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Thread: schedule c deductions

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    Default schedule c deductions

    OK, I did a search, but I couldn't find exactly what I was looking for. I know that I can deduct costumes and shoes on my schedule C, but what about some other things... for example,
    - baby wipes, sanitizer, and other essentials
    - gas/ wear and tear on car driving to and from work
    - make up that it strictly used when i'm working
    - getting nails and hair done, tanning
    - anything else?

    Thanks.

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    God/dess Emily's Avatar
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    Default Re: schedule c deductions

    you really want to be verrrrrrrrrrry careful making any of those deductions (except costumes and shoes).

    They are very hard to prove that you used them solely for work and you're just asking for an audit.

    And forget the car altogether if you work at the same club every night. You cannot deduct commuting costs if you are just driving to/from home and work.

    here's a very good thread about this:
    http://www.stripperweb.com/forum/showthread.php?t=59996

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    Banned Melonie's Avatar
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    Default Re: schedule c deductions

    There is a common method for roughly deciding whether a business expense is deductible or not, which is commonly referred to as the 'housewife test'. The principle behind the 'housewife test' is that anything that a housewife would spend money on, with absolutely no business reason since a housewife is not IN business, must therefore be a personal expense rather than a business expense and is thus NOT deductible. You can then start going down your list of potential deductions and ask yourself ... do housewives buy 'drugstore' makeup ? Do housewives buy tanning sessions ? Do housewives buy 5" stiletto heels ? Do housewives buy bikinis ? Do housewives buy seguined gowns ? Do housewives buy baby wipes ? Does a housewife pay 'house fees' to a club ? Do housewives buy breast implants ? If the answer is a YES then you are at risk of the IRS trying to disallow the deduction.

    On the other hand, there is also an IRS doctrine which says that business expenses which are 'ordinary and necessary' in order to conduct business ARE legitimate business expense deductions. This obviously conflicts with the 'housewife test' in certain cases. When that happens, my accountant recommended to me that a 50% deduction for such expenses (like tanning sessions, drugstore makeup, hair etc.) would probably not be questioned.

    I would also point out that BUSINESS expense tax deductions can only be taken by dancers who are independent contractors filing schedule C. If dancers are working as 'employees' i.e. receiving a paycheck with taxes withheld, then they are not technically IN business and as such cannot deduct 'general' business expenses. About the only deductions that WILL fly for employee dancers are costumes and shoes, under the same IRS doctrine that allows nurses and waitresses to deduct the cost of 'uniforms'.

    In regard to car / travel expenses, regardless of the type of business, the IRS disallows the cost of travelling from home to a 'primary place of business'. However, the IRS does allow deducting business use of your car for travelling from your 'primary place of business' to other places of business. Thus if your clubonwer 'loaned you out' to another club or to a bachelor party, you could deduct the travel expenses between your regular club and the other club or location of the party. However, if you don't regularly work at the same club, and wind up booking yourself into different clubs in different cities/ states on a regular basis, then the IRS does not consider that you have a 'primary place of business' such that all of your travel expenses are deductible. And even then, if you only have one car that you share between business use and personal use, you can only deduct auto expenses in proportion to the business miles versus total miles driven.
    ~
    Last edited by Melonie; 11-03-2006 at 02:56 PM.

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    Default Re: schedule c deductions

    Wow. Thanks for the info. This isn't nearly as good of a deal as I was told. =(

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    Default Re: schedule c deductions

    One thing I left out-- what about the dancer wealth course? Career development?

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    Default Re: schedule c deductions

    that's deductible (since it's something only dancers would buy)

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    Default Re: schedule c deductions

    Sweet, thanks.

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    Featured Member Katherine's Avatar
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    Default Re: schedule c deductions

    To further Emily's statement- it's deductible as it's for education. Let's say you buy some books on selling or anything like that- that's deductible as well!

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    Featured Member MadisonM's Avatar
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    Default Re: schedule c deductions

    My acountant told me that I can deduct makeup, baby wipes, hair/nails, tanning, and even tampons, besides dancer clothes and shoes. If I would get audited for deducting these things, would I get in trouble, or would my accountant get in trouble, or both? Since she is the one that told me I can deduct these things, and she's supposed to be the tax "expert", would I still end up having to pay in for these deductions if I would get audited? I deducted all these things last year, and was going to again this year because she told me I could.
    Take the road less traveled- just make sure you have a map.

