I'd have to kill you after

Assuming providers make over $10k a week or month easy, what do most providers do with the cash?  If they deposit it frequently, the bank will report it to the government and ther could be investigations on money laundering or suspicious activity.  So do most providers just do a cash economy and spend only cash?  I like to hear on how providers are getting around this

while not easy for the Feds to prove, making deposits less than $10k for the purpose of avoid the $10k law is also against the law. An escort agency in Vegas (no not HHPC or 100ProofofLV),  was recently indicted for the usual tax  scenarios and one of the charges the Feds nail them with was "structuring".

not a lawyer or cpa

Stash your cash away in a bank's safety deposit box if you don't want it lying under your bed. Banks don't want you doing that, but I doubt they'd look into what you have in your box. Now you can pay your credit cards with cash at the teller. No need to pay them with money from a checking account. At least BofA and Chase let you do that. But with AmEx, you're out of luck. Or you could use rechargeable debit cards. That way, you can maintain a low balance in your checking and savings accounts.

IRS take you to trial. If there's a provider that I like a lot then I may teach her how to avoid getting caught by IRS, free of charge. I know some of them already know how. I don't see how it would help anyone, except IRS agents, if I tell everyone how to do it on a public forum.

For example, you can't use it to buy a house. It will probably trigger an audit very shortly. IRS will want to know if you paid the taxes on the money that you spend on buying the house.

ROTF!

Entertaining Reading of what NOT TO DO:

http://www2.8newsnow.com/docs/Vara_Giannis_IRS_Escort.pdf

The Agency in LV is Midnight Entertainment which is one of the agencies that you'll find all over the phone book, cabs, cards passed out on the strip, etc.

Looks like a pretty easy case of proving "structuring" to me.

Take note of every single cash deposit at multiple banks. It's very easy for the IRS to get that information and match it up once you catch their attention.

They buy lots of sexy lingerie...lol

But it's a good start for providers until they have enough to get an offshore account... or do something the mafia does.

And I actually saw a provider who asked me to give her Form 1099-MISC for all her earnings that year so she could pay income tax. lol

It's perfectly legal and will stand up in court, if you are willing to testify for her. If you are willing to use up your lifetime estate exclusion amount then the limit is over $5 million for 2012.

An added benefit of declaring tax is you can collect Social Security, Medicare, etc. when you are retired. IRA or Roth IRA is also very good. First, your contribution into it is tax free so you get to deduct that from your income. Second, you don't pay tax on profit until you are retired and start to withdraw. Tax free compounded growth is extremely powerful. For example, my IRA is over $400k in 21 years with annual contribution of $5k. I would recommend ETF instead of mutual fund (if you have enough to open a brokerage account). Beyond that, it's aggressive tax avoidance (legal) or tax evasion (illegal). For tax avoidance, you should seek professional tax accountant help. For tax evasion? That will depends on too many factors to give general advice and it's not a good idea to have too many people using the same strategy. They do have some smart people in IRS (not the auditors) and they learn pretty quick. I used to get audited every other year so I know.

stick it in the mattress paying all their bills in cash or money orders or set up a llc or corp

They would be screwed if their house set on fire. goodbye mattress and money.

That's an impressive return.  Not often that any of the pro's beat the S&P CAGR.  I should give you my retirement funds to manage ... But, the 5,000 limit hasn't been in effect for 21 years (more like 6)

I have retired for 7 years now so I have not been able to contribute to my IRA account. $5000 a year was up to 2005. I always contributed the same amount so it would be easier to track the account's performance. Large part of my return had been luck (I have pretty good luck in choosing stocks), but compound tax free return is really very powerful. I manage my IRA in the most aggressive fashion because I felt 40% (30% Fed 10% St) of the money is borrowed from US government (it hasn't been taxed yet). Every dollar that I risk, I only risk 60c. Since I don't feel I will need the money from IRA for my retirement (I have other sources). I continue to mange it like a 20 years old (high risk with 40 years time horizon).

Excellent advice to set up a business  and  show a reasonable amount of income.

As a small business you should also set up a Small 401k Plan.  You can  deffer/contribute $17,000  out of your "salary"  and also contribute another 25%  of your salary  from the business.

If you want to  get credit and buy anything  you have to show as a real person who files taxes and has an income

You probably won't have to pay much income tax, but  the Social Security tax  will be a bit painful at  13.3%