What shout I do about my taxes?

I would really like to start paying taxes on my income, because 1) it's my civic duty, and 2) I would eventually like to buy a house. However, I have no idea what I'm doing. Should I hire a CPA or financial advisor? If so, how honest can I be with them about what I do, and if I should be honest how would I go about finding one that would be provider-friendly? Or should I just use Turbo Tax or some other software like it? Would it be easy enough for me to use considering I've never done my own taxes before? (That's what dads are for :P.)

Thanks for any info or advice.

You have no idea how sexy you just became to the entire male population of this board. A provider with a brain that is reaching out into worlds beyond many others.

Traci,

You don't have to tell them you are doing anything illegal.

Just tell them you are a lingerie model without details.

They can tell you what receipts to keep and what you can deduct from your taxes.

Hobby phone used only for work, hotel rentals and other items you can deduct but condoms and anything related to sex cannot.

I would be leery of someone offering to help for free. Find someone who is a CPA and pay them, that cost is also a deduction and they are then liable for the advice they give you when they sign the form as the person assisting you in the 1040.

Kayla is correct in that many guys just love the girls who pay taxes....

Following up on the earlier posters, and adding a few things to remember and consider:

1. Get a CPA. TurboTax etc really would be fine, BUT I am guessing that you're not sufficiently experienced to use it. Maybe, after you have seen how the CPA prepares the return for a couple of years, going to a computer program would be okay. It might be a good idea to get TurboTax and go through the various questions and schedules, just to see's involved.

2. You DO NOT have "privileged" communications with a CPA. This means that your CPA can be compelled to disclose the details of any conversations or communications with you. Accordingly, NEVER tell a CPA about any illegal activities.

3. Try to get started ASAP. The reason is that you're obligated to make quarterly estimated income tax and FICA/Medicare tax payments, and there's a penalty if you do not do that, or pay too little. The next payment due date is June 15th. Be prepared for a shock on taxes -- the FICA/Medicare rate is 15.3%, and that's in addition to the income tax.

4. Keep good records on business-related expenses. These expenses might include mileage for outcalls, as well as incall rent and such. You should have a list of what you pay and the amounts.

Good luck.

I use Turbo Tax.. Just remember to keep records of everything...

Make it easy. Pick a time to start your business like June 1st. That way you don't have to go backwards.

Also having a savings plan for retirement and for emergencies will also serve you well.

You might want to contact Dharma as I thing she was setting something up for the ladies and she has a wonderful massage business.

On the main board under A Question of Legality, there's a discussion "I'm independent now......now what..."

http://www.eccie.net/showthread.php?t=13247

It has some good pointers.

In addition to my real-world job, I list my extra income as being a part-time model. No problems so far! H

Tax programs are a lot better these days, but may be a bit much if you are just starting out.

If you don't have any other form of employment (i.e. you aren't getting a paycheck from someone) you'll need to set yourself up as an independent contractor. That means you'll need to 1) keep track of your income and expenses - and receipts for everything, 2) make sure you balance you reported income to what you deposit in the bank. If you want to build credit, you'll need to start charging some things, but you should pay cash for things where practical. If you get audited your bank records will show a discrepancy in your income that could be hard to explain.

You'll need to pay quarterly estimated taxes, so make sure you keep about 25% of every paycheck (that you are going to claim) and put it aside in an account you don't touch. The IRS will send you forms to do your quarterly payments.

As an 'entertainer', or say you wanted to claim you were a professional dominatrix, things like clothes, makeup, toys, lingerie, etc. are going to be tax deductible. So could things like dresses and shoes and the like - just don't go overboard with it and you'll be fine. Since you entertain like that its an expense and it comes off the top before you figure your taxable income.

A visit to an accountant is helpful to start out. Before you go write down what you think you are going to report in income, how much you think you are going to spend, and think about 'do i work out of my home'? type questions. If you do you get to deduct some of your rent off your taxes as a legitimate expense. All you need to tell the accountant is the basics, give him/her the numbers and they will set you up. You could just have them help you out the first year till you get the hang of it and then do it yourself after that.

Welcome to the world of self-employment!

With no real paycheck, you become a 1099 employee. It is important to do your taxes quarterly as a 1099 so you do not get a big chunk taken at the end of the year. Assuming you keep detailed records of phone, internet, mileage etc, the hit should not be so bad. I would still file quarterly. A tax man can help you get the most out of your deductions rather than turbo tax. It is worth the 200 or so they charge. Trust me.

