Paying Taxes?

[Mariner45]

I don't know if this is out of line or too personal of information, but do most escorts pay taxes? I suppose technically you're self employed, but since it's mainly a cash job. I've always been curious.

[josephga]

I think some do. I pay taxes on my massage business federal state plus you have a business tax. To get somethings you have to prove income. Atlanta to rent an apartment you have to show 3 times the rent in monthly income to rent. I normally show my last 6 months of bank statement..

[jjkrkwood]

I don't know if this is out of line or too personal of information, but do most escorts pay taxes? I suppose technically you're self employed, but since it's mainly a cash job. I've always been curious.

 

I would classify that as a bit "personal"...:o

[Mariner45]

Lol probably, but it's curious what we consider 'personal' and not on here.

[rvwnsd]

I don't know if this is out of line or too personal of information, but do most escorts pay taxes? I suppose technically you're self employed, but since it's mainly a cash job. I've always been curious.

 

As Joseph points out, any individual who wishes to buy any item on credit or rent an apartment/business space must be able to provide documentation of income. In absence of a paycheck, tax returns and/or 1099s can suffice. If one does not pay taxes, one would not have these documents and, therefore, would be unable to demonstrate they have an income. As has been pointed out in previous threads on the topic, the cost of massage oil/lotion/cream, lube, laundry services, work space, etc can be tax-deductible.

[josephga]

yeah you do get a few write offs. massage cream, table, sheets, candles, laundry, laundry detergent, paper towels, toilet paper, bottled water, internet, cell phone, I write off my gym clothes and gym shoes as uniforms since that's what i wear when working. advertising. I don't write rent because I live here but would if i rented a separate place. every 3 years I buy a new computer and write that off too

[Kevin Slater]

I should hope they do, just like any other sole proprietor would, which means they pay both portions (the employer and employee contributions) to Medicare (2.9% of all their earnings) and FICA (social security) (10.4% on the first $110,100 in income). Most regular employees see 4.2% of their wages taxed for social security but don't realize that their employers are also contributing another 6.2%; self-employed folk have to pay both portions.

 

Here in NYC, there's also a state income tax, a city income tax, the Metropolitan Commuter Transportation Mobility Tax, and an Unincorporated Business Tax.

 

Kevin Slater

[jjkrkwood]

I should hope they do, just like any other sole proprietor would, which means they pay both portions (the employer and employee contributions) to Medicare (2.9% of all their earnings) and FICA (social security) (10.4% on the first $110,100 in income). Most regular employees see 4.2% of their wages taxed for social security but don't realize that their employers are also contributing another 6.2%; self-employed folk have to pay both portions.

 

Here in NYC, there's also a state income tax, a city income tax, the Metropolitan Commuter Transportation Mobility Tax, and an Unincorporated Business Tax.

 

Kevin Slater

 

Its a small wonder us New Yorkers get to take home anything in our checks.

[Edward]

I know at least two well known escorts that don't pay tax on their income from professional services. They also support Mr. Obama and his program to sock it to the rich. I find that amazing.

 

Aside from that, if you are going to apply for a loan to purchase a house or a car you need to show an income history. Also, to qualify for social security you need to pay into the system for at least 40 quarters. Social Security and Medicade is not just of the elderly. If you become disabled SS and Medicade kicks in.

[Scorpio]

self-employed folk have to pay both portions.

 

 

True, but we also get an income tax deduction for approximately 50% of the self-employment taxes. The actual deduction varies based on one's self-employment income. The self-employment tax number is always a shocker for most self-employed folk, but the income tax deduction does provide some relief.

[Kevin Slater]

True, but we also get an income tax deduction for approximately 50% of the self-employment taxes. The actual deduction varies based on one's self-employment income. The self-employment tax number is always a shocker for most self-employed folk, but the income tax deduction does provide some relief.

 

For the past few years and including 2012, it's even bigger than that. The employee-paid and employer paid contributions had always been equal at 6.2%, but the 2010 Tax Relief Act reduced FICA withholding for all employees by two basis points. Because the self-employed deduct the employer portion when determining your AGI, they get to deduct 6.2 of the 10.4%, or nearly 60% of what they pay into FICA.

 

The overall tax hit is still substantial and entirely regressive, though.

