Tax Season for Spicy Workers

Honestly, the first year I filed my LLC's taxes, I was beyond terrified. I was sure that I was going to miss something or make a mistake somewhere along the way. However, after receiving some much-needed guidance and assistance from my accountant, I felt much more secure and informed. First things first here, I want to give everyone the info for my sex work tax specialist! The Only Consultant has been doing my stripper, OnlyFans & W2 job taxes since 2021 and I have never felt more well taken care of, understood and valued as a client. Katherine and her team are a wonderful asset to any sex worker's financial toolbox, and I highly recommend booking a consultation with her to discuss your taxes, business structure, and financial goals. In addition to being able to provide detailed, accurate and up to date tax info for each state, Katherine and her team also have a wide network of other financial experts who can help you with just about anything you could need as a small business owner! Now that I've given you a direct contact for a wonderful, judgment-free tax accountant, let's dive into some more information about taxes and why they matter! 

Why should I file my taxes?

• Avoiding audits and penalties: Even if you're self-employed, it is still important to claim what you're making in order to avoid any penalties, fees and or audits from the IRS. Failing to report or underreporting can raise red flags to the IRS and become a potentially large issue for you.
• Business deductions: When you keep tabs of your income and expenses for tax season, these business-related expenses can become eligible for deductions! Claiming these deductions helps to reduce your overall taxable income and therefore, can lessen the total amount of taxes you owe the IRS.
• Building Retirement Savings: Since social security benefits are calculated using your self-employment income, claiming what you make can help ensure that you're creating a good retirement foundation for yourself.
• Credit and loan eligibility: By reporting your self-employment income, you are able to demonstrate your earning potential to lenders and creditors. This can help you establish credit, secure loans and higher credit card limits, as well as access other financial opportunities. This one was particularly helpful to me when I was leaving an ex-boyfriend that I lived with and needed to be in my own place ASAP. Without claiming my income, I'd have had a much harder time securing my own apartment and moving as quickly as I did.
• Compliance with tax laws: When you claim & file taxes, you also ensure that you are in compliance with state and federal tax laws, which helps you maintain a clean tax record and avoid penalties!
• Health insurance & benefits: In some cases, self-employment income can impact your eligibility for health insurance and other benefits. By accurately reporting your income, you can make sure you're eligible to receive any benefits you should be able to take advantage of.
• Improving financial record keeping: Reporting and tracking your self-employment income helps you to keep an accurate record of what you're making and spending. This means that creating an accurate budget, planning for the next financial months/years, managing your business and making informed financial decisions will be easier!

As you can see, there are several reasons why claiming and filing taxes can not only be important for legal reason, but also personal & business reasons as well! Now, if you've been in any financial conversations at all, you've probably heard about the beloved "write-offs". If you're wondering what they are and how to claim them, read on! Be aware, while some people will tell you "Anything can be written off", that's simply not true. This is why I highly suggest meeting with a professional tax accountant who can tell you the exact and actual laws of what we as industry workers are allowed to write off. Claiming write-offs that aren't actually legally considered write-offs can become problematic for you in the future if you're audited by the IRS. I know not everyone is going to care or heed this warning, so operate at your own risk - but I'd rather be safe than sorry.

What are write-offs?

There are various types of write-offs, including things like operating expenses, capital expenditures, travel expenses, business use of a home, and depreciation. In order to find out what write-offs you can claim and what they qualify as, make sure you consult with your accountant to make sure you're claiming them correctly and obtaining the proper paperwork/proof of purchase and necessity that may be needed at tax time. So, as sex workers, what are some things we can write off?

• Work clothing & accessories: This means anything purchases for work use only, such as a pair of Pleasers, dancewear bikinis, work jewelry, wigs and press-on nails can be claimed as a business expense. Here's the catch - it has to be used solely for work, and you have to be able to take it off at the end of your shift. This is why things like acrylic or Gel X nails and breast augmentations cannot be claimed as a work expense. You're not able to just take them off when you're headed home. 
• Stage makeup: Just like clothing, if you're purchasing makeup specifically to wear for work, it can be a write off. 
• Travel expenses: If you're a travel dancer, there are a variety of travel costs which can be deducted expenses during tax time. Contact a tax professional to make sure you're in compliance with the current laws with what you're writing off and how much of it is allowed to be written off. In addition, you can claim the miles driven to work on your personal car for business expenses, too.
• House fees and tip outs: Yes, you can claim these! The ins and outs of how to claim them and also have them reflected in your income cam be a bit confusing, so I would once again recommend contacting Prisma Tax LLC or another professional tax accountant for the exact details and breakdown.
• Tax prep fees: Since it's technically a business expense, you can certainly claim the cost of your tax preparation as a write off for the next business year!
• Cell phone and home office: If you're using your cell phone for work related activities (texting regulars, online promotion, etc) you can claim a portion of your phone bill as a deduction. Similarly, if you're a content creator and a portion of your home is used specifically for content creating purposes, a portion of your rent and utilities can be claimed as an expense. 

Remember, this is not a full list of everything that could be considered a deduction, and to make sure you're compliant with your federal and local tax laws PLEASE run everything by an actual professional accountant! This post was meant to be introductory to taxes and a little bit about the how and why behind them for sex workers, specifically. I hope this has made taxes seem even a little bit less intimidating and easier to tackle! Although claiming might seem scary or stupid, it does have a number of benefits in the short and long term. 

I hope this was helpful! If you've got any questions or suggestions for the next blog topic, please leave a comment down below or contact me on Instagram @thedancers.diary