Federal taxes

[candymansd]

Most young girls can't manage money. They spend the money so fast it never makes it to the bank.

[Pistol Man]

To address the original question: (and I should disclose that I have been in the tax advice/counsel/preparation business for 30 years). You must remember that the IRS knows only what has been reported to them. The SB arrangement is not reported by the payer (and probably legitimately so) as the payments are not made in a trade or business. On the flip side, the tax code requires taxpayers to report all income from all sources wherever earned. This includes SB income as well as income from illegal activities; however, the expenses of earning the income from illegal activities is not deductible! The SB arrangement is not illegal but it is income to the recipient and she may have some expenses of producing the income. The lady's concern should be who is going to turn her in for the 10% recovery reward. Her other concern should be to never live the lifestyle she can afford with no visible means of support. If she stays UTR lifestyle wise and doesn't piss anyone off to turn informant, she could go for years without being noticed by the IRS. I am not saying that is proper or moral - just possible. It may also come down to the question of "what does it take for her to sleep comfortably at night?" And as I counsel many ladies, at some point you are going to want to buy a car or maybe a house, and the first thing asked for is a copy of your tax return. How do you explain a sizeable down payment and poverty level tax returns? Or how do you explain poverty tax returns when you're obviously not poverty stricken. The situation eventually comes back to bite you in the ass one way or another. So the safest way is to file a tax return, report some income, pay some tax (especially the self employment tax because we old folks need you to contribute to social security) and sleep well at night.

[Squarenot]

(Full disclosure) I do have a four degree in accounting from a reputable U.S. university, but have very limited experience with the Federal Tax code. The following is not advice in any way shape or form, simply my opinion.

The scenario of the OP where a provider has yearly income of say 80K and 5K legitimate income along with annual disbursements significantly exceeding that amount , especially for a few years in a row, is very vulnerable should she come to the attention of the IRS, imho.

Individual or single financial transactions of 10K or more must be reported to the U.S. Treasury per Federal law and are normally done by financial institutions. IRS and LE has access to these data. These days, 10K transactions are a dime a dozen. However, IRS is becoming more sophisticated too and via computer matching with other data bases, are more able to spot scenarios that they believe require their attention.
Bottom line is that it's all a risk. Trust me, you do not want to have IRS open a case on you. It is very difficult to satisfy. Been there, done that.

I subscribe to Jannisary's suggestion/advice. Style yourself as an independent contractor, pay taxes and be careful not to claim too many deductions that could send red flags. If you pay taxes, I believe the IRS may dispute what you owe, but will not go after you for criminal charges.

[straightshooter30]

I guess longer appointments and HDHs will have to reveal their SS# so a 1099 can be issued! ;-)


QUOTE=tigercat;1051962067]If I spend over a certain amount with one lady, do I need to issue her a 1099? W2?

Granted, I always do incall, they provide the condom 90% or more of the time, so I don't think they ever reach the level of my employee, but I am not sure I understand the 1099 rules.

Thankfully, I don't think I have ever crossed the line for the $13,000 gift tax exclusion in one calendar year to one provider.[/QUOTE]

[instfixer]

By reporting more of your income, you then qualify for better Social Security payout at age 62 and beyond
I THINK at $5,000 a year, you may not qualify
You need 10 years of qualifying to be eligible for Social Security unless you were married for 10 years, then you qualify under his Social Security

Not that i am claiming to be 100% correct but something to think about

Also one year turning in a tax return at $5,000 then next year turning in a tax return at $85,000 might look suspicious might, want to think about a gradual increase

You need a Tax attorney that you can trust

Being a provider is not illegal under Federal law. How about all the providers in a legal state like Nevada? Hmm tax attorney in Nevada... they must have heard it all by now

[Alexander The Great]

The basic issue of this thread is: is it a sugar-daddy relationship, or payments for sex. If she is his mistress or girlfriend she's just receiving gifts, which she doesn't have to pay tax on. If she's receiving the payments for sex, she should be filing a schedule C like any other self-employed person.

Originally Posted by dreamvacationdates

any single deposit or purchases totally over 10,000 will put you in the spotlight

That's a common misconception. The 10K threshold only applies to cash transactions. That's the green paper stuff and the shiny metal stuff. See Wikipedia.

Originally Posted by instfixer

I believe the minimum salary that receives Social Security credit is something like less than $3000 a quarter.