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    Banned Melonie's Avatar
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    Default Re: schedule c deductions

    ^^^ it is YOU who carries the tax liability, so if the IRS disallows deductions it is YOU that will get the extra tax bill. It's extremely unlikely that the IRS would 'make trouble' over trivial deductions such as you are talking about - they'll just want extra money out of your pocket. Ultimately, the fact that an accountant recommended taking a particular deduction carries no weight whatsoever with the IRS auditor.

    On the positive side, the worst that can happen is that you'll wind up getting a bill for additional taxes. And if you do decide to follow the same route re deductions this year that you did last year, this may in fact improve the odds that these deductions will be allowed again by the IRS since they allowed them previously. On the other hand, the IRS could disallow deductions taken on previous years' tax returns too (audits typically go back 3 years).

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    Default Re: schedule c deductions

    The Internal Revenue Code (“The IRC”) states that any expense that is ordinary an necessary for the operation of the business is a deductible business expense, unless expressly prohibited elsewhere in The IRC



    The “House Wife Test” is not a law, regulation or rule of the IRS. It is a test the Tax Courts apply if the validity of a denial of deduction is being challenged in court by the tax payer. The court holds that if the expense is in excess of what an ordinary individual would occur in normal day to day circumstances and it is a normal and ordinary cost of that taxpayer’s profession then it must be a valid business deduction. However, if the item is not in excess of what an ordinary individual would occur in normal day to day circumstances, it means that the taxpayer must provide additional facts and documentation that shows that the expense was incurred as an ordinary and necessary expense of doing business.



    Example:

    Dancer claims $2,000 in evening gown expense on schedule C. IRS notifies her that they are disallowing the deduction. Dancer sends in (A) receipts showing six dresses were bought at $400 apiece but that she is only claiming 5 for work expense and one for personal, (B) Dancer sends a written policy from club management requires dancers to have a formal attire walkout at 8:00 pm and Midnight every night, (C) Dancer sends receipts showing the five gowns are dry cleaned ever three to four weeks to remove the smell of smoke and stale perfume. In light of the additional documentation it is likely that the IRS will back down and allow the deduction.



    The key is that when the IRS disallows a deduction, the burden for proving that the deduction is valid rests upon the taxpayer. Consult your tax adviser on what documentation you need to maintain to support any deductions that you claim. I would also recommend that you consult your tax advisor on how to setup transactions that will allow you to claim all the deductions that you are legally entitled

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    Default Re: schedule c deductions

    ^^^ true, true. However, it will be very hard to prove that the purchase of tampons / tanning sessions / makeup was 100% contingent on working in the exotic dancing business. It's theoretically possible I suppose.

    Also, and very unfortunately, the interpretation of 'ordinary and necessary' is subject to a wide range of variation from auditor to auditor. If you want to prove the point, try deducting the cost of 500cc breast implants ! I'm guessing that 7 of 10 auditors would disallow the deduction, 2 of 10 auditors would allow 50% of the deduction, and maybe 1 of 10 auditors would allow the deduction. However, the degree to which the dancer being audited allows the auditor to closely inspect these 'business investments' probably has some bearing as well LOL !

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    Default Re: schedule c deductions

    tampons!? Can I write off my birth control pills too? And why stop there? Maybe I should write off the salad I'm eating right now. I need this to work!

    Have fun at your audit explaining why tampons are a business expense.

    Just making deductions on Schedule C is a red flag in itself.

    If you really don't want to pay taxes on baby wipes, there is a way to buy them that the IRS will never know about. It's called unreported income (note: this is illegal and obviously not recommended, but if you're so hell bent on saving the $2 of tax on baby wipes...)

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    Default Re: schedule c deductions

    Melonie,



    It’s about documentation!



    Give me a dancer who has worked at least one year at a club with documented $X dollars in earnings before the BA, and can show a substantial increase of $Y dollars in earnings after the BA in the same club over a year and I know a half dozen tax attorneys that will take the case and one tax attorney for the IRS who says they would never let it go to Tax Court. The IRS does not want to set a precedent that would allow that deduction to become almost automatic.