 

Kevin Slater

[instudiocity]

yeah you do get a few write offs. massage cream, table, sheets, candles, laundry, laundry detergent, paper towels, toilet paper, bottled water, internet, cell phone, I write off my gym clothes and gym shoes as uniforms since that's what i wear when working. advertising. I don't write rent because I live here but would if i rented a separate place. every 3 years I buy a new computer and write that off too

I don't know about ALL of that Joseph. For example, the uniform deduction says something about "Work clothes and uniforms if required and not suitable for everyday use." And those other items would need to be segregated between business uses or personal use. You would need to account for total laundry detergent - laundry detergent used for personal purposes. The same with paper towels and toilet paper. In theory, personal usage of Internet and Cell Phone should be segregated. Probably the least likely deduction to spark a tax audit would be the percentage of your apartment segregated for office in home deductions. Of course, I'm writing this tongue-in-cheek because the IRS is the only organization that can screw with you without lube with frequency and intensity.

[Kevin Slater]

Probably the least likely deduction to spark a tax audit would be the percentage of your apartment segregated for office in home deductions. Of course, I'm writing this tongue-in-cheek because the IRS is the only organization that can screw with you without lube with frequency and intensity.

 

The home office deduction is dicey. You have to have a completely separate space that is only used for work. I doubt most masseurs have space that qualifies.

 

Kevin Slater

[instudiocity]

The home office deduction is dicey. You have to have a completely separate space that is only used for work. I doubt most masseurs have space that qualifies. Kevin Slater

You're using a old definition... Congress liberalized the definition of usage and specifically outlawed the IRS's previous definition of "dedicated separate space" as a room in which no other activity may take place.

 

In the bad old days the IRS said my home office used exclusively for work wasn't deductible at all because I had a futon that was convertible to a bed in the space. Under the new definitions, the room is a dedicated space for work while I may occasionally use the space as a guest room, I get to deduct the space for a home office. This according to my CPA who has me furnish photos annually as a part of documenting my tax return. Now I even write off my garage space as a business deduction, at the same percentage as my business mileage is to my total annual miles.

 

How this applies to an escort seeing clients in his master bedroom, I don't even want to attempt to figure out.

 

From the IRS Website:

You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.

 

Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction

 

[Scorpio]

For the past few years and including 2012, it's even bigger than that. The employee-paid and employer paid contributions had always been equal at 6.2%, but the 2010 Tax Relief Act reduced FICA withholding for all employees by two basis points. Because the self-employed deduct the employer portion when determining your AGI, they get to deduct 6.2 of the 10.4%, or nearly 60% of what they pay into FICA.

 

The overall tax hit is still substantial and entirely regressive, though.

 

Kevin Slater

 

 

Yes I know, which is why I said "approximately" and stated that it "varies" based on self-employment income. As a tax professional, I don't like to talk in absolutes without all a taxpayer's data available. But yes, the deduction could be as high as 57.51%. It begins to fall once you reach the Social Security wage base, but are still paying the Medicare taxes at 2.9%.

 

For instance in 2011, I had a client who's deduction against his AGI worked out to be 52.4885% of what he had paid as self-employment taxes.

 

Kevin, I wish all my clients were as educated in tax matters as you. I wouldn't have to spend so much time telling them they can't do something. Instead, they do things and then tell me and I"m expected to get them out of it.

[maxwellissmart]

Sorry, I'm not paying taxes on escorting. When The Powers That Be decide to make it above the board, I will happily join them.

[SteveEscort]

Do the IRS enforce tax on illegal activity ???

 

If prostitution is illegal then they are capitalising off the illegality of a profession

 

Prostitution itself isn't illegal in the United Kingdom but certain aspects of it are and the Inland Revenue in the UK tend to leave the sex industry alone except where significant amounts are being made. Once someone is ascertained to have been making money from illegal gains they are subject to a proceeds of crime order to seize their assets

[instudiocity]

Do the IRS enforce tax on illegal activity ???

Of course the IRS taxes income on illegal activities. The IRS taxes INCOME, PERIOD. Ill-gotten gains are still GOTTEN in their minds.

 

My dad was an IRS agent in the Deep South. He was also an auxilliary deputy sheriff. He would go with the sheriff to raid a moonshiner's still. As they poured out the illegally produced alcohol, he assessed the Federal alcohol taxes - so the moonshiner lost his means of production, he was arrested and jailed, and he wound up owning the Federal government the tax on the alcohol he had produced and taxes on the income he gained from selling the moonshine.

 

The Federal Government invented Catch-22 before it was even defined.

[Scorpio]

From the IRS Website:

You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.

