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Thread: First yr filing taxes as an independent contractor, where do I start?

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    Arrow First yr filing taxes as an independent contractor, where do I start?

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    Last edited by pumpkinpie; 12-09-2013 at 05:03 AM.

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    God/dess Emily's Avatar
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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    at least you asking about it! Most dancers would just say, "fuck it" and go on about their merry way. Then in 5 years when they wanted to buy a house or put some money in the bank, they can't because they owe so much in back taxes and must continue to live under the radar.

    I think H&R block can help. The more prepared you are, the less time they will need to spend on it, and therefore the less it will cost. Definitely bring your bank statements and anything you have that you can deduct (did you pay for your own health insurance?)

    I keep all my receipts and still was only able to deduct about $500 worth for clothing, shoes and pasties. I don't buy that much so if you're like me (don't buy a lot of clothing and don't travel for work), it won't be an expensive problem if you don't have receipts for everything. You might not get all the write offs you deserve, but they won't be that high anyway. FWIW, and I'm also very conservative with personal maintenance items. I just paid $1170 for laser hair removal treatments and it pains me that I won't be able to write that off.

    You should have been making quarterly estimated payments so you wouldn't have one huge lump sum, but you're in luck since you won't get penalized for this since this is your first year as an IC.

    So here's the bad news: You owe in the thousands (can't say for sure, but don't be surprised is it's in the $5000 neighborhood). And no, you can only get an extention in time to file, not pay. If you do an extention, you still have to send them an estimated tax payment for the whole year. You can do a payment plan, but it's a ripoff. You're better off putting it on a credit card.

    Plus you will owe state taxes (prob around $1000) and maybe even a local city tax (mine's 1&#37.

    And then on April 15th, you'll also owe estimated taxes for 1st quarter 2007. But on the bright side, you will be better prepared next year at tax time!

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    This is my first year as an IC. All the years before this we were actually getting paychecks. I have a daughter so does anyone know how it's going to work then? I've kept all my receipts, and I got the tax form this weekend and it states that I only made $8000. I'm so confused I have a private accountant I go to so hopefully she can help me out. But if someone has any info. that'd be great!

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    Quote Originally Posted by pumpkinpie View Post
    Oh my gosh thank you so much! I had no idea I had to file 4 times a yr! I guess I will make a list of questions for H&R block. I’m definitely going to start saving right now to pay my taxes, at least 6000 like you say. And like many girls on here I’m getting a notebook to keep a record of my earnings, purchases, receipts, and bank statements. So when is the next deadline for us? You say April 15th? So Ill be paying for a year worth of dancing?? Eeek that’s a big chunk out of my wallet. But its worth It. once I get this done I will have proof of income. Thanks a lot, really I had no idea and im so glad I asked or it would have been too late for me.

    I don’t think I would be eligible for deductions (didn’t have health insurance). Just used one club this whole time. Didn’t keep record of things I bought for work.

    Anyway thank you.
    you don't have to file 4 times a year, but you have to send in money 4 times a year for what you estimate you will owe for that quarter or pay taxes on all the money you earned.

    Maybe you should get Quicken or something like that instead of writing it in a notebook. it'll make you so happy when you try to do your taxes next year.

    The $6000 is just an approximate guess. I really don't know, but just threw that out there so you get your ass in gear to save or time to plan how you're going to pay for it. But like I said, that doesn't include what you will pay for the 1st quarter of 2007 due on the same day.

    Quote Originally Posted by kaiarose View Post
    This is my first year as an IC. All the years before this we were actually getting paychecks. I have a daughter so does anyone know how it's going to work then? I've kept all my receipts, and I got the tax form this weekend and it states that I only made $8000. I'm so confused I have a private accountant I go to so hopefully she can help me out. But if someone has any info. that'd be great!
    Your daughter doesn't change anything except give you another tax credit. It doesn't change the fact that you still have to send in quarterly estimates or that you have to report your tip income (I'm assuming you made more than $8000 in a year and so will the IRS.)

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    Basically Pumpkin, I'm interpreting your statement to mean that you earned $3000 a month for 8 months in 2006 = $ 24,000. I would also agree that between the 15.3% self-employment tax and federal income taxes that you'll owe 25% or about $6,000 to the IRS on your 2006 earnings - $6,000 which must be paid by April 15th. Since 2006 was your first year of dancing you will not be penalized for failing to make estimated tax payments throughout 2006.

