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Thread: Depositing money

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    Default Depositing money

    Hey, I'm a newbie here to this website & I hope this is the right thread to post my question. I just started dancing & I've never paid taxes before & plan on doing so. But, I was wondering if my bank would get suspicious when I start to deposit large amounts of money each week. Would it be better to deposit smaller amounts every other day? Or is better to deposit a week worth of work, or 2 weeks, or 3 weeks, or once a month?? I was worried they would get suspicious & check to see if I've been paying taxes, which of course I haven't yet because I just started working. Thanks for any advice!!

  2. #2
    Yekhefah
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    Default Re: Depositing money

    Deposit your money at your convenience. The worst they can do is refer you to the IRS, but the IRS doesn't give a shit either until you file next year. You pay taxes next spring on this year's income, so don't worry about it. You aren't doing anything wrong so they have no reason to get suspicious.

    Just write down your takehome pay every night so you can have it all on file when you add it up for tax purposes in January. I write my earnings, what club I'm at, and the mileage it took to get there and back in my little day planner on every date that I work. Then at the end of the year, I total it all up (earnings and mileage) and give the totals to my accountant. I also save receipts for work-related expenses (stripper shoes, outfits, hotel and gas receipts for work trips, etc.) and give that total to the accountant too.

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    Default Re: Depositing money

    I also recommend depositing at your convenience. There is some amount that, over which, the bank has to file a special form. I'm not exactly sure what it is, maybe $5,000-10,000. I have deposited up to 3,000 at one time before with no problems.

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    Banned Katrine's Avatar
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    Default Re: Depositing money

    Businesses deposit large amounts of money into the bank all the time. The bank won't get suspicious, it isn't their job. There ARE some reporting rules due to the Patriot Act though. Which reminds me, I need to get my updated Money Laundering training done soon....

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Banned Melonie's Avatar
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    Default Re: Depositing money

    ^^^ the US federal cash reporting limit is $10,000 in a single day. Many states have lower thresholds i.e. $3,000 in a single day. As Yek already posted, the fact that large cash transactions are being automatically reported to the IRS and to your State Tax Agency is not problematic in and of itself. It only becomes a problem when corresponding self-employment taxes and income taxes aren't paid.

    PinkLove, in point of fact it is much easier to start making your quarterly estimated tax payments now in order to avoid being 'slammed' next April 15th. The next estimated tax due date is actually this coming September 15th. The self-employment tax rate is 15.3% no matter how much money you have earned. The federal income tax rate is an unknown at this point since you haven't been working very long. Also you didn't mention whether or not you live in a state / city that also assesses an income tax, because they also require estimated tax payments.

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    Default Re: Depositing money

    Wow!! Thank you guys so much. That information was incredibly helpful & I feel not as paranoid now. Hah.

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    Default Re: Depositing money

    I've been trying to read the forum for some more information. But, I'm still a bit lost. What do I do exactly?

    I live in Arizona, so does anyone know my total exact tax percentage I would owe? Also, I know I fill out a form, but which one? Should I take the percentage of what I made from Sep7 (when I started working) through Sep15 for the first tax due date (Sep 15)? Do you have to send the form & check in before Sep 15? Also, how do I deduct the extras like makeup, shoes, etc? Do I just subtract the total amount of those items from what I owe for taxes? Also, do I have to make a copy of the receipts that I saved for proof & send it in?

    Do I need to go to H&R Block or could I really just do it myself? I'm just worried I won't have any clue how to fill out that form & might need someone to help me. Maybe it's not so intimidating as it seems, but I'm trying to get started!!

  8. #8
    Yekhefah
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    Default Re: Depositing money

    Don't go to H&R Block. They hire random untrained nitwits off the street, who can very easily screw up your taxes and cost you a lot of money. Go to a real accountant and let him deal with it.

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    Banned Melonie's Avatar
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    Default Re: Depositing money

    ^^^ ahhh, a bit of a misunderstanding. The September 15th due date is for taxes on money earned between June 1st and September 1st. If you didn't start working until September 7th, you won't need to send in an estimated tax payment until January 15th - which is the due date for estimated taxes on money earned between September 1st and January 1st.

    As far as how much in taxes you'll wind up owing in January, that requires some assumptions. Just for example purposes I'm going to assume that you are grossing $1000 a week as a dancer, and that you're going to have worked 11 weeks between your September 7th start date and the end of 2007 - for a total gross income of $11,000.

    First let's guess that you'll have costumes, shoes, and other legitimate business expense tax deductions that total up to $1000. This results in a 'business' income of $10,000

    Self-employment tax (which equals the employee's share plus employer's share of Social Security and Medicare tax - since you're self-employed you are your own employer) will be 15.3% of that $10,000 = $1530 . This tax is independent of income, filing status, dependents etc.

    Federal income tax goes by tax brackets. Taking a wild guess that you are single, that you have no other sources of income earlier in the year, that you have no dependents (children), you'll probably wind up owing 11% in federal income tax = $1100. However, the IRS allows a $5150 standard deduction, meaning that you won't owe any federal income taxes for 2007.