    The IRS auditors are not the final word on the tax law, the US Tax Court is. The IRS auditors are playing a game called how much money can I get out of this taxpayer. The Auditor looks at several things (A) at what point will the taxpayer save more in taxes, penalties and interest than they will spend in attorney and court fees, (B) how likely is the taxpayer willing to go to court, and (C) how likely is the IRS to lose this case if it does go to court. The IRS auditor will look at those three things and decide how far they are willing to push it. The more documentation a taxpayer has (B) and the stronger that documentation supports the validity of the deduction (C) the less likely the IRS auditor is willing to push it.

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    Banned Melonie's Avatar
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    Default Re: schedule c deductions

    ^^^ arguably, the final authority on income tax and deductions is the US congress, with the Tax Courts merely serving to interpret the tax law that congress has written - to wit 'plastic surgery which is not deemed to be medically necessary' ...

    I don't doubt that many tax attorneys would agree to take the case re 'housewife sized' breast implants for dancers, and I also understand that the IRS might negotiate rather than take the chance of setting an adverse precedent in tax court, but of five dancers I have known who tried it and were audited 2 were disallowed, 2 got a 50%er, and one got to claim 100%. Of course where implants larger than 1000cc are concerned, the 'Chesty Love' IRS letter ruling precedent already exists (IRS vs. Cynthia Hess).

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    Default Re: schedule c deductions

    My tax lady goes stritly by the books and told me this:
    make-up: not a deduction if you wear in and out of work. Only make-up that is used specifically for work can be deducted. Example: dermablend (used to cover BA scars and stretchmarks) eyelashes are deductible other than that the answer is no.
    Costumes: yes. you have to wear dancer clothes and they aren't worn outside of work. You must have ALL reciepts for all deductions.
    Shoes:yes. You only wear them for work.
    Car: only mileage to and from work and to and from tanning and getting dancer clothing /unless you bought and hybrid this year nothing else from your car will get deducted unless you are a traveler then keep all gas reciepts and keep track of miles cuz it is a deduction.
    Baby wipes: questionable, but probably no. It is not a necessity for work only. You choose to use them.
    Tampons: I doubt it. You use some sanitary products every month anyways, so why would this be a write off.
    Tanning: Yes. You tan to make more money and look better. I don't really know, but my accountant says yes.
    Health Insurance is a write off so keep your reciepts. However it is not %100 deduction unless you spend more than $1700 a year. This may vary from state to state.
    All traveling expenses for traveling dancers except for food is write off, so keep ticket reciepts, rental car reciepts, gas reciepts, hotel reciepts, and keep track of cab fare if possible.
    Wigs: write off/only used for work
    Nails:write off
    Massages: write off
    Can't think of anything else but remember, you don't want too many deductions because it brings down your earnings. Yes, it will help with lessening your taxes but too many deductions is not a good thing.
    And just remember you MUST have reciepts for it to be a legitimate write off.
    OH YEAH!! Forgot the most important thing. ALL YOUR HOUSE FEES AND TIPS TO EMPLOYEES IS ALSO A WRITE OFF. SO WRITE DOWN EVERYTHING AND ASK FOR SOME KIND OF RECIEPT FOR HOUSE FEES IF THEY DON'T ALREADY GIVE YOU ONE. Well hope this helps. I've been doing this for three years now and I haven't had any problems.

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    Default Re: schedule c deductions

    I would like to know if there was anyone that took the deductions like those listed above and went through an audit. What happened? I mean, not getting audited doesn't mean they were legit deductions.

    Massages? Nails? 100% write off?

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    Default Re: schedule c deductions

    The Internal Revenue Code (“The IRC”) states that any expense that is ordinary an necessary for the operation of the business is a deductible business expense, unless expressly prohibited elsewhere in The IRC
    how come if I'm not a dancer I can't deduct buying suits? I mean where the hell else would i ever wear a suit but to work?

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    Default Re: schedule c deductions

    ^^^ re suits for work versus dancer costumes, the technical distinction is that you can also wear your suit to a wedding, to a doctor's or lawyer's office, into a car dealership etc. It's assumed that you can't do the same wearing a strip club stage costume ! But in fact you may be able to take a partial deductions for suits worn at work if your 'employer' requires that they be worn.

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