What inspired me to write this guide is the sheer amount of bad information I see floating about nearly every time the subject of cam girls and taxes comes up. Deductions seem to be the source of the biggest fallacies, but I've also seen a lot of bad information about losing money doing something or filing for taxes at all in low-income circumstances.
Just because somebody did it already and said so on the internet doesn't mean they did the right thing, only that they were lucky and didn't get caught. An easier way to get lucky is to not poke the IRS bear with a spoon.
This guide will be structured much like the tax form process itself. Everyone's tax situation will be different and highly dependent on their living situation and other sources of income, but I'll try to address most of the common ones.
I cannot stress this enough. Get software to help you file. Not only will you get instant calculations of how each thing you do affects your income, but you also never have to explain why you're writing off your donkey dong.
As a cam model, you are now a business unto yourself. This is known as a sole proprietorship. What this means, basically, is that every time you are asked to write a Business Name, Address, or tax ID number on a form that you need to use your own. Your business Tax ID is your social security number.
The pitfall here is that many models make up a name for their business or use their stage name on their tax forms. Don't do this unless you have an actual business registration. If you do, you are outside the scope of this article and the remaining advice won't be very helpful to you.
The above information is usually input on a W-9 form, which is basically 'officially' telling a company that you are camming for who you are. They will use this info to properly fill out a 1099-MISC for you at the end of the year.
A 1099-MISC must be issued by a payer (website usually) to you if you earned over $600 that year with them. These are required to be in your hands by February 2nd so you may file your taxes on time. Customarily, most companies do not send them out until January 20th, though they could be given to you much sooner if you 'know people.' The IRS gets a copy of this form, so they will know if you fail to file.
Warning: Lying about your social security number or your real name could have dire consequences. There is one cam model that was trying to avoid showing income, so she used her name and her friend's social security number. Had this not been corrected, the IRS would have received a 1099-MISC under the wrong social and the model would have thought she was safe not to file. This is considered fraud and could have resulted in up to 2 years of hard time (though generally a $10,000 fine is normal).
If you made enough money to need to file at all, you must still declare every penny of income even if you weren't issued a 1099. You can issue yourself a 1099 using all company info you can get your hands on for the exact amount. Most company info you need will be either on the paycheck header or on their website obscurely hidden away. By law, it must be publicly accessible; they cannot hide their tax ID from you if you ask for it.
Schedule C-EZ is the simple version of a Schedule C. A schedule C of one kind or another is needed by anyone that has income from 'self-employment' or 'independent contracting' in the last year. This form is actually pretty easy. It looks extremely intimidating, but in reality you only need to fill in a few of the blanks on the form for it to be good.
Your principle business (Block A) is Web Broadcasting and your code is (Block B) 516110. If you have scheduled C income from a totally different kind of job, you can be more creative here.
Leave blank C and D, as you are a sole proprietorship in most cases. If you are not, you need more help than this paper can give.
Blocks F and G are both 'NO', these are for if YOU needed to pay people by 1099, not if you got paid by 1099. This is a common error and will get a follow-up letter from the IRS if you check the wrong box.
Part II, Line 1 Add up ALL your income you made that year from camming (and other sources that qualify, like babysitting, gardening, etc). Usually this is done by adding up your 1099's.
If you are also indy, then you need to include ALL money from any source not included on 1099's, including PayPal, GiftRocket, Amazon gift cards, etc. Yes, Amazon cards are fully taxable income, they say 'Gift' but the IRS has specifically declared these to be the same as cash.
If you have received gifts (physical items that you did not purchase yourself) worth over $100 from business clients or employers, you must claim a portion of these as income. See a tax professional about this.
Line 2 Here's where everyone likes to go a little nuts and try to think of things that could be a business expense. Pro tip: Knock that shit off. Nothing will get you audited faster than claiming weird business expenses. The biggest red flag producer is the home office write-off.
Sex toys, gym membership/equipment, cosmetics, utilities (Phone, gas, electric, internet), fetish pervertables, beautification of any kind, clothes and lingerie, and lube/tissues are all NO GO for business expenses. Don't even try it. I know you're saying 'But so and so got away with it sometime or other.' It doesn't matter. These are not valid expenses under American law and will kill you in an audit or at least embarrass the hell out of you in the judge's chambers.
Here are some valid business expenses that usually don't raise red flags:
Always keep the receipt or it didn't happen.
