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  1. #1
    ddheather is offline Junior Member
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    Exclamation Paying taxes as a phone sex operator?

    What is the name of your state (only U.S. law)? Arizona

    I am a part time phone sex operator working through Niteflirt. Here is Niteflirt's tax policy:

    "As of 2011, the Internal Revenue Service (IRS) requires all businesses that process payments to file a Form 1099-K for anyone who is eligible to work in the United States and receives $20,000.00 or more per year in payments (combined across all accounts).

    If you are a Flirt who gets paid less than $20,000.00 from NiteFlirt in a calendar year, you will not receive a Form 1099-K and we will not report your earnings to the IRS for that tax year.

    If you are a Flirt who gets paid $20,000.00 or more from NiteFlirt in a calendar year, we will send you a Form 1099-K and we'll report your earnings to the IRS. Your Form 1099-K will include a monthly summary of all payments for the tax year and should be received at your payment address by January 31 of the following year. For example, your Form 1099-K for the 2011 tax year should be received by January 31, 2012.

    In order to prepare your form, we need to verify that your Social Security Number (SSN) or Employer Identification Number (EIN) matches your "Payable to" name. This verification process can take up to 5 business days. Edit your Payee Information if you need to make changes or add information. If your Payee Information cannot be verified before you are paid $19,000.00 within the tax year, your NiteFlirt payments may be suspended. Your earnings will continue to accumulate and will remain safe in your NiteFlirt balance until your Payee Information can be verified.

    Although we are always willing to help you with any questions you may have, we are unable to provide tax-related advice or filing information. We strongly suggest consulting a tax advisor if you have questions about how this regulation may affect you."

    I have made less than 20k through niteflirt in 2011, so they will not be sending me a 1099-k. I do have records of all money received from niteflirt. How would I report them to the IRS legally and properly? Thank you so much!
  2. #2
    xylene is offline Senior Member
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    Quote Originally Posted by ddheather View Post
    How would I report them to the IRS legally and properly? Thank you so much!
    the best approach is to hire an accountant to help you file.

    Barring that you will need to file a 1040 and report all your self employment income.

    Did you make estimated tax payments?
  3. #3
    FlyingRon is offline Senior Member
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    Hopefully you've been making estimated tax payments.
    You report the income on your 1040 Schedule C and SE.
  4. #4
    LdiJ is offline Senior Member
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    Quote Originally Posted by ddheather View Post
    What is the name of your state (only U.S. law)? Arizona

    I am a part time phone sex operator working through Niteflirt. Here is Niteflirt's tax policy:

    "As of 2011, the Internal Revenue Service (IRS) requires all businesses that process payments to file a Form 1099-K for anyone who is eligible to work in the United States and receives $20,000.00 or more per year in payments (combined across all accounts).

    If you are a Flirt who gets paid less than $20,000.00 from NiteFlirt in a calendar year, you will not receive a Form 1099-K and we will not report your earnings to the IRS for that tax year.

    If you are a Flirt who gets paid $20,000.00 or more from NiteFlirt in a calendar year, we will send you a Form 1099-K and we'll report your earnings to the IRS. Your Form 1099-K will include a monthly summary of all payments for the tax year and should be received at your payment address by January 31 of the following year. For example, your Form 1099-K for the 2011 tax year should be received by January 31, 2012.

    In order to prepare your form, we need to verify that your Social Security Number (SSN) or Employer Identification Number (EIN) matches your "Payable to" name. This verification process can take up to 5 business days. Edit your Payee Information if you need to make changes or add information. If your Payee Information cannot be verified before you are paid $19,000.00 within the tax year, your NiteFlirt payments may be suspended. Your earnings will continue to accumulate and will remain safe in your NiteFlirt balance until your Payee Information can be verified.

    Although we are always willing to help you with any questions you may have, we are unable to provide tax-related advice or filing information. We strongly suggest consulting a tax advisor if you have questions about how this regulation may affect you."

    I have made less than 20k through niteflirt in 2011, so they will not be sending me a 1099-k. I do have records of all money received from niteflirt. How would I report them to the IRS legally and properly? Thank you so much!
    Apparently they are treating you as self employed, therefore you would include Schedule C with your tax return to report the self employment income.

    However, what they are doing appears to be highly improper. The new form 1099-K is for credit card companies and they are to use it to report credit card payments that their customers receive. I doubt that niteflirt is a credit card company. Either you are their employee, and they should be doing proper withholding and giving you a W2, or you are a subcontractor and they should be providing you a 1099-MISC if they pay you 600.00 or more annually.
  5. #5
    FlyingRon is offline Senior Member
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    Quote Originally Posted by LdiJ View Post
    Apparently they are treating you as self employed, therefore you would include Schedule C with your tax return to report the self employment income.
    Netflirt is claiming they are the "middleman" arranging direct payment from the customers calling and the girls talking on the phone. Yeah, it seems to be a reach for me as well rather than being an employer or hiring the girls as contractors.
  6. #6
    ddheather is offline Junior Member
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    Thank you all for the replies.

    To be perfectly honest I'm not sure of the legality of how niteflirt operators, but after researching how other phone sex websites function I'd rather pay the taxes myself.

    I realize that I will have to file as self employed or as a independent contractor. I haven't been paying taxes quarterly and realize that may require other fees.

    I have a few other questions.. What things may I write off that have to do with this income? Home phone line? Internet service? Laptop Webcam? etc? Is there a way to write off a certain percentage that I use for the business because most things I use personally as well?

    Also, is there any place on tax forms for the fees that niteflit charge (I'm not entirely sure what the equivalent of these fees would be for other types of business but I assume there must be equivalents)? I have browsed the small business turbotax forms, but would like to understand them better.

    Thanks again.
  7. #7
    FlyingRon is offline Senior Member
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    You can certainly deduct the things necessary to generate this income.
    Start here:

    [url=http://www.irs.gov/publications/p587/index.html]Publication 587 (2010), Business Use of Your Home[/url] for things like the utilities (phone line) you share with the residence.

    Your computer, webcam, etc. can be expensed in the year you bought them, so if you bought them in 2011 they can come off this years taxes.
  8. #8
    LdiJ is offline Senior Member
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    Quote Originally Posted by ddheather View Post
    Thank you all for the replies.

    To be perfectly honest I'm not sure of the legality of how niteflirt operators, but after researching how other phone sex websites function I'd rather pay the taxes myself.

    I realize that I will have to file as self employed or as a independent contractor. I haven't been paying taxes quarterly and realize that may require other fees.

    I have a few other questions.. What things may I write off that have to do with this income? Home phone line? Internet service? Laptop Webcam? etc? Is there a way to write off a certain percentage that I use for the business because most things I use personally as well?

    Also, is there any place on tax forms for the fees that niteflit charge (I'm not entirely sure what the equivalent of these fees would be for other types of business but I assume there must be equivalents)? I have browsed the small business turbotax forms, but would like to understand them better.

    Thanks again.
    It all depends on how niteflirt handles the fees. I assume they are deducting them from the payment before forwarding the payment to you. If they report the full payment on the 1099-K, then you would deduct the fees from your taxes. If they report the payment after deducting their fees, then you wouldn't deduct anything.
  9. #9
    FlyingRon is offline Senior Member
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    You might want to take every scrap of paper (receipt, agreement from net flirt, 1099, your records, etc..) to a tax preparer this year. You can deduct that fee off the top as well. Once you have the general layout of things, you may be able to deal with it on your own in successive years.

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