They'll let you pay self-employment taxes (mostly social security) on any amount of income.

[ShysterJon]

Y'all should cut out the middle man and send your ideas directly to the IRS so they can use the information in prosecutions.

[guest043013-2]

SJ,

You are so true. But I would bet the IRS has seen all of these schemes by now.

Few things for you sugar daddies to consider:

1. If it is a gift over $14K in a tax year, then the giver (IE: Sugar Daddy) needs to file a gift tax return. Any amount over the annual exclusion goes against your lifetime exclusion of approximately $5 million. All of these are tied to inflation, but you get the general rule.

2. If you are paying to a sugar baby for sex, then you need to decide if she is an employee or a contractor. Whole new set of rules to look at. If an employee, you need to be withholding SS & income tax, providing her with a W2. If she qualifies as a contractor, then you need to provide her with a 1099.

Hint: If she has multiple sugar daddies, you can probably argue better that she is a contractor.

Second hint: If you have multiple employees already in a private business and you try to sneak her on the payroll, are you required to provide insurance under Obamacare?

[ShysterJon]

My SB isn't my employee, although she works under me.

[ftime]

This is an old thread. However an update. The SD in question is an ex CPA - kinda messes up the "I didn't know" defense.The payer of the money, (less 2011 $13,000 "gift" exclusion) must file a 1099. Failure do do so is treated as evasion. Assets like cars and expenses are all a matter of record. Obviously bank deposits and the payment of credit card bills create an easy to follow paper trail. Paying of bills - child care, even with cash create a trail. Going to a jewlery store and buying a $15,000 necklace creates an issue. If you out of the country and bring $20,000 worth of merchandise without claiming it in customs is an issue.

I finnaly took this to my tax person, a CPA and a lawyer and fully disclosed what I was talking about. He's a friend and trying to convince me he had billable hours he answered. He said - we're clearly not talking about you - me - you're not spendind $100,000 on getting laid. He asked me if men really spend tens of thousands of dollars on hookers i assured him some do.

Asside some strategies to mitigate marginal amounts he came up with a clear answer. A. SD marries the SB (not gonna happen). Or B. the SD 1099s all cash and gifts (expensive trips, jewlry, clothes, $1,200 spa visits) to the SB and she claims them as income. Paying income tax and SS etc. However being careful about the duration etc of the 1099 income so not to become W2 income. All he would need to do is gross his payments up a third.

I think this is much less of an issue for normal providers unless they are low volume HDHs.However in the 70s without thier database abilites of today tracked many drug dealers through cars, real property and bank accounts.My suggestion is, it's easier to fool vice than the IRS. Or you can spend all your money on intoxicants and $25 rings or $12 shoes

[flghtr65]

Originally Posted by tigercat

2. If you are paying to a sugar baby for sex, then you need to decide if she is an employee or a contractor. Whole new set of rules to look at. If an employee, you need to be withholding SS & income tax, providing her with a W2. If she qualifies as a contractor, then you need to provide her with a 1099.

Hint: If she has multiple sugar daddies, you can probably argue better that she is a contractor.

Second hint: If you have multiple employees already in a private business and you try to sneak her on the payroll, are you required to provide insurance under Obamacare?

If she is considered a full time employee(40 hours per week) yes. If less than 40 hours, no. The employer could elect to not provide insurance and pay the fine. The employee could then go to the government exhange and purchase insurance (at a price that would be below market rate). The assumption is that the state the employee works in did not opt out of Obamacare. This part of the Affordable Care Act (Obamacare) is not effective until 1/1/2014.

[Alexander The Great]

Originally Posted by ftime

The payer of the money, (less 2011 $13,000 "gift" exclusion) must file a 1099.

It's either a gift or an independent contractor expense. It can't be both.

[Alexander The Great]

Originally Posted by tigercat

If you have multiple employees already in a private business and you try to sneak her on the payroll, are you required to provide insurance under Obamacare?

Originally Posted by flghtr65

If she is considered a full time employee(40 hours per week) yes. If less than 40 hours, no. The employer could elect to not provide insurance and pay the fine. The employee could then go to the government exhange and purchase insurance (at a price that would be below market rate). The assumption is that the state the employee works in did not opt out of Obamacare. This part of the Affordable Care Act (Obamacare) is not effective until 1/1/2014.

It's 30 hours/week for employers with 50 or more full-time equivalent employees.