As a general rule, if whatever it is could ever, in theory, be used for personal use in any context, you can't write it off except where listed above.
Because you are self-employed, the rules change a bit. You MUST FILE if you made over $400 total for the entire year. This minimum is very different than someone who works at a regular job, where the minimum goes up into the $1000's depending on family size.
If your parents are claiming you as a dependent for taxes, you may have some explaining to do. I can't advise you to lie, but you may need to get creative with the job description on your Schedule C-EZ. Your parents don't need to see your 1099's (the IRS already has those), so if you can cover that much income by saying you were a babysitter, go for it.
Figure out something though, because a likely scenario is that you don't tell them anything, the IRS has reported income for you because of 1099's, and your parents get audited.
After age 22, or if you're not in college, you don't have anything to worry about as they can no longer claim you as dependent under most circumstances. If you are disabled enough to remain dependent, you likely aren't camming without their knowing. Regardless, be sure to ask them if they're claiming you on their taxes for the year.
Whomever's name is on the 1099 is the one that earned the income. If you are married, this is easy, as all income and expenses go into the same pot. Schedule C's are needed for each person that got a 1099. If you earned less than $600 as a couple, and didn't receive a 1099, you will need to make one up for your couple's income. Peg it on whomever is the primary account holder for the couples account.
If you are NOT married, it gets tricky. There's several ways to resolve this, and fairly easily, but ultimately the person that received the 1099 is the one on the hook to the IRS. You can then issue a 1099 to your partner for a portion of that amount, from you to him/her (be sure to say yes on blocks F and/or G on your Schedule C-EZ). Make sure the IRS is sent a copy ' you can hand write it on the form but it's nicer to print it. Address and instructions are on the form. One of you can also just bite the bullet and take all the tax burden/benefit.
If you lived in just one state, this is pretty straight forward. I just normally let the software do the work here as I couldn't be arsed to learn about state law. The worst that has happened to me is they sent me a bill for $10 one year.
If you have lived in multiple states, this can get tricky. You may need to split your state income based on how long you lived in each state and which jobs you held there. It's safe in most cases to report 1099 income based on the state written in the address box. You may also split based on the percentage of year in one state or another.
Use the software. My recommendation is TurboTax Home Business off-the-shelf (not web-based), and pay the extra few dollars for the audit protection. Camming is a high audit risk, especially if you combine it with other common red flags like the EIC (if you have kids).
Other countries may also have other rules about deductions. The advice here specifically pertains to US models. My only other expertise would be Ukrainian tax law for private entrepreneur licensees, if anyone is interested, but that tax scheme is ludicrously simple.
I will also be on the lookout for alerts to changes in the tax code. Last year they made changes all the way until March which really screwed some of my accounting firm clients that filed early. File early anyways and just get it done - the day you have all your 1099's.
Disclaimer ' While this is advice from a qualified source, it is no substitute for the personal services of a tax preparation professional. I am not liable for the advice herein written. Everyone's situation is unique and there are billions of possible combinations of factors that can't be covered in this column. More personalized advice will be available at models.katyboleyn.com. If there is interest, I'll get a license for tax preparation this year, since camming I have let it expire.
Thanks so much for the article....great! I disagree w you on the home office deduction. For example; I use a spare bedroom as my cam studio. Totally set up for camming and not used for anything else, TV watching, guests, etc. ( I don't want to sleep where I work) So since I rent a 4 room cottage...I deduct 25% of the rent as well as 25% of the utilities. As for sex toys, they are mostly deductible as a business expense, I list them as props. When I do my tax for 2013, I am also going to include my boob enhancement expense of $9,000 plus. II also do some porn shoots and this deduction is rather common. I wouldn't deduct a nose job or similar things. I have also been deducting some lingerie, outfits and stripper heels.....anything that can not be worn outside. The issue is to be reasonable....if you have a ton of deductions, way beyond your income question would be why are you camming? Just for your own pleasure and thrills? Doesn't make $$ sense. Turbo Tax is my guide.....listen to all the questions and promps
As I said, if you've gotten away with it, it doesn't mean that it was right. The audit system works on an informal "red flag" basis. A home office deduction is a red flag, and it might be ignored if its the only one. Be prepared to "prove it" if it goes to audit. I see many models that don't get that this deduction must absolutely meet specific criteria to qualify as a deduction. The IRS doesn't like "creativity". This is not based on my opinion, but directly from IRS whitepapers. In several decision papers, the IRS has also specifically stated that cosmetic surgery is not a tax write-off. The boob job case goes back to 1988, but it took extraordinary circumstances in order for her deduction claim to stand for her plastic surgery. You can read about it here. Chesty won her case, but due to the way it was presented, her case does not make a precedent for other strippers and models and does not make a de facto rule change. Basically, be prepared to testify that there was no possible way that your enhancement could be for anything other than your job. I would certainly consult a tax lawyer before adding it my tax deductions, as it has the potential to end badly. As an accountant, I would never recommend to a client to take that risk. Good luck.
