Money is a sensitive issue when it comes to the adult industry. They barely talk about finances, leave alone taxes… And as a stripper, you may be wondering whether you should give Caesar his dues.
Well, this post will not only give you an answer but also help you figure out how to go about it, to avoid facing an audit or penalty for tax evasion.
Shall we begin?
Do Strippers Pay Taxes?
Yes, they do pay taxes. They can do this in different ways depending on their employment status. Some dancers work under employers while others are self-employed, having their brand or business. Either way, they are liable to pay taxes.
Most dancers are, nonetheless, self-employed and therefore considered independent contractors by the IRS. They earn by cash and non-cash tips which are subject to income taxes. These tips can be harder to keep track of compared to having check payments or direct bank deposits that are associated with a salary or wage.
So, before I tell you how you can file your returns, it’s important to know how you can keep records of income.
How To Keep Track of Your Income as A Stripper
In this occupation, you are paid primarily by cash. This means you are responsible for accounting and tax prepping, which can be complicated. It is, therefore, crucial to know how you can track your cash flow to have proof of income and to be able to file returns on tax day.
Maintain a Daily Tip Log
The IRS recommends filling in a daily log of cash tips to track your income, weekly or monthly.
It is therefore important to be disciplined at adding data in it. Otherwise, you will be at risk of generating inaccurate records by doing rough estimations and guesswork just to complete the blank spaces.
Make Bank Deposits and Keep Receipts
Bank deposits make useful paper trails. For hard copy records, keep receipts and put them in a safe place. Alternatively, you can use online bank records or wait for monthly invoices which are usually in PDF or hard copies. Either way, you will be covered.
Record Your Payments In Mobile Tracking Apps
Technology is greatly advanced, so are software tools for bookkeeping. A lot of them come with mobile apps, which you can utilize to keep information of payments immediately you get them.
These records are safely kept in the cloud, meaning you will access years of elaborate and highly accurate archives. Some apps that you might consider include TipSee and Just The Tips which are available on Google Play Store and Apple App Store.
Now that you know how you can track your cash flow, here’s a detailed guide on filing taxes as a dancer.
How To File Taxes As A Stripper
As earlier said, strippers can either be employees or independent contractors. Whatever the status, there’ll be tax implications for both you and your employer.
As an Employee…
You and your employer are jointly responsible for your taxes. Since they pay you regularly and control your hours and services, they should file a W-2 form. This is used to report your wages, tips and any other compensation they pay you.
You will then fill out a W-4 form to inform your employer how much they should withhold as tax on your behalf. It’s pretty easy to file returns as an employee. You don’t even have to specify your occupation, instead, you can use ‘consulting services’ or ‘entertainer’.
As an Independent Contractor…
You will need to report your gross income (even if you don’t get Form 1099-Misc) by filling out Schedule C of Form 1040. You should be able to evaluate your gross income from the records you keep. Alternatively, you can estimate it from an average week, then multiply it by the number of weeks you normally work in a year.
After you enter your details on the form, indicate that you use the Cash Accounting Method and that all income is at risk.
You will then be asked whether you received any form 1099-Misc and if you have income that’s not reported on that form. Answer the questions accordingly. You will then enter your expenses for deductions.
After you’ve completed filling your incomes and deductions, your tax dues will automatically be generated.
These are costs you incur to earn your income. They may include costs of traveling beyond commuting, advertisement, business space, and Insurance. Beauty-associated items such as hair extensions, clothes, and cosmetics may (or not) be included.
It’s important to save receipts for all these items. I would suggest having labeled folders with categories say, meals, traveling, Internet, and clothes. You drop receipts in their appropriate folders whenever you get them. Then add them up when the time for filing returns comes. This will be much easier than having mixed-up receipts during tax time.
You can opt to pay the IRS in installments, in the form of quarterly estimated taxes. This will help avoid a huge tax burden. You can either use Form 1040-ES to make out your estimated tax or you can use records from the previous year to figure out your current year’s estimated tax.
All in All…
Like any other individual contractor, strippers are subject to tax payments. It’s therefore important to keep accurate records of income and business expenses to be able to file during tax season.
Is the stress of worrying about an audit or tax evasion penalty worth it? So, when your clients make it rain, make sure you stash some away for Caesar.