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Kevinr Inner circle 1854 Posts |
Hello,
I have a question for all you pros.. Granted there may be ethical issues with this but I am asking anyways. The US tax code I believe state if you make less than $500 you don't need to worry about taxes. I have a friend who like some magicians has the checks written out to himself. (however a lot of clients also just pay cash) which is quite common. In this case he just goes to there bank and has it cashed. Usually the amount per party he works is less than $500 a year per client so he pays no taxes on it. He also works several restaurants and claims no money on his tips or anytime a client pays cash. The only time he claims taxes is if he knows ahead of time an event or client uses him more than once in a year (making his amount over $500) or if the restaurant mails him a form at the end of the year asking him to be responsible for the taxes because they pay him every week. (still he doesn't claim the tips in this case) I tried to tell him the tax code means if your entire income for the business is less than $500 that's o.k. but NOT per client like he is doing. He then started blabing about tutors, babby sitters and waiters doing this so I didn't argue.. HE HAS BEEN DOING IT THIS WAY FOR 25 YEARS! What do you think? |
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Jim Snack Inner circle 1338 Posts |
Your friend is cheating on his taxes. Granted, if he is paid in cash or is paid by check that he cashes at the client's bank, the IRS probably won't find out. But he is still cheating.
If he receives over $600 in miscellaneous income from a business, he will receive a 1099 form, and it will be reported to the IRS, so he had better claim the income or risk an audit. Someone once told me years ago that there are two rules about incomes taxes one should always follow: 1) Never, ever cheat on your income taxes, and 2) Never, ever tell anyone if you do! I prefer rule #1. Jim |
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Bill Nuvo Inner circle 3094 Posts or 2742 Posts |
Well yeah, I pay taxes. How do you explain a car, a home, and other things on $500/year lol
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RJE Inner circle 1848 Posts |
Some people believe it is only a crime if you get caught and even then some feel they are being picked on when they are.
First, I do declare all my income from shows and selling off any props I no longer want. I think it is the right thing to do and after undergoing a mini audit by the government last month, am glad I do. To carry on the theme of honesty though, how many performers pay for the right to use music in their shows, unless of course they have royalty free music? How many performers are properly covered by insurance and know their limitations? Or the big bug a boo, how many performers are willing to steal another's routine(s) and feel proud of how good of a job they do? |
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Bill Nuvo Inner circle 3094 Posts or 2742 Posts |
I pay for the rights to play music
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sethb Inner circle The Jersey Shore 2719 Posts |
Kevin, I think your friend needs to speak with an accountant (or perhaps his parole officer).
At best, he is seriously misinformed. Ironically, he may also be cheating himself out of Social Security benefits down the line (assuming the system is still solvent when and if he gets there), since the benefits are based in part upon earned income. SETH
"Watch the Professor!!" -- Al Flosso (1895-1976)
"The better you are, the closer they watch" -- Darwin Ortiz, STRONG MAGIC |
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Dannydoyle Eternal Order 21219 Posts |
It only works till a few things happen.
Try to even qualify for buying a new car, or a house especially in the current environment. You will need 2 years minimum of tax returns from the company showing what you make. Tough to do when you have literally thousands and thousands not accounted for. Try to get a credit card, or anything for that matter. It is cool when you are young and it seems like you are making more money, but it will make life down the road much much tougher. Plus the second you get caught, and you will get caught, game over. When they do come down on you they will look into your history and when they do that you are really cooked. He will get caught and when he does it will not be pretty. They have a program to reward wistle blowers so telling you is not the smartest thing he can do. As for music, routines, and other things of ethics. I had a spot in my life where I was far less than "ethical" to say the least. I have done things that were wrong and even embarassing. I have lots of excuses for the behavior, but it was wrong. Now not so much. I don't do others routines, I pay for music, and I have insurance. Older and wiser I like to think.
Danny Doyle
<BR>Semper Occultus <BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell |
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Scott F. Guinn Inner circle "Great Scott!" aka "Palms of Putty" & "Poof Daddy G" 6586 Posts |
I book my shows through a third party (agent). He sends me a 1099 at the end of the year. It makes life so much easier, especially come tax time. He always gets me the price I ask for, so that is never an issue.
"Love God, laugh more, spend more time with the ones you love, play with children, do good to those in need, and eat more ice cream. There is more to life than magic tricks." - Scott F. Guinn
My Lybrary Page |
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magicofCurtis Inner circle Los Angeles 2545 Posts |
We should report all our income earnings. It is only fair to all other tax payers. However, we are fortune enough to have so many deductions it really does not matter at the bottom line
Performers are able to write off so MUCH for research and development and normal business exp.
Curtis Lovell II
http://www.CurtisLovell.com http://www.MagicofCurtis.com www.facebook.com/curtislovellii Los Angeles, California - U.S.A. |
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TonyB2009 Inner circle 5006 Posts |
As a proud and patriotic Irish man it pains me to admit this, but I pay my taxes. After all I use the roads, my kids use the schools, and I have been known to use a hospital.
What bugs me is the fat cats at the top (the band U2 spring to mind) who use every loophole, legal and otherwise, to escape their responsibilities. We'll have a fairer society when the guys at the top start pulling their weight, the way we in the middle and at the bottom do. Tony.
Check out Tony's new thriller Dead or Alive http://www.amazon.co.uk/Alive-Varrick-Bo......n+carson
http://www.PartyMagic.ie |
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magicofCurtis Inner circle Los Angeles 2545 Posts |
Tony,
Laws are laws. If the gat cats are smart to get around them do to legal issues than anyone else can too. It about time & cost verses benefit! :)
Curtis Lovell II
http://www.CurtisLovell.com http://www.MagicofCurtis.com www.facebook.com/curtislovellii Los Angeles, California - U.S.A. |
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Dannydoyle Eternal Order 21219 Posts |
The fact is that once you make good money, they come for you. Yes some can be written off, but nowhere near all. Plus it only takes one audit for people to change the tune on what they think can and can not be deducted.
Danny Doyle
<BR>Semper Occultus <BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell |
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JordanB Special user dallas, tx 626 Posts |
Your friend is nuts. Income is income.
He needs to pay his taxes. If he gets caught and has really been under reporting for 25 years, there is a good possibility they will nail him to the wall. The rich pay a lot in taxes. Lately about 1/3 of tax revenue generated from individual income tax returns (ie-non business) comes from those in the highest marginal tax bracket (currently 35%). They have their faults, and I'm not an apologist by any means, but they pay a large share of taxes too. |
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rossmacrae Inner circle Arlington, Virginia 2475 Posts |
Bet your life it's only a crime if you get caught!
Warden, I'm ready to go back to my cell now. |
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Dannydoyle Eternal Order 21219 Posts |
In all fairness, and not to make this pollitical and get it deleted, BUT the "rich" pay more like 90% of taxes. People who make over $250,000 pay a HUGE portion of our tax burdon. Whether this is "rich" or not is a matter of debate depending on where you live.
Danny Doyle
<BR>Semper Occultus <BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell |
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Dynamike Eternal Order FullTimer 24148 Posts |
That guy better start paying his taxes. If does not I will report him to the state and IRS. I want him to pay because my relatives need their food stamps, SSI, WIC Cards, medicaid, etc.
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Dannydoyle Eternal Order 21219 Posts |
Mike makes a joke, but makes a good point with it. When others don't pay, some pay more.
Danny Doyle
<BR>Semper Occultus <BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell |
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Kevinr Inner circle 1854 Posts |
Very TRUE! I agree!!
However, When you recieve a tip do you claim it? Do you pay royalties for your music? Is this not the same thing... |
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JordanB Special user dallas, tx 626 Posts |
The rich don't pay 90%, but those above roughly $200,000 do pay a lion share of the taxes. For some interesting reading check out the stats published by the IRS at http://www.irs.gov/taxstats/ I start graduate school in January to work on my master's degree in taxation. I've used that site a couple of times in my undergrad tax courses.
Claiming a tip is tax law. Paying royalties is not. So not quite the same thing. Ethically and legally, people should be doing both. |
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Dannydoyle Eternal Order 21219 Posts |
I have claimed every dollar of tips for 10 years. Why? Because if I wanted to buy the house I have, I needed to have a high enough income in order to qualify for it. Same with my car and every credit card I have.
Performance is the only job I have had for 15 years so how was it I could qualify for these things if my income is hidden? I knew what I wanted and how to go about getting it. If you get an extra $500 in tips a week, well that is about $25,000 a year. That can be a huge difference in what house or car or whatever you can get. You can't just one year BAM have the income. It is something they look at over time. So while it may seem like a good thing and all that, think about how your life will play out in the future. I bet your friend has another job and this is just extra. I pay for all the music I use yes. I have always worked venues which require such things. Try doing a show in Branson without paying BMI and see how long that goes on for. As I have said before I have done things before that I would never even think of doing now. Made some huge mistakes that I regret. Had a wonderful justification for each and every one of them. Still made me a piece of crap now didn't it? I don't do those things now. I don't judge things anyone does but me. People make choices and those choices have concequences sometimes. I just don't think it is worth not claiming stuff because of the income proof issue.
Danny Doyle
<BR>Semper Occultus <BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell |
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