Does my sugarbaby have to pay taxes?

I have a friend who has a young female friend for whom he pays for almost everything.
Apartment, cable, food, she handles his balls

Tax time is coming, does she count the stuff she gets from him as income? If the IRS looked at all that she has, there is no way a women with no education and a job at walmart could have all that she has.
Anyone here know about tax law?

I have a friend who has a young female friend for whom he pays for almost everything.
Apartment, cable, food, she handles his balls

Tax time is coming, does she count the stuff she gets from him as income? If the IRS looked at all that she has, there is no way a women with no education and a job at walmart could have all that she has.
Anyone here know about tax law? Originally Posted by bigcockpussylicker

I know that she could have a Flea Market business where everything is a cash transaction. She can declare what she wants to declare. She could also admit to being a self employed massage therapist who takes tips (also cash). If he is single, he can put her on the payroll as a independent contractor doing whatever it is she wants them to know she did. She is responsible for her own workmens comp, taxes, and what have you. I just thougt of another popular thing, places like the Brass Armadillo give people cabinets to display things purchased from estate sales, auctions, flea markets, and garage sales. There is a little bit of a paper trail but low in cost.

I know that she could have a Flea Market business where everything is a cash transaction. She can declare what she wants to declare. She could also admit to being a self employed massage therapist who takes tips (also cash).. Originally Posted by JD Barleycorn

so if audited, the IRS would fine her for not declaring income, since she is living beyond her means of her declared income from her Mcjob.

If he is single, he can put her on the payroll as a independent contractor doing whatever it is she wants them to know she did. She is responsible for her own workmens comp, taxes, and what have you. I just thougt of another popular thing, places like the Brass Armadillo give people cabinets to display things purchased from estate sales, auctions, flea markets, and garage sales. There is a little bit of a paper trail but low in cost. Originally Posted by JD Barleycorn

I used to work in construction and was paid in cash and the boss would tell the IRS what he paid me, but he left it up to me to declare my income. I always declared my income. I also sell my plasma and I get paid for my time, I don't declare that(about $2500-$3k/yr) since the plasma center does not declare what they pay.
For myself, I've always thought I could get a pornography licscense to make pornos, staring ME and girls I'd pay...but that's just too much trouble as most girls dont want to be videoed.

Thanks for the advice on my friends matter. Sounds like she needs to declare her goods as income, if the IRS finds out, she'll get fined/jail.
but seeing as its not even $100K, it may not show up on their radar.

Unless he is trying to deduct the expenses he pays for her, then they could all be gifts. If he gives her less than $14,000 per year, nothing needs to be claimed. $28,000 if he wants to split the gifts with his wife. If he gives her in excess of $14k, than he would need to file a gift tax return to report the excess. This would reduce the amount of his estate exemption at the time of his death.

If the sugardaddy reported the gifts on a gift tax return, I don't think the IRS would try to recharacterize the gifts as income. But if he deducted them of his or his business return, than he's an idiot.

I just spoke with a H & R Block tax preparer and this is her opinion; any thing that he gives her is a gift. She has to do nothing but if he gives her over $14,000 annually then he has to pay a tax on the gift. If he gives her money to pay incidentals like cable and food then that is income. Apparently the best thing is for all bills to go through him and keep it all as taxes. Now if he gave her something very expensive (like a Mercedes) and she sold it then she might have to declare it as income.

Thinking about it....if he paid for the apartment (house), food, utilities, insurance then the house is just sitting there. Anyone could move in and not be on the hook for anything as long as no money passes through their hands.

I just spoke with a H & R Block tax preparer and this is her opinion; any thing that he gives her is a gift. She has to do nothing but if he gives her over $14,000 annually then he has to pay a tax on the gift. If he gives her money to pay incidentals like cable and food then that is income. Apparently the best thing is for all bills to go through him and keep it all as taxes. Now if he gave her something very expensive (like a Mercedes) and she sold it then she might have to declare it as income.

Thinking about it....if he paid for the apartment (house), food, utilities, insurance then the house is just sitting there. Anyone could move in and not be on the hook for anything as long as no money passes through their hands. Originally Posted by JD Barleycorn

thanks a ton

I think the part you're missing here is "she has to do nothing." She has to do 'something' or she would ultimately get 'nothing.' Some of it is gifts, some income, but the vast majority is income. And the IRS gets to characterize it and you then have the burden of showing why it isn't what they say. Good luck--those answers are another issue if you lie. Their audit is simple. They add it all up and then tell you the bill. The real question is how they ever decide to question it in the first place. So your real issue now is whether to be safe or sorry, how much of a gambler she is--it's mostly relevant to her tax return--and the odds on getting audited, and what happens if she is. Probably a big tax bill, with a settlement negotiated. They generally only prosecute the big fish, people who put it in their face, those who jerk them around, or are truly out there on what they were doing. Of course, it's up to them, but they mostly want the money, not the headache. The SD deducting it is dumb, just asking for it. As for getting audited, that's an algorithm or something that triggers it--like a tattle tale, or even 'you' if she screws you over and you report her to the IRS. See, the risk is hers, not yours. It appears filing the gift tax return might be best, though, if you're past $14X and wanting to positively characterize the outlay in some sense. That's your safe harbor as the sugar daddy I suppose. It wouldn't surprise me if the IRS had some kind of Revenue Ruling or letter on this out there for guidance, though. Look for that.