    Therefore when January 15th rolls around, you'll need to send in an estimated tax check for somewhere around $1530. In order to save that up, you'll need to set aside $140 every week for the 11 weeks you'll be working between now and the end of the year.

    Arizona does have a state income tax. However, because you will only have worked a small portion of 2007 your state tax liability will also be erased by the standard deduction,

    However, after January 1st, you won't be able to escape federal or state income taxes any longer, because your estimated 2008 income will vastly exceed the amount of the standard deduction. At that point you'll have to recalculate how much money to set aside each week based on owing (guessing) 15% in federal income tax plus 3.5% in Arizona income tax plus 15.3% self employment tax - for a total of somewhere around 35% of your nightly dancing earnings = $350 per week based on a $1000 per week average dancing earnings level.

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    Default Re: Depositing money

    Thank you, thank you, thank you!!! You are so incredibly helpful. If I have any other questions, I'll be sure to pm you. =D

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    Default Re: Depositing money

    I'm a little confused about bypassing federal & state taxes for 2007 because of the standard deduction. Could you explain into a little more detail about this? Should I just pay for the federal/taxes for Jan. 15, or can I definitely exclude it with no problems later on? Also, you said the federal tax would be 11% but after my first tax payment, it would then be 15%. Why is this?? Thanks!!
    Last edited by PinkLove; 09-20-2007 at 11:47 PM.

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    Default Re: Depositing money

    if you go to you will see a federal income tax rate table. The table basically says that the tax rate for the first $7,550 earned is 10% ... that the tax rate for additional earnings between $7550 and $30,650 is 15%. Thus for someone with a $10,000 income the blended tax rate is right around 11% (= 3/4ths of that $10k taxed at 10% plus 1/4th of that $10k taxed at 15%). The dollar value of an 11% tax on $10,000 is obviously $1100.

    In addition to income tax, independent contractors will also wind up owing a 15.3% self-employment tax (consisting of both the employer's share and employee's share of Social Security and Medicare tax). The dollar value of a 15.3% tax on $10,000 is obviously $1530. Combining the self-employment tax plus the federal income tax adds up to a tax liability of $2630 on a $10,000 income.

    However, the IRS also allows a $3300 exemption from income tax for every person ... which you can claim as long as nobody else is attempting to claim you as a dependent on their own tax return. $1100 in income tax liability less a $3300 exemption means that you actually owe less than zero in federal income taxes. You can't totally escape the self-employment taxes, but the less than zero amount of income taxes does subtract from the self-employment tax you still owe.

  13. #13
    AudreyLeigh
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    Default Re: Depositing money

    This whole thread is making me depressed. Why should I give them govt money - so the guys in prison can get root canals for free? Ugh.. leading me back to me $20K worth of dental work.... do depressing...

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    Default Re: Depositing money

    PinkLove, any money you deposit into your bank account you MUST pay taxes on! Don't use H&R Block, they don't understand the deductions. I have a great accountant in Phx near 16th & Bethany Home Rd. He's done my taxes for the past 5 years. PM me if you want a reference.
    Rebecca Avalon







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    Default Re: Depositing money

    ^ my parents told me i just had to pay tax on my interest. is that wrong?

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    Banned Melonie's Avatar
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    Default Re: Depositing money

    ^ my parents told me i just had to pay tax on my interest. is that wrong?
    If you're implying that you will be earning money as a dancer, and directly depositing that money in a bank account, and then only having to pay income tax on the bank account interest, then yes that is wrong. In the US or Canada, your dancing earnings are considered to be ordinary income, subject to both income tax and other social welfare taxes. With rare exceptions, dancers are considered to be independent contractor sole proprietor business owners by US and Canadian tax authorities - dancing earnings are considered to be business income - and as the business 'owner' you are responsible for withholding and paying periodic estimated tax payments to the tax authority as well as filing a tax return and reconciling your total tax owed versus total estimated tax payments made once a year.


    PinkLove, any money you deposit into your bank account you MUST pay taxes on!
    Elaborating an a blunt fashion, the point that Britney is making is that the US and Canadian tax authorities receive automatic reports of bank account interest earnings from the banks administering these accounts. The tax authorities then back-calculate the amount of deposits necessary to produce that amount of reported interest earnings. The tax authorities' computers then run a cross-check based on Social Security Numbers (or whatever sort of similar ID is called in Canada), and attempt to match up the reported bank account owned by a person with Social Security Number 12345678 with a tax return having been filed by a person with the same Social Security number. If no such tax return is found during the computer search, or if a matching tax return is found but the amount of reported income on that tax return is insufficient to explain where the money came from to make the bank deposits, aaa-ooo-gah an auditor will be assigned to investigate the discrepancies. Once an auditor is assigned, an official request will be sent out on the financial computer network for any and all financial information matching that Social Security Number. Within 5 minutes this official request will spit out a complete list of bank account transactions, credit card transactions, car loans / consumer loans, mortgage loans, college tuition payments etc. If it is immediately obvious that a person with Social Security number 123456578 did not file a tax return or did file a tax return only claiming to have earned $20,000, while at the same time the sum total of bank deposits plus credit card payments plus loan payments plus tuition payments made by that person would actually require an income level more like $40,000, the tax authorities will be on that person's case by the end of the week.

