Do you think it's wise to try and claim clothing, makeup, etc. as a deduction? I've heard of strippers doing this. Though I doubt many claim their real income LoL In my case, I'd also deduct travel cost (airfare/car mileage) if that's allowed.
To do this, would I need an escort license? If yes...Do they go after people who register for one?
I wonder if it would even be worth it moneywise? I'd like to claim honestly for future big ticket items like a first home.
You may end up drawing unwanted attention, so don't over do it.
If you do, keep receipts and ledgers of everything. If you do get called into an audit, being able to produce all this stuff will somewhat lessen the chances of the IRS going ape on you.
As for the need for an escort license, this all varies state to state and even county to county, so do some research on that. Go to your state's website, type in some key words like escort license and see what pops up. Just being registered as an escort should not bring any IRS scruitney, but I can't speak for LE.
First of all, Tax Records are confidential and may not be accessed by law enforcement without a warrant. Also I'm not aware that the IRS has a duty to find people making income 'illegally' and report them to local LE.
The IRS is interested in two things:
1. Your INCOME.... they honestly don't care how you earned your cash income that is otherwise unreported to them as long as you report it and pay taxes on it. You might list your profession on your 1040 as 'Entertainer' or even 'Escort.' In and of itself, there is nothing illegal there. The issue is that the profession has to require the things that you want to write off as expenses.
2. Your Business Expenses... As MR F. said, a well documented set of records is required. One easy way to accomplish this is to get a credit card that provides an annual summary statement. Or you can just keep the monthly statements. Use that credit card exclusively for things that you are claiming as deductions.
The rules may have changed but as I recall, a small business has to turn a profit 2 out of 5 years or the IRS disallows the loss claiming the business is a 'hobby' (their term!). Of course a profit of $1.00 is a PROFIT.
The UP side to paying your taxes etc is that it establishes your income whichis required to get a mortgage etc. It would be a hoot to watch a Loan Officer take a mortgage application from a lady who showed appropriate income as an escort via her past years 1040s. Given sufficient down payment and a good credit rating, I don't know how they would deny the application... but what do I know anyway? lol
The DOWN side to being honest and paying taxes on your cash income is that it WILL put you on the IRS's radar as a cash based small business and COULD result in IRS scrutiny as to whether or not you are paying taxes on ALL your cash income.
Local urban legend has the IRS investigating the Vegas strip hotel show Maitre' de who makes $38,000.00 a year 'on the books' but somehow affords a palace on an acre overlooking Lake Mead!
All clothing is considered to be a personal expenditure and not deductible if it is suitable for street wear. Deductible clothing is largely limited to true costumes: a cop’s uniform, surgical scrubs, a clown outfit, historical period pieces, etc.
Normal make up would also be non deductible personal...unless like to make your face look like a clown, but can't imagine makeup for a dancer not being just what you would wear going out to dinner yourself with a date so would be personal.
Dave in Phoenix formerly a tax manager for a then Big 8 CPA firm but long ago.
As answered before, everyday clothing is not deductible. School teachers and salesman can not deduct your clothing. Mileage to clients is not deductible. It is considered commuting. If you have a separate incall location that is not your home you could deduct that. If you travel out of your normal area you could deduct that.
You certainly can deduct the cost of advertising. I would be on the conservative side in taking deductions because an audit would be embarrassing.
I studied tax preparation and as of last year, nursing scrubs are no longer a deduction unless they have a company name on them.
travel cost may be deductible I wouldn't get an escort license.
start a legit part time business and let your hobbying be funny money as cops like you look through computers.
I have done web design since 1997 and had a domain w/ newspaper advertisements before a recent legal encounter and I think it saved me as many of my escort clients also needed web pages, computer instruction or someone to housesit/pet sit for them and I advertised these businesses for some time before my computer was grabbed for a year.
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