Post: 04-15-2006, 08:14 AM
  5. Replies: 11
    Last Post: 10-16-2004, 12:39 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •