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ldl1017 Elite user 476 Posts |
With the end of tax season looming on the horizon, now may be a good time to discuss how some of the more active performers handle thier taxes. I'd be interested in any and all talk about the dry subject of deductions, write offs, etc., etc.
“I am, as I've said, merely competent. But in an age of incompetence, that makes me extraordinary.”
Billy Joel |
Peter695 Regular user 102 Posts |
In lieu of discussion, I offer the following link: http://www.fredbecker.com/tax_advice.htm . I have another book by the Beckers and it's excellent. (I haven't read this one).
I have someone do my taxes so it would be a short discussion on my end. Peter |
Matt Graves Special user Huntsville, Alabama (USA) 504 Posts |
do you have to have a license to perform professionally? Just wondering . . . I mean, how can you have income tax if you just go around to schools and churches or cruise ships or whatever doing magic for people and getting paid? How would you work it out?
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ddyment Inner circle Gibsons, BC, Canada 2499 Posts |
Quote:
serling307 wrote: It's pretty simple... whatever you get paid is income, and must be declared as such. And you must pay taxes on this income as you pay taxes on any other income. Failing to report it is a bad idea, as you can be pretty sure that some of your clients will be claiming the payments as expenses, so the government will be aware of them. Of course, you can deduct legitimate expenses from that income, provided that they are documented and appropriate... consult your tax advisor for details on both. ... Doug
The Deceptionary :: Elegant, Literate, Contemporary Mentalism ... and More :: (order "Calculated Thoughts" from Vanishing Inc.)
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Peter695 Regular user 102 Posts |
Quote:
On 2002-04-21 21:54, serling307 wrote: There's no federal license for performing that I'm aware of. There may be local licenses that apply, depending on where you perform. With regard to your questions about taxes, I'm not sure if you're asking how you would file and track your taxes or how would the IRS catch you if you decide not to file. For all intents and purposes, all money you are paid is considered income and therefore taxable. Schools, churches and other organizations would likely claim, on a form submitted to the IRS, your fee as an expense and or a deduction. Exotic circumstances can effect your tax status. Income from cruise ships can be a sticky situation. If you are working, living and being paid on the sea, outside the US is that income taxable? The US tax code is more difficult to understand than quantum physics. Hire a pro. That's all I can tell you. The consequences of tax error can be difficult to live with. Tax evasion can be devastating. Ask Willie Nelson. Peter |
ddyment Inner circle Gibsons, BC, Canada 2499 Posts |
Quote:
Peter695 wrote: It is if you are a US citizen or permanent resident ("green card" holder). American citizens (unlike those of many other countries) are taxed on "world income" and must report everything. ... Doug
The Deceptionary :: Elegant, Literate, Contemporary Mentalism ... and More :: (order "Calculated Thoughts" from Vanishing Inc.)
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Peter695 Regular user 102 Posts |
Quote:
Right Doug, as I noted when I wrote: "For all intents and purposes, all money you are paid is considered income and therefore taxable". My hesitation to make a declarative statement was do to the more exotic circumstances that would lead to "non-resident citizen" status. I didn't go into the matter because it is unlikely to be encountered by anyone here. Therefore, for all intents and purposes, if you earn, you owe. You're quite right. Thanks. Peter |
ldl1017 Elite user 476 Posts |
Interesting how an innocent statement regarding the handling of taxes can trasition into a discourse on the dark side of "tax evasion".
“I am, as I've said, merely competent. But in an age of incompetence, that makes me extraordinary.”
Billy Joel |
Peter695 Regular user 102 Posts |
Quote:
On 2002-04-22 23:22, ldl1017 wrote: Tax = fear. My primary frame of reference; a few year ago I owed the IRS about $500.00 . I thought I would take my time about paying them off. You know, the casual approach. Maybe three months past and I got a bill for something over $3,000.00 . Interest plus penalties etc. And then there's the friend of mine who did engage in evasion. As his fines doubled, they ended up with a couple of houses, a large boat, vehicles and he ended up living in his parents basement. I don't know jack about taxes and didn't intend to discourse. I was not and am not clear on what's behind Serling's question(s), if anything. (I don't really need to know). So, here's what I actually know about taxes: -Pay in full and on time. -Hire someone who does know tax law and how the IRS operates. Peter |
Marduke Kurios Veteran user Vancouver, Canada 316 Posts |
Income Tax is voluntary. It always has been.
Whether you decide you want to participate or not is up to you. Anyone can keep 100% of their cheque depending on what capacity they are working. Knowing this allows the concept of deductions, write-offs, and heavy paperwork to dissolve. Zero worries at tax time. The stress and fear are voluntary too. You can keep ALL monies you agreed to on your contract, if you want to. Yes, it does matter what type of contract you signed. It does matter if you are working in your capacity as a natural person or an entity. It's a BIG difference. Once aware of contractual obligations, we can choose to give our earnings to the 'club' or keep it ourselves for our own families. As for 'needing a license' to perform, this depends on whether you perform as a natural person or an entity/artificial person. A natural person does not require a license, while an entity may need one to work. Check it out for yourself. See for yourself how far the rabbit-hole goes. Proper education diSPELLS all misconceptions and false-truths. All rights reserved. Without prejudice. Copyright 2002.
Live well,
Laugh often, Love always. To the world you might be one person, but to one person you just might be the world. Without Prejudice, All Rights Reserved. |
Peter695 Regular user 102 Posts |
Look before you leap.