    However, to avoid IRS penalties and interest charges, since 2007 is NOT your first year of dancing you must now make your estimated tax payments by the due dates. Thus on April 15th you'll also owe estimated taxes on your 2007 January through March earnings. In annualized terms if you were to work every month in 2007 your total annual income would be $36,000. This amount puts you in a slightly higher tax bracket of say 28% instead of the 25% that applied to the 2006 income. From January through March you will earn another $9000, so the estimated taxes due on these 1st Quarter 2007 earnings will be in the ballpark of $2,500. Added to the $6,000 taxes due on your 2006 earnings, you'll need to be prepared to cough up a total of about $8,500 by April 15th to the IRS for federal taxes.

    Also, since South Carolina has a state income tax rate which will probably be about 3% in your tax bracket, you'll also have to file a SC state tax return and pay them an additional $1000 bucks or so by next April 15th for 2006 state income taxes plus 1st quarter 2007 estimated state taxes.

    Putting this all together, Pumpkin, it looks like you might be able to cover your April 15th tax bill if you save every single dollar that you earn between now and April 15th. I'd seriously consider trying to work some extra nights. If you don't/can't come up with the entire amount due by April 15th, you're basically going to have a choice of paying the IRS a 10% penalty plus interest on the amount that you are short, or as Emily pointed out paying 10-15-20% interest by putting the amount that you are short on a credit card.


    Kaia, you may qualify for 'head of household' filing status providing that you pay for the 'home' that you and your daughter live in. You may qualify to claim your daughter as a dependent if you provide 51% or more of her financial support. You may also qualify for a child care tax credit. If so, all of these will reduce your effective tax rate and reduce the amount of money you'll be required to shell out by next April 15th

    !~
    Last edited by Melonie; 01-25-2007 at 05:13 PM.

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    Just make sure you pay it. You'll screw yourself 10 times over if you get behind on your taxes and 100 times over if you don't pay at all.

    next year you'll be better prepared.

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    thanks everybody. If I didnt know this I would be in real trouble, but thanks to you Ill know to get it taken care of!

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    Quote Originally Posted by pumpkinpie View Post
    Here is my situation; this is my first yr dancing. My first time filing taxes as an independent contractor. I started in may. I made about 3000 a month but I didn’t keep record of my earnings. All my bills amounted to 3000 a month. My question is can I walk into H&R block or any other business like that and expect them to be able to take care of my taxes? What should I bring with me. I don’t have any receipts, just my bank statements. Should I go some where else to get my taxes done? Somewhere more professional? Sorry I’m just so new at this. How much would I be expected to pay? In the hundreds or the thousands? I haven’t saved any money for taxes so I wonder how much will I have to come up with now. Plus what is my time frame, or my time limit to pay. Can I extend my time to pay? From those of you who have done this before I just need some guidance. Thanx so much!
    Ugh I don't recommend H&R Block. I made the mistake of going there around 4yrs ago. They charged me $105, which is $5 more than I paid for a private accountant who works frequently on dancers' taxes. I'd recommend going to an accountant who knows a lot about the dancing industry and does taxes for a lot of dancers. He/she will know what you can and cannot write off. Usually this type of accountant is more money than filing yourself or going to a regular accountant, but generally the extra money is worth it because he/she knows what they're doing better. And H&R Block isn't that cheap(or, at least it wasn't for me...but who knows if they tried to hustle me, because I tended to get "hustled" a lot back then due to unassertiveness issues I had).

    For the amount that H&R Block charges, it's really really sad that they only pay their employees $7.50/hr(I found this out because I actually applied for a job there last year).

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    Default Re: First yr filing taxes as an independent contractor, where do I start?

    Go to a CPA. Ask a girl you work with who seems very responsible and has her stuff together. Or ask someone you know who is a business owner.

    Emily and Melonie are 100% correct, but they are erring on the conservative side. A decent CPA should get you a large amount of business deductions to lower your overall taxable income. Mine charges me around $100-150 or so, and worth every penny.

    Get a printed copy of all of your bank statements for last year. Some things you can write off:
    mileage and entertainment expense (technically not supposed to if you are working at the same club all the time)
    outfits and jewelry for work
    supplies(this stuff lies in a grey area too)
    portion of your rent
    charitable donations
    educational credits or interest expenses
    professional fees (yes, paying a CPA is deductible)

    Do this ASAP. You may not be in such a huge pickle after all, but the ladies are still absolutely correct.

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