She has to do nothing but if he gives her over $14,000 annually then he has to pay a tax on the gift. Originally Posted by JD Barleycorn

Only time there is any tax to be paid is if he gives her (and anyone else) more than $5.250m during his lifetime, not counting the $14k annual exculsion.

http://wills.about.com/od/understand...-tax-chart.htm

IMHO, I don't think she ever needs to worry about taxes on the bills he pays for her. I've never seen a tax case involving income from a sugar baby/daddy situation. I don't think the IRS could press that case that she's in the business of providing services, unless she does it for other (customers?).

I think the part you're missing here is "she has to do nothing." She has to do 'something' or she would ultimately get 'nothing.' Some of it is gifts, some income, but the vast majority is income. And the IRS gets to characterize it and you then have the burden of showing why it isn't what they say. Good luck--those answers are another issue if you lie. Their audit is simple. They add it all up and then tell you the bill. The real question is how they ever decide to question it in the first place. So your real issue now is whether to be safe or sorry, how much of a gambler she is--it's mostly relevant to her tax return--and the odds on getting audited, and what happens if she is. Probably a big tax bill, with a settlement negotiated. They generally only prosecute the big fish, people who put it in their face, those who jerk them around, or are truly out there on what they were doing. Of course, it's up to them, but they mostly want the money, not the headache. The SD deducting it is dumb, just asking for it. As for getting audited, that's an algorithm or something that triggers it--like a tattle tale, or even 'you' if she screws you over and you report her to the IRS. See, the risk is hers, not yours. It appears filing the gift tax return might be best, though, if you're past $14X and wanting to positively characterize the outlay in some sense. That's your safe harbor as the sugar daddy I suppose. It wouldn't surprise me if the IRS had some kind of Revenue Ruling or letter on this out there for guidance, though. Look for that. Originally Posted by bartipero

good points and that was my point to him also, He shouldnt report the money to her as anything, he earned it, he got taxed on earning it, he can throw it down the toilet,(give it to her/buy her stuff)
He was concerned about her. how she has so much crap she could never afford with her McJob...

"why are you concerned,?" is what I asked.

Its not his issue to be concerned about. and I cant see how it could affect him whether she reports it or not.

depends on how young the friend is. is the support of said SB a qualified gift? call it a gift, or donation or what have you. in the event the gifts do not add to the sum of 14k/year, the short-term assets and immaterial tangible goods and means by which she lives could be justified depending on the length of time she has been receiving said gifts. assuming something other than a wholly unequal transfer, the amount of support may be treated as income in the event she was providing a service such as consulting in exchange.

her lack of declaring the gift as income, subject to the exclusion, shouldn't raise eyebrows, so long as she is not acquiring assets of appreciating value, or property subject to future tax basis.

Why would the IRS check up on a SB in the first place. she will file her Wal-Mart job.
But if this guy files anything in taxes on his SB, that might cause a problem.
it's like saying every provider files the exact amount they make while being an escort, along with all their expenses. now the IRS might look deeper into them, then just a little SB getting a gift.
Filing as an entertainer and only making 20,000 to 25,000 a year might get flagged.
But if she filed that she made, hand made widgets, and sold them on line along with only making 20,000 to 25,000, this is more believable to the IRS.

Why would the IRS check up on a SB in the first place. she will file her Wal-Mart job. Originally Posted by Stiffy008

Just so I am clear here...according to you all SBs work at "Wal-Mart" ?

All this time and I was surfing the wrong place...
I had no idea..

Just so I am clear here...according to you all SBs work at "Wal-Mart" ?
All this time and I was surfing the wrong place...
I had no idea..
Originally Posted by malwoody

Going off what Big Cock stated in the OP, I don't care where you find your providers, Walmart or the old folks home. It's your choice what you do with your money. I really don't care, but thanks for quoting me.

Going off what Big Cock stated in the OP, I don't care where you find your providers, Walmart or the old folks home. It's your choice what you do with your money. I really don't care, but thanks for quoting me. Originally Posted by Stiffy008

While we're on the subject...how is your SD/SB comming along??
For someone with your deep understanding of this endeavor I would think they are beating down your door....
Since you seem to always be commenting about other folks perceived SBs...I just wonder when we get to hear about your adventures...