USA Based sex work and taxes
Okay so I imagine Iâll be updating this over the coming weeks/months, but here are some sites that Iâve found that contain information regarding sex work and taxes (which you should all be doing if you make over 3K annually, which I hope and trust that you are!) You donât want to get hit with a 6 figure bill and/or jail time at some point over the next few years because you werenât doing your taxes. Shoot me a message if there is anything that I should add.
Congress has established something of a safe harbor for people reporting income from illegal activities. The IRS may not disclose tax returns to law enforcement authorities unless the individual in question is already under investigation for wrongdoing. In other words, police can use a tax return in their investigation, but it canât be the initial tip. The opposite is not true: Local police can, and do, notify the IRS that they have uncovered a prostitute or ring of prostitutes who may have violated the tax laws.
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Things you need to file if you are an independent contractor stripper/model/performer/camgirl, an escort, sensual touch provider, etc:
Schedule C for income from a business (you are a business)
Form 8829 for home office deduction (you have a computer in your home where youâre doing business, yes?)
Your receipts for work-related supplies, travel, and other expenses
Even if you lack accurate records, give it your best shot and file. Even if you canât pay right now, file. Even if what you do is illegal, file (you donât have to write down what you do. We are all âentertainersâ). Read this piece over at the Awl for some good reasons why you should file no matter what. Itâs so, so much better to have YOUR realistic numbers than to have the IRS say, âHey, we have this 1099 from your club, where you sold $1500 in VIP rooms, so weâre assuming that was a normal night for you, so weâre calculating your tax debt based on that,â or âWell, we saw on this 20/20 special about escorts that $2000/hour is a rate people pay in New York, so letâs start there.â
http://titsandsass.com/five-reasons-sex-workers-file-their-damn-taxes/
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http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes
The link above contains information regarding gift taxes. You may also find additional information in Publication 559 or some of the other forms and publications offered on our Forms Page. Included in this area are the instructions to Forms 706 and 709. Within these instructions, you will find the tax rate schedules to the related returns. If the answers to your questions can not be found in these resources, we strongly recommend visiting with a tax practitioner.
What is considered a gift?
What can be excluded from gifts?
May I deduct gifts on my income tax return?
How many annual exclusions are available?
What if my spouse and I want to give away property that we own together?
What other information do I need to include with the return?
What is âFair Market Value?â
Who should I hire to represent me and prepare and file the return?
Do I have to talk to the IRS during an examination?
What if I disagree with the examination proposals?
What if I sell property that has been given to me?
Can a married same sex donor claim the gift tax marital deduction for a transfer to his or her spouse?
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http://www.slate.com/articles/news_and_politics/explainer/2009/09/how_do_prostitutes_pay_their_taxes.html
They report their income on IRS Form 1040 Schedule C (PDF) and pay self-employment tax in addition to ordinary income taxes. Sex-worker advocacy organizations regularly receive requests for tax advice. Some prostitutes, for example, might need help with the first line on the formâwhich asks the filer to identify her profession and service offered. It turns out that the Fifth Amendment privilege against self-incrimination permits a prostitute to leave this line blank or provide a vague answer like âsale of leisure services.â The form also requires the filer to select a code for line of business. The ACORN employee recommended 711510 (âindependent artists, writers, and performersâ), but 713900 (âother amusement and recreation servicesâ) and 812990 (âall other personal servicesâ) would have been equally appropriate.
Successful prostitutes may claim to be working in a related field, like nursing or psychology. There are some powerful incentives for these women to file: If a high-earning prostitute wants to buy a house or a car or sign up for a credit card, sheâll need to report some income. One way to do that is to get a degree or license of some kind and then claim income for a related serviceâfor example, therapy. For high-end prostitutes, the fear of being caught evading taxes has more to do with reputational damage and harm to their business than legal penalties.
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TurboTax FAQ page on reporting illegal income
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http://www.slate.com/articles/news_and_politics/explainer/2009/09/how_do_prostitutes_pay_their_taxes.html
TurboTax FAQ page on reporting illegal income