Peter |
DaveB New user Toronto 83 Posts |
For piece of mind I always get a pro to do my taxes. They can tell you what you can and can not write off, keep up with the forever changing laws and save you from big headaches. Living in Canada I also receive income from the US and I would never even consider not claiming it. If and when they catch you they will not be happy and go over everything with a fine tooth comb.
Honesty is truly the best policy when it comes to taxes (or anything). You sleep better at night. |
Stuart Hooper Special user Mithrandir 759 Posts |
Okay heres a question, I'm 16 and I make a signifigant income from magic. Should I just get it under the table and not pay tax? Or should it get put on my parents return?
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Kardenni Regular user Orlando Florida 116 Posts |
I make my Taxes vanish in thin air!
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Genio New user 54 Posts |
Yeah, I agree with mithrandir. I am 16 and getting my business up and running.
What to do? And am not gonna make them VANISH because they are there whether you like it or not! genio
Respectful Classic Magic.
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MagicalPirate Special user Shamokin, PA 828 Posts |
Marduke:
If you going to bring up the liberty books of tax abatement, the least you could have done was include a link so these people would know of the great wisdom you are speaking. I couldn't find the link or I would have posted it for you. I'm sure you are more knowledgeable on this.
Martin Blakley, CSH, DASH, CMSA
http://www.thehypnoguy.com/HYPNORESOURCES http://www.docgrayson.com/ How To Sell Anything Online http://tub.bz/?r=1z Copyright to my own words retained 100%. |
cgscpa Elite user Ashton, MD 447 Posts |
"--Okay heres a question, I'm 16 and I make a signifigant income from magic. Should I just get it under the table and not pay tax? Or should it get put on my parents return?--"
I am basically repeating what others have already posted - but for the sake of sharing my unsolicited advise: If you are self-employed as a magician you are required to file a return as a sole proprietor. Your total gross income is reported and any "ordinary and necessary" business expenses are deducted from the gross to arrive at your net income. If you are showing a positive net income after deducting expenses then you would also be subject to self employment taxes which is the equivalent of social security taxes paid by employees (although the rate is higher than employees). You probably would also be required to file quarterly tax estimated during the year since taxes are not being withheld at the source. This type of income cannot be reported on your parents return even if you qualify as their dependent. As far as being paid "under the table", bottom line is that tax evasion is illegal which is what you are talking about. The fewer problems you have with the IRS the better. I refer you to Peter695's post for his experience. It says more than I could say. Also, regarding the post that "whether you decide you want to participate or not is up to you" regarding income taxes, this is an old, old position taken by some tax protestors in the US to claim that they do not have to pay income taxes. It never works. Period. My advise to you as a CPA is to learn about the taxes you are required to pay and your responsibilities. Visit the IRS web site - irs.gov - and download some publications about being self employed to learn more or visit your local book store. Meet with an accountant or tax professional or someone you trust you can show you how to keep a simple set of books so you can track your income and your expenses and what records you need to keep and who can give you tax saving advise and suggestions. This will make tax season a lot less stressful for you, help you legally pay the least amount of taxes required and give you the proper documentation and no need to fear in case of an audit. If you do not want to learn about taxes than take the advise of others here and find yourself a tax pro who will handle this for you. Ask around for referrals from your friends and other magicians. In the long run you will be glad you did. Hope this helps and good luck. |
Starrpower Inner circle 4070 Posts |
If you perform full-time as your sole means of income, file quarterly estimates and get a tax accountant. They are not nearly as expensive as you might think.
Each year, I get a packet from my accountant, and I do all the "leg work" -- adding my yearly receipts, keeping track of expenses, etc. -- and "fill in the blanks" on her worksheet packet (about 15 pages.) Anything I don't understand I write down, and present it all to her. If she has questions, she calls me. Otherwise, I leave the rest up to her. I also keep copies of this, and each year is gets easier as I have something to refer to. And, I don't know how things are in Canada, but here in the good ol' U.S. of A. taxes are definitely NOT voluntary! PAY THEM! |
rossmacrae Inner circle Arlington, Virginia 2475 Posts |
Quote:
On 2002-04-24 14:02, Marduke Kurios wrote: This utter fallacy was "swallowed" by numerous people now serving time in Federal prison. It was "sold" to them by other people now serving time in Federal prison (or facing it, or out but sadder if no wiser). Believe it if you are gullible, but also believe this: the Feds are big enough to MAKE you pay taxes or face the penalty, and they can and will. -------------------------- The beauty part of being a pro is all the deductions you can legitimately take for things you used to pay for as a hobby - all you have to do is turn a profit, even if it's only a buck or two, and not even every year. Keep good records (I use Microsoft Money Home & Business version) and log every single penny you make, and you can deduct as legitimate expenses every magic book and supply, every tuxedo and silk, every penny of advertising, your magic DVDs and club dues ("professional development") and more. Worried that you might be tempted to get so far-fetched in deducting that you won't be able to stand scrutiny? Don't - even the most well-founded, customary deductions should be enough to keep your taxable profits tolerable. A good tax software can help you identify deductions you've overlooked. I've been audited once by the state and once by the IRS and passed without any problem. The secret is keeping your records and receipts ORGANIZED and ACCESSIBLE. "All right, sir ... what about this figure for dry-cleaning?" "Well, you can't launder a tuxedo, and here are the receipts right here." --------------------- Please PLEASE don't heed those tax-protest jerks! |
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