 

 

 

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction

 

 

Yes, you can base the deduction based on a percentage of your total square footage. But the square footage allocated to business must be used "exclusively" for business purposes.

[josephga]

The room I use for massage is actually only used for that purpose. its a spare bedroom with a full bath that i use for no other purpose than just massage there's no bed in there or anything else to emply its for anything other than work. I don't write it or the electric bill off. i was told that home office write offs raise eyebrows sometimes.. I use to know a guy that had a full bar and wrote that off as entertaining clients. i take the massage laundry out too a laundry mat and get receipts. the gym clothes i write off are only used for work i find them less clinical than me buying and writing off hospital scrubs. there's times I've actually called the IRS asked them about certain items

[Scorpio]

The room I use for massage is actually only used for that purpose. its a spare bedroom with a full bath that i use for no other purpose than just massage there's no bed in there or anything else to emply its for anything other than work. I don't write it or the electric bill off. i was told that home office write offs raise eyebrows sometimes.. I use to know a guy that had a full bar and wrote that off as entertaining clients. i take the massage laundry out too a laundry mat and get receipts. the gym clothes i write off are only used for work i find them less clinical than me buying and writing off hospital scrubs

 

From http://www.kiplinger.com:

 

[h=3]4. Claiming the home office deduction[/h]Like Willie Sutton robbing banks (because that's where the money is), the IRS is drawn to returns that claim home office write-offs because it has found great success knocking down the deduction and driving up the amount of tax collected for the government. If you qualify, you can deduct a percentage of your rent, real estate taxes, utilities, phone bills, insurance and other costs that are properly allocated to the home office. That's a great deal. However, to take this write-off, you must use the space exclusively and regularly as your principal place of business. That makes it difficult to successfully claim a guest bedroom or children's playroom as a home office, even if you also use the space to do your work. "Exclusive use" means that a specific area of the home is used only for trade or business, not also for the family to watch TV at night. Don't be afraid to take the home office deduction if you're entitled to it. Risk of audit should not keep you from taking legitimate deductions. If you have it and can prove it, then use it.

 

 

 

http://www.kiplinger.com/features/archives/12-audit-red-flags-the-irs-looks-for.html

 

Like the article says, risk of audit should not prevent you from taking a legitimate deduction....unless you have other things to hide that might be uncovered.

[Frequentflier]

I know at least two well known escorts that don't pay tax on their income from professional services. They also support Mr. Obama and his program to sock it to the rich. I find that amazing.

 

I'm sorry but this comment was so curious as to meaning I couldn't let it go. If by "sock it to the rich" you mean charge us (yes I'm part of the over $250 K crowd) a Federal tax rate on the over $250 K income equal to what we paid when President Clinton was in office I'd say you have a warped definition of "sock it to us". Like you I'm sure, I didn't put on a uniform and put my life at risk for my country for the last 10 years (unless you consider wearing a hoodie while on vacation putting my life at risk) and like you I haven't paid anything towards either the Iraq or Afghanistan wars or for Medicare Part D. You must think after this past horrendous election season that Americans will fall for your kind of "fact" aka "none".

Edited December 4, 2012 by Frequentflier

[Frequentflier]

Of course the IRS taxes income on illegal activities. The IRS taxes INCOME, PERIOD. Ill-gotten gains are still GOTTEN in their minds.

 

My dad was an IRS agent in the Deep South. He was also an auxilliary deputy sheriff. He would go with the sheriff to raid a moonshiner's still. As they poured out the illegally produced alcohol, he assessed the Federal alcohol taxes - so the moonshiner lost his means of production, he was arrested and jailed, and he wound up owning the Federal government the tax on the alcohol he had produced and taxes on the income he gained from selling the moonshine.

 

The Federal Government invented Catch-22 before it was even defined.

 

I don't know when your Dad was an auxiliary sheriff but wanted to share with you that moonshine is still made in the confederate states as recently as say a month ago. Very tasty so it's no wonder the "legitimate" companies that make alcohol don't want it legalized and taxed.

[Xander]

I have a business account which all my business expenses flow out of

 

If I want my money to be "clean" then it goes through that account.

 

So "Yes" I pay taxes.

[Frequentflier]

I have a business account which all my business expenses flow out of

 

If I want my money to be "clean" then it goes through that account.

 

So "Yes" I pay taxes.

 

Good for you young man. As a fellow tax paying citizen I appreciate the teamwork you show by paying along with some of the rest of us