Interview with a tax preparer: Jenna Hope-Goldin from Math LLC
Red: So how would someone file? Can they just go to anybody? Do you know of anyone sex worker friendly, besides you?
Jenna: I don’t, I think it’s going to be a case by case basis, just because first of all, you can say, “I’m a performer” or “I’m an artist,” and have the income and expenses associated with that; there doesn’t have to be a talk specifically about what you’re doing. If there’s a reason you want to share what you’re doing and you want a specific person associated with your industry… I don’t know. I wouldn’t say that my clientele has a higher percentage of people working in the industry, however, I feel comfortable talking to people from most industries. I just want to talk to people who need help, and I feel like people are generally unrepresented in the sex industry, there’s a lot of taboos around it, a lot of misinformation about taxes, and really, it’s just work. Claiming your income, claiming your expenses, having proof of it. Even if someone doesn’t give you a form, you have it.
Red: What kind of things do you need to do taxes for? Like besides getting a mortgage, what else do you need a paper trail for?
Jenna: Loans; health insurance these days, they want tax returns; if you want different kinds of grants [like for school], you have to have a tax history.
Red: And people need to save their receipts, like make-up and hair, but lap dance receipts, should they save those? Some clubs give lap dance receipts even if they don’t give you a 1099.
Jenna: Yes. Anything to prove your income and expenses. But remember, you can’t write off a suit, for example [because it can be worn elsewhere]. You have to be able to argue that it’s for business purposes only.
Red: Are stage fees and tip outs tax deductible?
Jenna: If you get your income after stage fees and tips have been taken out, you don’t have to write them off. If you made 200, but before you got the $200 the club took $50 out and you only got $150, then you don’t have to claim that part. If you get the $200 and you physically give $50 to the bar, then you can claim that as an expense. Like, Square does that, as a merchant service. You don’t get the money until after they’ve taken their fees.
Red: What about transportation to the club? Can you write it off or is it about multiple clubs?
Jenna: It’s really about multiple clubs, like if you’re part time places, but if you’re full time at one and that’s the one you go to all the time, that’s considered a commute, and commutes are never deductible.
I would say at times, like if you take a cab home or something like that, if it’s too late to take the bus and you have to pay for a cab, I would say that’s arguable: it’s for safety and you’re stuck at work until a time when the buses aren’t running, I don’t see an auditor arguing with you about that--
Red: but cabs as such aren’t deductible?
Jenna: No, it’s a commute, like anyone has to get to and from work.
Red: What does it cost to file taxes for the first time? Can you do it for free online?
Jenna: First of all, you can do it for free if you do it by paper.
Red: Where do you get the paper forms?
Jenna: I believe the library, I want to say the post office but I’m not sure anymore, and I know the IRS office downtown has all the forms.
Red: Okay, and is it always a 1099? I heard sometime you can use a 1040.
Jenna: A 1099 is just the form you get when you’re a contractor, that’s what you get. Then you use the information on the 1099 for the 1040; the 1040 is the personal individual tax form. Part of the 1040 is called the Schedule C: the Schedule C is where your income and expenses show up for your business. So if I get a wage, I file a 1040. You don’t have a wage, you have a 1099, but you still file a 1040, you have to have additional forms to explain what happened. That’s called a Schedule C.
Red: Technically don’t contractors have to be paid by the people they have a contract with?
Jenna: So contractors get a 1099, you fill out a W9 to get that, where you fill out your social, your address, and your name; if they pay you more than $600 in a year, they’re technically supposed to give you a 1099. One of the things to argue about is whether you’re an employee or a contractor.
That’s a real tough one and a lot of industries are having real trouble with that. Tattoo artists, hair salons--
Red: Yoga studios, FedEx, and Uber!
Red: Oh really?
Jenna: They contract people out for really long periods of time, Nike makes a ton of money and they don’t have to pay payroll tax, and then the people are punished by having to pay their own, because you get taxed higher when you’re a contractor. And you don’t get any benefits.
Red: What’s the difference in tax rates between a contractor and an employee?
Jenna: Your income tax rate doesn’t change, that’s based on how much you earn. However, when you work and you get a paycheck from somebody and taxes are taken out, 7.5% of the total amount that you earn goes to Social Security and Medicare. Your employer pays that exact same amount for you, and matches it and sends it to Social Security and Medicare. When you work for yourself you get hit with both sides, so you get taxed at 15%. It’s 7.5% more, which is a lot of money to contractors, who lots of times are self-employed small business people.
Red: Lots of businesses are doing contracting lately, it’s cheap-
Jenna: Yeah, employers don’t have to pay payroll tax for you and you get hit with that yourself. To me that’s--a company that big, when people want to argue with small business folks about having to pay for staff and healthcare, you have to look at the people like WalMart, they’re the biggest employer but also they are the biggest user of welfare because all their staff has to be on welfare in order to make it because they don’t get paid enough. Can anything be more obvious than that? You look at their numbers and of course they’re making a lot, because they’re gutting their staff. And they’re relying on welfare [to pick up the slack] just like businesses that make a lot more money by paying people as contractors, than as employees.
Red: Yeah. That’s the point, right? Like strip clubs not only save money on payroll tax but they can also use dancer tip outs to staff to defray the burden of paying staff a living wage.
Jenna: What happens if you get hurt?
Red: You’re out of a job!
Jenna: Being a contractor, there’s really amazing things about it. But if you work at the same place all the time, you have a shift, you’re not--that’s not being a contractor. If you don’t have the choice about how you do it, and there are rules around what you do…
Mostly the thing to remember is that sex work is work. Like, dealing drugs is work to the IRS, working in a coffee shop is work to the IRS. Whether or not you get paper or not to prove that it happened--that’s how people end up getting thrown in jail, because of tax evasion because they aren’t paying their taxes. Any kind of work, whether or not you get a form for it, you’re responsible for claiming your income and expenses associated with it. It’s on you to prove it. Don’t wait for your employer to do it, you should do it yourself and know what you’re--whatever the 1099 says, is that even right? Did they overclaim what they paid you, did they underclaim it?
Red: Yeah, so how do you find that out? If you don’t have any records because it gets busy in the club, and they handle all the money so you don’t know how much you get--
Jenna: You’re technically responsible for whatever you take home.
Red: Okay. What are the odds of getting audited?
Jenna: I have no idea.
Red: Do they tend to go after bigger businesses?
Jenna: They don’t have as much money to go after little people, but they do it randomly. My business partner had to go to an audit yesterday, walked out fine because the person had records. I haven’t been to one yet, in four years. My business partner’s had four, in seven years, out of 400 clients. It’s not that common.
But the whole thing is having records, knowing your story. It doesn’t matter if you have a ton of expenses and are like “Can I claim these?” If they’re expenses they’re expenses. If you get audited you just go and prove it to them. And sometimes they pay you, because you overlooked an expense.
Red: Something to look forward to!
Jenna: The most important thing is just not to wait for someone else to tell you, you should know it yourself: if someone gives you a 1099, you should already know what’s on it. You’re responsible. A W-2 is different because there’s a lot more information on it.