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Thread: A few questions about taxes, student loans...

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    Newbie Kawigirl's Avatar
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    Default A few questions about taxes, student loans...

    I have been on this site before I even started dancing and have spent a ton of time in this particular section. I have kept all of my reciepts from my club, stuff I have bouught for work, and have been saving 35% of all of my earnings for when tax time comes around. BUT... when I go and file my taxes under the 1099 form for California is there going to be a sub-form or any code that will give away exactly what kind of independent contracting I am doing. Simply when my job does a background check will they know that I was a stripper? Could I just get a student loan for the time I will be in college and then just save the money I make dancing to pay off my debt later on? I know that probally sounds dumb doesn't it? All I can think of is sitting in the middle of the interview when my would-be employer's eyes widen when he sees that I was a dancer through my years in college. I am also thinking of what it would be like to be audited. Someone, anyone a little help.

    K

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    God/dess VenusGoddess's Avatar
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    Default Re: A few questions about taxes, student loans...

    I always claimed the Entertainment code. It's generic and could mean anything (singer in a band, DJ, etc). You are not required to disclose that you were a dancer (unless you are going to sit for the Bar or for a Medical License...they take that shit very seriously).

    If you report all of your income (like you're supposed to) you may lose some financial aid benefits...but that depends upon how old you are and whether you are considered "self sufficient" (you are legally separated from your parents at the age of 21, but in the eyes of FA, you're not financially separated until the age of 24). So, IME, they'll take how much you make plus how much your parents make and give you their estimate of what your yearly family contribution should be.

    However, if you hide money (which you could) and don't claim that excess money on your taxes, you collecting FA due to false information on your application will get you into some hot water...and if you use that money that you hid to help support you through school...when it comes time to file taxes and you claim that you make x amount of dollars a year and yet live the lifestyle of someone who makes more (without parental help, etc) then you could easily trip an audit...and the penalites on an audit are worse than if you just sucked it up, paid the taxes, and took the cut on the FA help.

    File your taxes...take as many deductions as you can, and pay what you owe. The good thing about your deductions is that it decreases your "earnings" and thus could help you when you apply for FA.

    HTH.

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    Banned Melonie's Avatar
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    Default Re: A few questions about taxes, student loans...

    try using the search function with keywords 'student loan'. There are a number of older threads which cover this subject very well.

    To elaborate on Venus' post, for the past several years there has been automatic reporting linkage between the IRS and gov't student loan / grant agencies and US college financial offices. The gov't student loan / grant applications require that both you and your parents report your combined 'family' income when applying for loan / grant money. This amount must jive with the amounts reported by you and your parents on your tax returns, or IRS computers will start waving red flags like crazy. As Venus also pointed out, until you are either 'financially emancipated' or reach age 24 your finances are inxorably linked to your parents' finances - such that any 'problems' that happen to develop for one will also affect the other. Basically, if your parents still claim you as a dependent on their tax return, you are not 'financially emancipated'.

    The risk factor here is that if you do not report your dancing earnings as income, if you and your parents apply for student loans / grants where eligibility was based on the amount of combined income that was reported on the loan applications, and if the IRS should ever audit you and discover the unreported dancing income, then the potential problems go well beyond non-payment of taxes due on your dancing income. Your parents will also be audited because your dancing income, if accurately reported, would probably have made you ineligible to be claimed as their dependent (50% of total financial support requirement) meaning you parents are likely to be billed for extra taxes as well.

    But most importantly, accepting loan / grant money which your true combined income, if reported, would have made you ineligible to receive, is considered to be committing a fraud against the US gov't. Legally speaking, this is no different than some dancers who choose not to report their dancing income, and then apply for and receive welfare checks - other than the fact that your parents also become 'accessories' because their names and financial info was also included on the fraudulent student loan/ grant applications.

    Granted, the probability of this being discovered is pretty low unless something unrelated occurs which happens to draw the attention of the IRS (club bust or lawsuit, automatic IRS reports of bank interest, car title, tuition payments, or something else which indicates a big gap between the income you reported versus the amount of money you are spending). However, if and when this were to be discovered by the IRS and turned over to gov't student loan agencies etc., it could turn out very badly !

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