Pypr Pointers for American Customers

As an independent contractor, there are three types of taxes you will owe:

• Self-Employment Tax
• Federal Income Tax
• State Income Tax

Self-Employment Tax: As an independent contractor, you will be taxed 15.3% of your net income (income after business expenses).

Federal Income Tax: Is the tax taken by the Internal Revenue Service (IRS) from taxpayers’ annual earnings. Everyone who earns income above the standard deduction in the United-States is required to pay federal income tax.

The amount you owe depends on your total income during the year, which is calculated after business expenses for independent contractors. 

*The more you earn, the higher percentage of federal income tax is taken from your earnings*

State Income Tax: Is the amount of tax taken from your earnings by the state government where you live and/or work. This is separate from the IRS. and the amount you owe will depend entirely upon the tax policies in the state where you live/work.

If your state has income tax, you will be required to file a state tax return every year in addition to your federal tax return. If you use an online service to file your taxes, you can almost always file your state tax return at the same time. 

If you owe state income tax, it is important to note that this needs to be paid directly to your state’s government, separately from what you pay to the IRS. 

What Are Write-Offs?

Write-offs are qualified business expenses that you subtract from your gross (total) income to get your net (actual earned) income. These business expenses are things that are necessary to keep your business running. 

Employees are not eligible for these write-offs because they are not the business owners, and they are not responsible for keeping the business up and running.

 *It is important to keep your receipts for all business purchases because if you are audited, the IRS will ask to see proof of purchases.*

Who Is Expected to Pay Taxes Quarterly? 

Anyone who is expected to owe $1,000 or more in taxes, and whose tax withholdings cover less than 90% of their tax liability, needs to pay quarterly taxes. Most independent contractors fall into this category because no taxes are withheld from self-employment income. If you have another job where you are paid as an employee, you may not be required to pay quarterly. It depends on how much you earn in self-employment income, and how much is withheld from your paychecks. 

How Much Do I Need to Pay Quarterly?

 Each quarter, you will need to pay 1/4 of your total taxes owed for the year. However, since you won’t know exactly how much you’ve made until the end of the year, these quarterly payments will be estimates of what you owe. There are two ways to estimate the taxes you will owe for the upcoming year in order to make quarterly payments. The first way is to use what you owed in the previous year. I don’t recommend this method, because as an independent contractor/business owner, your income can fluctuate greatly. However, this can be a good starting place if your income is fairly steady from year to year. 

The second way, and the way that I recommend, is to make payments based on what you have earned so far for that year. The quarters for quarterly estimated payments are broken down like this: 

Quarter One: January 1st-March 31st

Quarter Two: April 1st-May 31st 

Quarter Three: June 1st-August 31st 

Quarter Four: September 1st-December 31st 

Other Income:

You may have income other than self-employment income to report on your tax return. Here are some common examples of other income you may have, and what tax form you’ll need to report them!

Unemployment: 1099-G. (If they didn’t mail this to you, you can usually access it from your online portal, where you filed weekly claims.)

Wages from a job: W-2. This should have been mailed to you, and shows all of the income you earned in the tax year that you are filing. If you changed addresses and didn’t receive a W-2 from your employer or former employer, you can request that they send this to you again. 

Interest income (usually from a savings account): 1099-INT. Your bank will have this on file, and sometimes you can log into your bank account online and authorise the tax software to access this form directly. 

You need 1099’s from all income sources (ie. TikTok, Youtube, OnlyFans, Cam Sites, unemployment etc.) 

Note: if you made less than $400 from a single source, you do not have to claim that income, and they will not send you a 1099.

*When a business sends you a 1099, they are also sending that form to the IRS therefore all income must be reported on your taxes.*

Tips to make tax season go smoother:

• Keep track of your business expenses in a spreadsheet so you don’t have to scramble through your bank statements come tax season.
• Record all of your income from third party payment apps (ie. Cashapp, Venmo, Apple Pay, Paypal, Zelle). Transactions from family members or friends to help with bills are not taxable so therefore don’t need to be counted.

Specific write-offs for online content creators:

Cameras, Recording and Lighting Equipment: These are considered supplies for your business, and you can write off the full cost of those supplies as long as they are only used for work. 

Home Office Deduction: If you record content at home, and you have a space in your home that is dedicated solely to filming content or other work tasks, you can write that off! We will get into the details of calculating that deduction in a later chapter. 

Internet: You can write off a portion of your Internet expenses, depending on the amount of time spent using the Internet for work and for personal use. 

Toys Used on Camera (if you are an adult content creator): Toys used for filming content or livestreaming are considered business supplies, and as long as you only use them for work, you can write them off. 

You can’t write off the following:

Delivery Food or Food Purchased at the Club: Meals cannot be written off, unless you are eating that food on camera. 

Lingerie/Outfits for Personal Use: If you wear your work lingerie or outfits outside of work, you can no longer write those items off. 

Salon Treatments Such as Tanning, Hair Treatments, Nails, etc: The IRS only allows you to write off things that you remove when you are not at work. Because of that, beauty treatments for parts of your body that are attached to you cannot be written off.

Expenses You Don’t Pay Yourself: You can only write off expenses that you personally pay for. If a client buys you an outfit, and you wear it on camera, you still can’t write that off.

Unfortunately, most strip clubs don’t give dancers a 1099 at the end of the year, so it’s essential that you keep a record of all cash income to report that year. Keep track of all of your income!

Tips to make tax season go smoother:

• Keep track of your business expenses in a spreadsheet so you don’t have to scramble through your bank statements come tax season.
• Record all of your income from third party payment apps (ie. Cashapp, Venmo, Apple Pay, Paypal, Zelle). Transactions from family members or friends to help with bills are not taxable so therefore don’t need to be counted. Transactions received from customers are taxable.

Specific write-offs for dancers:

House Fees, Dance Fees, and Tip Outs: Because these are mandatory expenses required for you to work at the club and maintain a good working relationship with the staff, you can deduct all of these fees as a business expense. 

Transportation: You can write off your expenses associated with driving to the club and other job sites, and the cost of Uber and Lyft rides you take to work, IF you list your “business address” as your home, and NOT the club you work at/your outcall location, etc. Travel Dancing Expenses: If you travel to work, you can write off your flight, hotel, transportation costs, and 50% of your meals while travelling. 

Dancer/Entertainer Licenses: If your area requires a license for you to work, you can write off any associated fees for obtaining that license. 

You can’t write off the following:

Delivery Food or Food Purchased at the Club: Meals cannot be written off.

Alcohol Consumed on Shift: If you choose to drink at work, and you buy your own drinks, you can’t write that off as a business expense. 

Lingerie/Outfits for Personal Use: If you wear your work lingerie or outfits outside of work, you can no longer write those items off. 

Salon Treatments Such as Tanning, Hair Treatments, Nails, etc: The IRS only allows you to write off things that you remove when you are not at work. Because of that, beauty treatments for parts of your body that are attached to you cannot be written off.

Expenses You Don’t Pay Yourself: You can only write off expenses that you personally pay for. If a client buys you an outfit, and you wear it to the club, you cannot write that off.

*Pypr’s Pointers are just that, and should not be taken as financial advice. Consult a professional accountant (we can connect you to one!) for information pertaining to your exact situation.