    Bottom line is that every dollar which winds up being deposited in a bank account, which winds up being paid towards a credit card bill / car loan / mortgage payment, being paid towards college tuition, deposited in invesment and retirement accounts etc. is potentially subject to a computer cross-check against reported income on tax returns. The tax authority is going to expect to see enough reported income to explain how it was possible for the person to make these deposits / payments and still afford to buy groceries. Using newly granted investigating authority (which stems from terrorist anti-money laundering treaties) the tax people will have your entire spectrum of personal finances in front of them within minutes of having suspicions raised. If there is an obvious discrepancy, the tax authorities WILL investigate - and will eventually hit you up for back taxes plus penalties plus interest.
    Last edited by Melonie; 09-21-2007 at 01:10 PM.

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    Default Re: Depositing money

    This whole thread is making me depressed. Why should I give them govt money - so the guys in prison can get root canals for free? Ugh.. leading me back to me $20K worth of dental work.... do depressing...
    Well, look at the bright side. If you are ever (bogusly) busted for excessive contact with customers, take the jail time ! While you're in custody get your teeth fixed for 'free' !

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    Default Re: Depositing money

    I also mean (quite simply) that any money you deposit into the bank HAS to be accounted for simply because it's easy to trace!!! Suppose over the course of a year you deposit 40K into your bank account (thats only $770 a week) If the IRS decides to audit you, you are responsible for paying taxes on that income, and if it earns interest, on that interest.

    We all have to pay taxes. It's part of being a responsible adult. Do you think the wealthy men who come into the club got wealthy by hiding currency in a shoe box to avoid paying taxes?

    Seriously, if you want to get ahead in life (own a home, have wealth creating investments, create multiple streams of income other than dancing) you are going to have to grow up and act like an adult. Hire an accountant, maximize your deductions and do it the legal way.
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    Default Re: Depositing money

    Do you think the wealthy men who come into the club got wealthy by hiding currency in a shoe box to avoid paying taxes?
    no, they hid it in the Cayman Islands or in Costa Rica to avoid paying taxes ! Or they hid it in plain sight in Wind Farms or Ethanol Distilleries or Municipal Bonds to avoid paying taxes ! Sorry for the thread hijack but I just couldn't resist !

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    Default Re: Depositing money

    Thanks again for all the advice!! You guys are sooooo incredibly helpful. I also forgot about interest from your savings account. Do you have to pay tax on this too??!!

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    Default Re: Depositing money

    I also forgot about interest from your savings account. Do you have to pay tax on this too??!!
    Absolutely ! There's absolutely no escaping having to pay income taxes on earnings from bank account interest, dividend and interest payments from investments etc. because the banks and brokers all automatically report these payments to the IRS. If you fail to claim these as earnings on your tax return, IRS computers will spot the unmatched automatic payment reports from the banks / brokers in a millisecond, and will start waving a yellow flag that your entire tax return needs to be scrutinized.

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    Default Re: Depositing money

    melonie... you're a lifesaver.

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    Default Re: Depositing money

    Melonie, say i claim 25,ooo a year. I would owe about 5,ooo in taxes?(i also live in az) So how much could i claim in right offs?? I spend a ridiculous amount on outfits,makeup etc. How much would be too much? So i would get to take that amount of money outa the 5,000 i owe? I'm confused.. or would i get $ back??
    THANK YOU FOR YOUR TIME !!!! <33 <33

  24. #24
    buffie06
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    Default Re: Depositing money

    Deposit all of the money you make and claim it on your taxes. Simple as that.

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    Default Re: Depositing money

    So how much could i claim in right offs?? I spend a ridiculous amount on outfits,makeup etc. How much would be too much? So i would get to take that amount of money outa the 5,000 i owe? I'm confused.. or would i get $ back??
    Unfortunately there are a zillion variables here. Using the conservative IRS 'housewife test', you can deduct the cost of costumes and shoes that can ONLY be worn for 'work'. This means you can deduct spandex dresses, but you can't deduct a bikini because 1000 housewives also buy bikinis. This means that you can deduct 'theatrical' make-up, but you can't deduct drugstore makeup because 1000 housewives also buy drugstore makeup.

    As far as tax rates go, absolutely nothing is going to save you from having to pay 15.3% of your declared income to 'self-employment' tax ... i.e. both the employers share and the employee's share of social security and medicare tax.

    Beyond that 15.3%, you then get into a complex equation with federal and state income tax brackets, filing status, number of dependents, tax deductible business expenses etc. I would take a wild guess that an additional 4.7% income tax rate is probably pretty close to the right ballpark ... meaning yes you'll get hit for $5000 in total taxes on a $25,000 gross income if you are single, don't have children etc.

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