Tax season is upon us and it applies to porn too!
It’s tax season and the filing deadline for this year is April 18th, 2022. The deadline to mail 1099 forms to taxpayers is January 31st, which means as we are wrapping up the first week of February it is time to get started organizing paperwork and receipts to begin filing.
To-do list for Adult Creators with an Accountant
While sex workers tend to jokingly call themselves “accountants,” most of the time an actual accountant will help you get a better grip on your taxes, deductions, and write-offs. What should you do if you have an accountant or intend to hire one?
- Compile an easy list of your write-offs with receipts as proof
- Create digital scans of your 1099 forms if you will e-mailing, or gather physical copies into an organized folder if meeting in person
- Create a document with detailed information and earning amounts for transactions you don’t have 1099 forms for (like payment apps and cryptocurrency)
- Make sure to communicate to your accountant if you used part of your home for your adult work, because a percentage of your rent or mortgage can be used as a write-off
- If you did any major cosmetic surgery during the last tax year, discuss the potential of writing off a portion on your taxes
- Calculate the cost of bills that are heavily used for adult work like phone bills, internet, electricity, etc. discuss what percentage of these should be written off on your taxes with your accountant
- If you traveled for work, discuss it with your accountant and account things like hotels and food for tax write-offs
- If you haven’t been making your estimated payments talk to your accountant about estimated payments, dates they should be made, and where/how to pay
- If you owe taxes, pay them by April 18th, if you can not make the payment talk to your accountant about an extension or applying for payment plans
- If you received COVID stimulus checks, make sure to let your accountant know
To-do list for Adult Creators without an Accountant
The first thing I’d love to put on your list is to hire an accountant, especially if you’re hoping to pay as little as possible in taxes. Unfortunately, accountants do tend to be expensive, especially for a specialized high risk industry like adult. If you’ll be filing yourself whether online or mail-in, here are some to-do’s for you!
- Add up the total of write-offs that are not percentage based (i.e. sex toys, webcam specifically for work, laptop specifically for work, prop for a custom video, etc.) by using receipts from these items, ONLY write something off if you have a receipt for it. Keep these receipts safe in case of audits!
- Add up the total of earnings from things you didn’t receive a 1099 for (like cryptocurrency)
- Decide if you will be writing off a portion of your home as office space for work, calculate the percentage of your mortgage or rent to be written off by the percentage of your home taken up by the office space (for example: a 250 sq ft room in a 1000 sq ft home would be 25%, if you pay $1000 a month for your home then you would write off $250 per month / $3000 for the year on your taxes.) Only do this if you have evidence the room is solely used as a home office and can verify it via walkthrough
- Calculate the cost of bills that are heavily used for adult work like phone bills, internet, electricity and compare it to work hours to come up with a fair percentage to write off on your taxes that could be verified by work hours / usage
- Calculate the total of any COVID stimulus checks received
- Look up standard deduction versus itemized deductions, if your write offs are less than the standard deduction then go with standard deduction for filing
- If you have children, look into the child tax credit which could give you a deduction of up to $3600
- If you’re in college, you can claim 20% of the first $10,000 spent on tuition and school fees with the lifetime learning credit
- Check out this list of other popular deductions for 2022
- Calculate how much you’ve already paid (if you were making estimated payments)
- Consider getting a web based tool / software that will walk you through the filing process
How to Prepare for Next Year (It starts now!)
The most effective way to prepare for tax season is to start at the beginning of the year, something simple like a spreadsheet that tracks payouts and expenses can make your life a lot easier once filing season rolls around, plus it can help you get a more accurate sense of your income throughout the year and earnings trends. A dedicated location for receipts and important paperwork can also be a huge time saver, whether it’s a folder you keep in a specific place or a filing cabinet or scanning important documents and keeping them in a cloud! If you want to make tax season as easy as possible, it’s also important to file your estimated payments as an independent contractor. The estimated payment dates for 2022 are:
- April 18th
- June 15th
- September 15th
- January 17th
Your estimated payments may not always be accurate, but to get a good idea of what you should be making for your estimated payments look up the income tax percentage for your state and add this percentage to the federal income tax percentage for your earnings bracket.