We’ve all heard other dancers talk about the golden days, when strippers used to make hundreds of dollars a night just for dancing on a stage, and we all know that that’s no longer the reality. In this economy, many of us are working long hours and pulling double shifts just to get by.
While dancing is no longer what it used to be, making fast cash under the table is still tricky when it comes to money management and paying taxes. While this may feel daunting, be patient with yourself as a learn the best way to budget and file taxes.
Business and Marketing tips
It is hard to save money as a dancer because you never know how much money you’re going to make in a night, never mind in a month. You might make $300 one night and only $30 the next night. You might even lose money to the club some nights. When you have a great night, it can be tempting to splurge and spend it on stuff you don’t really need. But if the club is dead next week, you might find yourself struggling to buy groceries. And what if you injure yourself, or have a baby, or you just get burned out and have to take a break from dancing for a while?
Here are a couple of savings plans to try:
The Survival Savings Plan If the money you make dancing barely covers your rent, bills, and food, you won’t be able to save a lot, but putting away a few dollars every shift can really add up and help you feel less stressed about money.
Try saving 10% of whatever you make each night. If you make $80, save $8. If you make $50, save $5. It may not seem like much, but you will appreciate it if the club is dead next week, or if you have to miss work for whatever reason.
The Long-term Savings Plan If you’re making more than enough to cover your basic necessities–at least on some nights–you should be saving more. Here’s a savings plan that can work really well for dancers. Since dancers never know what our weekly or monthly income will be, we can break our nightly income down into percentages.
- 55% Necessities
- 10% Financial Freedom Fund – For savings, investments (keep this amount untouched!)
- 10% Long-term saving for spending – We all need to set this portion aside so we don’t splurge. So, if I want a big ticket item, I have to wait until my play envelope or account has enough in it before I buy expensive toys, travel, etc.
- 10% Education – Self-improvement, skills, conferences
- 10% Play – We can’t forget to have fun, have nights out, try new restaurants, etc.
- 5% Gifts, charity, etc.
If you manage to save up a good sum of money, you should meet with a dancer-friendly adviser to discuss options for investing your money for long-term growth. Saving money can help you avoid that end-of-the-month scramble to pay rent. It may even help you save money for long-term goals like vacations or a college fund for your kids.
Spend Less Money
Do you find that, no matter how many nights you work, you don’t have anything leftover at the end of the week?
Instead of working extra hours, try to cut down on your spending:
- Buy groceries and make food at home, instead of eating out or ordering food at the club. Spending $5 or $10 a night on dinner might not seem like a lot at the time, but it adds up.
- If you take a cab home from work at the end of the night, share a ride with another dancer or two and split the fare.
- Try writing down what you spend money on every day for a week. Even if it’s just $1 on a cup of coffee, write it down! At the end of the week, look at your list and think about what you could cut out or cut down on.
Businesses That Offer In-Person Entertainer Discounts
Some dancers have a problem with spending our money on things we don’t need—fancy vacations, designer clothes, yet another pair of shoes! Because we are spending so much money, we have to work even harder to keep making it. This can become a vicious circle, and it can get exhausting. If you feel like your spending is getting out of control, talk to someone about it. Some people spend money compulsively on things they don’t need because, deep down inside, they feel like they don’t deserve to have money.
Where to Keep Your Money
If you’re keeping large amounts of cash at home, make sure you stash it in a safe place, and don’t tell anyone where it is, even if you trust them. Look into purchasing a fire proof safe or a lock box. Make sure to hide the key in a secret place and/or not share your safe code with anyone.
“I was sleeping with someone for a year. He always said he was my boyfriend. Slowly we got closer and closer. He got to know where my money was kept. One day we had an argument. I got in the shower. When I got out of the shower my money was gone.”
Finance Management Resources
- Women’s Institute for Financial Education
Take advantage of any government benefits you’re entitled to. Even if you’re not a U.S. citizen, you may still be entitled to food stamps, public housing, Medicaid, WIC, and many other benefits. Many undocumented immigrants think they are not entitled to public assistance, or that it could interfere with their immigration cases, but that’s not always the case.
