It is my understanding that a provider would have to pay self employment taxes (both the employer and employees share) and income taxes (gross income less expenses - condoms, ky, hotels, travel, medical, 401K, etc.). So, if you are a top earner.....you might be in the 35% bracket, add to that 15% payroll taxes, then state income taxes if applicable (in the state in which you earned it too....not just your home state!!!!!!!) so the tax man could easily garner 50% of your gross. So if you are charging $300 an hour, well you net $150 after taxes and expenses. Depressing isn't it? But if you don't report it, then income derived from illegal activities is money laundering and carries "stiff" penalties (pun intended) like 5 or 10 years plus fines and you still have to go back and pay the taxes. Depressing, but more so than not paying!
You should report your income, it's to your benefit. You use your tax return to substantiate income for credit purposes, etc. and to avoid suspicion.
How would you get caught? Lavish lifestyle with not reported income always gets noticed.
I know a provider who is making over $200K per year and is not paying any taxes and pays for everything in cash. She also has her kids on Medicaid and she gets AFDC. Guts huh. What is stupid is that she tells everyone what she is doing. At least keep your mouth shut. Don't put yourself in a position to be compromised. Duh. Originally Posted by FatBastard
Ya, you don't want to go blabbing to everyone about it. There can be rewards for people that turn in tax evaders.
