This information is from our chat with Jeannie “The Pole Digger” during her webinar November…
This resource is a general post focused on US-based pole dance instructors, performers or SWer/strippers and those with LLC-structured pole businesses.
What to Expect
Tax law changes and updates every year, sometimes those updates are small and sometimes they dramatic and wide-ranging. Make sure to stay up-to-date on any tax laws that change. Reference the US government website for information and also websites like Turbo Tax tend to have good common-language explanations of complex tax issues.
Legally, anyone who paid you as an employee or paid you more than $600 as a contract employee over the previous year (also known as an independent contractor) must report that information to the IRS and must also send you a copy of that reporting documentation by January 31 of the following year. If you were paid for work in 2019, you would receive the tax information for 2019 in calendar year 2020.
Depending on your situation, you might receive a W2 from your regular studio and your day job AND a 1099 from teaching at a convention, event, or other employment such as a performance.
- Income reported on a W2: if you are full-time or part-time employee of a studio you will receive this outlining your income and taxes paid out of your income at the federal and state level.
- Income reported on a 1099: if you were a contractor and employed as an independent contractor at a studio, as a traveling workshop leader, or at convention/event you will receive this type of document specifying your income paid. If you are legally set up as a corporation (rather than a LLC) then you may not be sent a 1099. If you were paid less than $600 then you may not be sent a 1099. Taxes have not been taken out of income reported on a 1099 which means you are responsible for paying taxes on it.
- Other income: If you generated any other income such as from performing, selling merchandise, etc. through cash, PayPal, Venmo, CashApp or other that is less than $600 at a time/from one source then you should report this income on your taxes. This is particularly important for SWers/strippers who receive cash, personal checks or even gift cards as payment.
If you own your own LLC-structured, pole-based business, make sure you set up a separate bank account as soon as possible. This makes it so much easier to track EVERY transaction even small ones. If you own your own business and you legally have an LLC, then you should report every bit of income received even if it’s in small chunks on your personal taxes as an LLC is a flow-through entity for income and expenses.
Audit Concerns: If you get audited, the auditor may ask to clarify ANY money (even less than $600 chunks) added to your checking account (personal or business) that is not accounted for in your “regular” pay check or in any moneys already reported through a clear documentation channel such as on a 1099. They will ask for things like your PayPal/Venmo/CashApp statements to cross reference with you deposits and if they determine that you this is unreported income (not a $100 git from your grandma for your birthday) then you may have to pay retroactive taxes on that money which also may include fees and interest.
There are lots and lots of deductions that you might qualify for on your personal taxes including, but not limited to, mortgage interest deductions, student loan deductions, charitable deductions, and more. For pole teachers and pole business owners, itemizing your deductions may sometimes be the best course of action. If you have an LLC, then you should definitely track and list all your legitimate business expenses. It takes time but it’s almost always worth it (new tax law has changed the standardized deduction amount and it may not be better to take that deduction depending on your individual taxes) and may help you save money. Also, if you were paid as a contractor this is typically the best course. If you were an employee, you can no longer deduct expenses for your W2 employment that you were not reimbursed for, which means you can no longer deduct training costs you paid for, however, a studio owner can deduct those costs through their business as a training cost for their employees.
Always save your receipts! Especially relevant receipts from large retailers that have lots of stuff like Amazon, Target, or Walmart that only show up on your credit card statement as “Amazon.” It is harder to explain to an auditor that it wasn’t groceries you were trying to claim as legitimate business expenses without a detailed receipt.
If you have an LLC, then you MUST keep track of all expenses related to your business and you must report these expenses on your taxes in addition to your business-related income. Try using a tool like Quickbooks.com to help you track all relevant expenses such as marketing, software, professional services, contract employees and more. All income and expenses for your LLC business flow through to your personal taxes so it is very important that you have tracked this information carefully to avoid paying more taxes than you need to.
Things you can generally deduct, if you are a contractor NOT an employee:
Uniforms* Be very careful with your interpretation of this one. Generally, a uniform should be something you wouldn’t wear outside of your job as a pole dance instructor, performer or SWer/stripper. You could include:
- Shoes you perform in/teach in/work in
- Fitness/active/pole wear you don’t wear outside of the studio
- Costumes/wigs/makeup for competitions, paying gigs or your club attire.
Audit Concerns: Uniforms and clothing may not survive audit scrutiny. Use at your own risk or under the advice of a tax professional.
Health Care/Medical related to your job as a pole dance instructor, performer or SWer/stripper might include the following costs:
- Sports Massage
- Injury related services or equipment.
Any Training Aids/Equipment that are related to your business/job as a pole dance instructor, performer or SWer/stripper:
- Things you bought specifically for use in class/at the club
- Tools for stretching
- Tools for myofascial release
- Equipment (poles, lyra, mats, etc.)
- Licensing (as applicable).
Education related to being a pole dance instructor, performer or SWer/stripper:
- Workshops with pole stars or other
- Personal Trainer sessions
- Contortion coach sessions
- Nutrition counseling
- Gym memberships
- Books related to training/fitness/dance/business/sales/marketing education
- Pole tutorial memberships
- App purchases for relevant training apps (like StetchIt! for instance)
- Fitness (or other relevant) certifications/memberships — like your membership to the IPIA.
- All travel associated with education (such as flying to PoleCon)
- All travel associated with performance gigs (such as parking garage fees)
- All travel associated with getting to and from work as an independent contractor including mileage deduction and/or ride share costs.
- All travel associated with competitions (only if you are being paid as a pole dance instructor, performer or SWer/stripper – not for people who are competitors but do not make money through pole, you can also include the competition fees but do NOT include the ticket cost for your friend who came to cheer you on)
- All travel associated with business development for your business (if applicable).
If you run your business from your home, you may qualify for a home office deduction. You may also qualify to include other expenses such as hardware or software expenses related to running your business (such as buying Turbo Tax, Quickbooks or Microsoft Office).
Likely Tax Scenario
So what does a likely scenario look like for your taxes? Here’s a real-life example from a pole instructor and pole business owner using TurboTax and not an accountant:
- W2 from my day job
- W2 from each of the two studios as a part-time employee
- 1099 from a private marketing clients who paid more than $600 in a year
- “Off the books” individual pole instruction income teaching privates from home studio
- All pole business-related income and expenses
- My husband’s W2 from his day job.
- Only the “off the books” related expenses such as paying for nutrition counseling, taking workshops and buying contortion online training NOT for anything applied to studio teaching or any where you receive a W2 from
- All pole business related deductions
- Home/property deductions
- Student loan deductions
- Charitable deductions.
Is it a lot? It sure is!
Audit Concerns: Being audited can be a scary experience. If you are not an organized person, you will be asked to provide a lot of detail that may be hard to find. If you keep your business expenses organized to start (such as using one credit card or a business account for all your expenses), it will be easier to go through an audit. An audit will ask lots of probing questions about your income and expenses. If they discover that you miss or under reported income or over reported allowable expenses, you may be asked to pay the difference in your taxes plus a fee and interest. The IRS has payments plans and will work with you to complete your tax payments. Some tax preparation software and services offer Audit Defense products. This doesn’t protect you from an audit but if you are audited, they will become the middle man between you and the auditor and work as your advocate to decrease your tax burden as much as possible.
Unfortunately, people who are independent contractors face more scrutiny than those that only receive and report W2 income. This doesn’t mean it’s impossible to do your taxes and this doesn’t mean in the unlikely event you are audited (auditing is at an all time low! ) that your life is over. Use these guidelines to make filing your taxes a little easier. Reach out to an account or tax professional or use a tool to help. There is free help available to those that qualify.