Ask Mia: Vol. 3
Updated: Oct 24, 2022
This article appeared in the Fall 2021 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
Considering legality, do you recommend writing off my ad expenses (for example, paying for an ad on Tryst), if my business is a “consulting” LLC? Like if I was audited and needed to show proof of my ad expense, would my receipt from Tryst bring up red flags?
ANSWER
Your expenses must fit the nature of your declared profession. This is why I recommend most escorts use modeling/independent artist as their profession. The deductions for modeling (advertising, photography, etc) most similarly reflect those of escorting. The IRS doesn’t care if you literally write ‘prostitute’ as your profession.
Generally speaking, all expenses incurred for the sole purpose of earning income that would not have been incurred if not for your job are deductible. For example, you would not have purchased condoms, advertisements or photography if not for being an escort. Thus, these are all deductible expenses.
However, you cannot deduct cosmetic surgery as you arguably derive non-work-related benefits from such enhancements. Similarly, if you’re a cam model, you can deduct your Cyc wall and lighting, but you cannot deduct your bed because you’d need a bed to sleep in regardless of whether you work as a cam model or lawyer.
Q
May I deduct a portion of my apartment/incall as office space, or is that pushing it?
A
Yes, but not as much as you might think. To the extent you have a desk and home office space, or a Cyc wall and lighting staging area if you’re a cam model, these spaces are deductible. This is because this portion of space is used exclusively for work and the furnishings and equipment in these spaces would not be placed there if not for your work.
You cannot deduct your couch, bed, dining room, or kitchen, even if you work in these areas, because you’d need/have these spaces and furnishings regardless of your profession.
A general rule of thumb with respect to deductions is that you cannot deduct anything you would need and/ or receive benefits from outside of work.
Q
I’ve recently taken over retirement management for a disabled relative. What investment strategy would you recommend for an elderly family member’s retirement assets currently held with a brokerage firm such as Vanguard or Fidelity?
A
If you’re looking for optimal returns over the long term for the lowest investment management cost and expenses, I’d recommend Vanguard index funds. They’re passively managed and track different indexes and sectors.
If your relative needs consistent returns for living expenses, I’d recommend certificates of deposit, investment grade (AAA rated) corporate bonds, or treasury bonds. Debt investments are safer and less volatile than similar risk equities and typically produce interest/coupon payments on a predictable basis.
Q
Is it a good idea to form an LLC in a different state than where I live for privacy and to accept payments from clients?
A
With respect to the LLC, make sure whichever state you incorporate in does not require disclosure of beneficial owners. For example, New York requires this, but Delaware does not. Use a registered agent, even if the state does not require disclosure of beneficial owners. You want to take this precaution because a knowledgeable and motivated stalker or other nefarious party could theoretically request beneficial ownership information from the Secretary of State either online or via paper records and obtain your legal name, if you register your corporate entity in a state that requires this disclosure.
With respect to accepting electronic payments from clients via your corporate entity, this is a matter of accepting an administrative burden and any consequent transaction fees for your clients’ convenience. Personally, I only accept deposits electronically, as the amounts tend to be small. But for booking fees, I only accept cash or Bitcoin. My reasoning is that my refusal to provide more convenient payment options is in line with industry standard, and therefore it makes no business sensefor me to absorb additional costs and administrative burdens to provide a more convenient payment option for clients. That being said, your mileage may vary.
Q
Currently, most clients have been gifting me via payment apps (e.g., Cashapp or Venmo), and I don’t want to tempt an audit of unexplained deposits. Plus, I understand they’re not SW-friendly platforms. So, would it be overkill to get the card reader offered through QuickBooks/Square? I mean, if a farmer’s market can do it why can’t I?
A
In short, because the farmer’s market can prove they’re not subject to FOSTA/ SESTA and a host of other financial regulation that discourage banks from banking sex workers. I would strongly advise against accepting credit cards, as you’re afforded little to no protections against chargebacks. Furthermore, I’ve heard a disheartening number of stories where sex workers have had a client claim a legitimate charge was fraudulent after service was provided. At best, Stripe will side with your client and refund his payment. At worst, Stripe will refund the payment, charge you a fee and then shut down your account.
Q & A BY MIA LEE
PHOTO BY PENELOPE DARIO