Ask Mia: Vol. 1

Updated: Oct 24

This article appeared in the Spring 2020 edition of Petit Mort Magazine.

Mia is an International Companion based in NYC and SF. She’s also a CPA who previously worked in finance for over a decade. She’s always been passionate about promoting financial literacy, especially among women, LGBTQIA+ folks and marginalized communities.


QUESTION

Do I need to pay for e-filing?


ANSWER

Turbotax and other software have free versions if you make below a certain income. These vary and I’m not exceedingly familiar with the income limits and other requirements, but I would encourage you to research these options. As a point of reference, Turbotax’s income limit for free online filing is $39,000.


Q

Do I need to file a tax return?


A

The standard deduction for single individuals in 2021 is $12,400, $25,000 for married couples filing jointly, and $18,800 for Head of Household . If you made more: you need to pay taxes. Though I would encourage you to file even if you made less, as you may qualify for certain subsidies via tax returns. Also, filing establishes an income record, which you’ll likely need for other purposes in life.


Q

What are estimated taxes and do I need to pay them?


A

When you work a W-2 job, your taxes are withheld from each paycheck. Furthermore, your employer pays a portion of your social security and medicare taxes, which you don’t see on your pay stub. As a self-employed worker, you are responsible for making these payments quarterly. If you expect to earn in excess of the aforementioned standard deductions, you will need to estimate your tax liability and pay accordingly. All filers must make payments to the IRS, which you can do online here (https://www.irs.gov/payments). You may have to make payments to your state tax agency if you live in a state with income tax. A quick Google search of “[insert state] estimated tax payment” should pull up the relevant site.


Q

Do I have to file jointly if I’m married?


A

No, you can file when you’re married as filing separately. However, be aware that you will only qualify for some low income credits, such as the Earned Income Tax Credit, if you file jointly as a married filer.


Q

What do I do if a cam site didn’t issue a Form-1099 or I didn’t earn enough to receive one?


A

Reference the answer above with respect to whether you need to file taxes with respect to the amount earned. If you did not receive a 1099, you can declare your earnings as self employed cash income.


Q

What about passive income?


A

Your brokerage service (e.g. Fidelity, Vanguard, Robinhood) will issue various applicable 1099 forms (e.g. 1099-DIV, 1099-Int, 1099-B). These are typically issued in February. You can either enter the info manually, or some tax filing software such as Turbotax will automatically import this information if you enter your credentials for your brokerage service.


Q

Do I need to declare gifts under $15,000?


A

Gifts over $15,000 are taxable to the giver. But only if they are truly gifts. For example, if a client gives you $1,000 for Valentine’s Day, this is a gift. However, an envelope containing $1,000 for your time is payment, even if you and the client call it a gift. If you are a find-dom and all your tributes are called “gifts,” they are still payment for services, and therefore taxable. Sex work is work, and the IRS agrees… go figure.


Q

Can I write off expenses paid with an Amazon gift card from a client?


A

Yes, and you’re supposed to declare the gift card as income as well. You only claim deductions against declared income.


Q

Are deposits taxable?


A

Yes, they are included in income, regardless of their form of receipt (e.g. gift cards).


Q

What happens if I don’t declare or under declare my cash income?


A

I can’t answer this, as I’m not law enforcement or an IRS auditor. I can tell you that the IRS is getting more and more effective at detecting undeclared cash income. For example, if you happen to get audited and you declared $10,000 in income, but you live in an apartment with an income requirement of $100,000/ year and drive a Mercedes… you’re going to have to explain that discrepancy. Especially because you likely signed a declaration to Mercedes and your leasing company that you earn more than $10,000/ year.

I will also add that if you disclose to a CPA that you have cash income, you are obligated to include it on your tax return. We will not report you to law enforcement for committing tax fraud, but we are legally not allowed to aid you in committing tax fraud. This idea is similar to the ethics standards and laws that prevent lawyers from putting you on the witness stand if you disclose your intention to lie in testimony, because they are not permitted to facilitate perjury.


Q & A BY MIA LEE

PHOTO BY PENELOPE DARIO