I'm just going to link this article. While it important to be as accurate as you can, I do believe that worrying so much about the IRS is silly. Yes the IRS is scary! But should you have a knowledgeable CPA everything will go smoothly. There is no reason to fuss over doing all those stressful forms or what is counted as what. I know it might be embarrassing but I cannot stress getting a CPA enough. I pay mine $200 at the end of the year and so far I have not paid in taxes. This year I will probably have to pay some in because of how much I made. But if you are really worried about that HUGE lump sum you think you are going to owe, WORK WITH A CPA! Get a payment plan setup so you can pay in monthly, quarterly, etc.
Thank you for this first of all. Secondly you mention in the intro writing off "donkey dong" and then later list sex toys as a no no on the write off's list. Was the donkey dong comment just meant as an example for how troublesome taxes can be as a came model of is there some distinction with writing off sex toys that I am missing?
Yes, actually there is a difference. A "donkey dong", being so large as to be impractical for any kind of pleasurable use (at least, for normal people's perceptions!), could be justified as a stage prop. The distinction would need to be decided in court - and I would love to be a fly on the wall in the judge's chambers for that. Regular sex toys you could theoretically use for fun would not be deductible. The same could be said of "costumes" if they are impractical for any kind of personal cosplay or Halloween use. This means basically only the most extremely gaudy Vegas costumes qualify as deductible. Anything like lingerie you could (not would or did) wear for fun does not count, nor do lubes and such.
I know you wrote about what to do for living with parents, but I am still a bit confused. I am 18 and my parents are paying for my college, and I live with them during breaks/summer. So if they are still declaring me a dependent, should I do taxes on top of the ones they already do for me? I am making around 50k this year.
If your parents are claiming you as a dependent, you need to provide them your income totals. Their tax person will also need your 1099's and a list of any non-1099 income (gift cards, etc). Once its sent off they theoretically don't need to see it or know about it again, but the accountant may provide them with thorough copies if that's his way. If your parents know about this and they're cool, then just simply do as above, without needing to beg the accountant to cover it up. Your other choice would be to ask them nicely not to claim you, but that would certainly effect your FAFSA student aid package at your age, and raise a lot of questions.
Thanks! Knew there had to be a distinction I wasn't seeing there!
Im crazy worried about my dad finding out about my camming once taxes come out. Are there any non sexual jobs that would be a good cover for making thousands of dollars? I know he is going to see the numbers, I just need a good cover
There's all kinds of gimmicky and not-so-gimmicky online marketing deals. I use mechanical turks as a cover with my in-laws, they seem to be buying it. They also think my chemistry student hubby is pulling a Walter White...if they only knew. Its too late probably to start a nanny or house-sitting cover story that would cover 1000's. Know that they will see the company name(s) on your 1099's when you turn them over to them or their accountant. Most are harmless looking until they google them. Not declaring your income is not an option, as the IRS has copies of your 1099's already and are looking to match that income with a tax filing...no match means nasty letters or an audit to your parents. Plan B is to tell them that you're filing your own taxes, but that drops you off their healthcare plan and may hurt your student aid package, and still raise questions. I don't know any way out of this that doesn't end badly except if your parents don't care about your camming.
Since we HAVE to file if we made over $400, do they still send out our tax info or do we have to request it? I haven't seen anything yet, and only know of companies sending out paperwork if it's over $600...
Great article! I've made a post about doing taxes as a camgirl, which includes more writeoffs you can have, and also a camgirl-friendly accountant recommendation:
Great informative article! Now I need to find a CPA who won't bat an eye at what I do.
thanks for the guide, I currently work for chatsexocam from the united states. I am a Spanish girl and I am new to this country. This guide seems very good because I know how to pay my taxes in this country. Anyway I had already consulted a lawyer expert in these issues and he clarified many doubts about the taxes that I have to pay as a webcam model