Just to clarify, a 1099 employee does not have federal, state, fica etc withholdings. This is why 1099 is your best option. You become responsible for tracking your own withholdings and with clever deductions you can limit the amount you will owe. You may even break even, but Turbo tax is not going to get it done properly in this arena unless you are an expert at deductions. If you own a home, you will be fine as the interest on a home loan is a write off.

I think Nitwitboy hit the nail on the head. A tax program would be hard to use in your case and you might not claim some legitimate deductions. Go with a professional tax man.

Remember if you do form a corporation to do your taxes - corporations have many filing obligations for the government (state and Fed).

people I am sorry but his reminds me of a joke. The provider was asked what she did for a living, she was honest. Of course the tax preparer say I cannot put that down on here. So, she thought for a moment and said she ran a Chicken Ranch. Guy says how that apply to this. Well, I raised over a thousand cocks last year.

PS Get a professional Tax man. They know what they are doing and he to has to sign the tax papers

The correct term is "self-employed"; you would receive a 1099 only if your clients held up their end of the legal requirements and obtained your real name and SSN, then sent you a 1099-MISC at the end of the year if they paid you more than $600. Like that's gonna happen.

For people with no withholding, estimated tax payments are due on April 15 for the first quarter, and June 15, September 15, and December 15 after that.

How do you figure how much estimated tax to pay? Well, you can essentially do a tax return each quarter and pay that amount, but there's an easier way to avoid penalties for underpayment. If you pay the IRS at least 90% of the current year's eventual tax total OR 100% of your total tax liability from the previous year, you'll be okay.

If you consider taking the home office deduction, you should know that the IRS has a three-part test for determining the deductibility of all or part of your home’s cost: The part of your home used for business must be used exclusively for business, it must be used on a regular basis for business, and it must be your principal place of business. Many tax pros consider the home-office deduction to be an audit magnet, and I'd suggest that whatever marginal benefit you might derive from the deduction isn't worth the additional complications and risk.

As a self-employed individual, you must pay self-employment tax and complete Schedule SE. This will be 15.3% of the net income computed on your Schedule C, which is the schedule you use to report your business's income and expenses. (The rate is equal to the 7.65% you would have deducted from your check if you were an employee, plus the 7.65% that your employer would pay.) You can take a deduction for one-half of the self-employment tax on Line 27 of Form 1040.

Someone above suggested that your clothing would be deductible. That's true only if it has no other practical use outside your work -- uniforms can be deductible for some people who wear them, but business suits aren't.

I once worked with a tax accountant who said, "It's all deductible -- until they catch you." I'm sure many escorts don't comply with the tax laws and suffer no consequences. The one complicating factor in this business is if a client knows your real name and, for some reason, decides that the IRS needs to be informed of a potential case of tax evasion, you'll have some problems.

My advise is fine an accountant that you can trust and don't rely on information posted here. I wouldn't exactly level with your accountant, but you need to provide him or her with enough information to do his or her job correctly.

Contrary to what some have said, there is some limited protection or privilege, between a tax payer and his tax preparer.

26 USC 1525(a)(1) states

With respect to tax advice, the same common law protections of confidentiality which apply to a communication between a taxpayer and an attorney shall also apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney.

However, this privledge is limited to

A) any noncriminal tax matter before the Internal Revenue Service; and (B) any noncriminal tax proceeding in Federal court brought by or against the United States.

http://www.law.cornell.edu/uscode/26...29%281%29.html
Therefore, if you were to be indicted for some criminal violation in connection with your modeling business, your accountant could be called to tell the jury what you said about your business. I will let you be the judge of how likely this scenario is. I think that you could certainly say that you are paid to model for men in the privacy of an incall environment (or in their homes) and that because of the sensitive nature of that sort of business, you prefer not to go into a great deal of detail about what it entails. Any accountant that you want working with you will be smart enough to figure it out from there. If they can't figure it out, or if they are uncomfortable, then you need another accountant anyway. I would join the advise that Sir Lancehernot gave you about not being overly aggressive in taking deductions, especially for clothes. Also, and this should be obvious, if you're going to go to the trouble of not telling your accountant all the details of your work, I would not try to deduct condoms or STD testing, either. Hard to figure how those would be "business expenses" for a model.