You may be wondering whether you need to pay taxes at all, or about your likelihood of ‘getting caught’ if you choose not to file. This section should help you figure out what you need to do to avoid being audited by the IRS or facing prosecution for tax evasion.
If you do not file taxes, you may be targeted by the IRS and could be prosecuted for tax evasion, tax fraud, or related crimes. Even illegal income is subject to the federal income tax and must be accurately reported if it is over $400. If you underreport, the government may audit you. If you fail to file, there is no statute of limitation for the IRS to come after you for the years that go unreported.
“First, file and pay your taxes. As a stripper you should have enough business expenses to make any income taxes minimal. It is 100% to your advantage to file taxes. It provides a paper trail should you ever wish to use credit to buy a car or a house. It also legitimizes the profession of exotic dancing and makes it politically difficult for cities and states to close clubs for morality reasons.”
Do I file as an employee, as self-employed, or what?
There are different categories of taxes depending on where you are getting your income and what your relationship is with your employer or your clients. You should talk to an accountant or tax attorney if you have questions.
Determination of status: Whether you are an independent contractor or an employee is a case-by-case determination, and it has tax implications for both you and your employer.
Misclassification of status: If you have been misclassified as an independent contractor when you should be an employee, then you can make a claim for refund for over payment of taxes. Refer to our “Know Your Rights” (hyperlink) section for suggestions on how to handle possibly being misclassified.
Some dancers fit squarely into this category because they work for a person or company that gives them regular pay and controls their hours, services, etc. Employers and employees are jointly responsible for employee taxes, and your employer must file a W-2, and withhold taxes, on your behalf. Assuming you are an employee, you can easily file. You do not need to list the specifics of your occupation, and can instead list “entertainer” or “consulting services” as your occupation.
Sole Proprietor / Independent Contractors
If you are an independent contractor or have some other type of relationship with your employer, you might need to file as self-employed. If you file as self-employed, you have to pay both the employer’s tax and the employee’s tax, but you are eligible for a number of tax deductions. You may be able to deduct items that are primarily work expenses. Some examples include:
- Insurance costs, including health insurance or a pension plan.
- Most costs associated with earning your income, including any travel beyond commuting, the computer you use for scheduling appointments, the portion of your apartment you use for business, and money spent on advertisements.
- Beauty-related items such as clothes, hair extensions, cosmetics, and gym memberships may or may not be allowed.
- IMPORTANT: If you intend to file as self-employed, you should save your receipts for all these items!
There is, however, an extra tax associated with being self-employed, and a self-employed taxpayer may be more susceptible to an audit than someone with an income hobby.
Hobby Income & Gifts
Some dancers may categorize their income as “hobby income,” but this category is not technically applicable to professional dancers. The IRS has a list of criteria for whether something is a hobby or self-employment, and factors such as profit, separate bank account or business license, and where you regularly spend your workday may lead the IRS to categorize it as self-employment rather than a hobby. Technically, the Federal tax laws in the US require cash gifts beyond $14,000 in a year to be claimed as income. That said, you are legally allowed to receive $14k as tax-free money annually and the person who gifted the money does not have to provide you with any documentation.
Additionally, if the gift is of appreciated stock, property or collectibles, there may be capital gains tax due. We should all be so lucky to have this problem! However, if you are audited and are receiving large gifts, this may cause the IRS to flag you, and they may want to talk to the individual who is giving these gifts. They can be traced to you through your bank accounts or other paper trails.
To determine if a payment is a gift, it has to be motivated by affection, respect, admiration, or charity. A person is entitled to treat cash and property received from a lover as gifts as long as the relationship consists of something more than payments or tips for dancing or other forms of sex work.
How should I keep track of my income?
The best way to document income is to enter your net take-home pay into a log or diary every day. Document everything and keep receipts for all work-related purchases and club-enforced fees. There are many methods dancers use including everything between shoe boxes of crumpled notes, organized filing cabinets, and digital logs designed for small businesses.
With the current federal deficit, the IRS is highly motivated to find any source of revenue. Also, new technology is making it easier and easier for the IRS to figure out who’s spending more money than they appear to be earning. If you’re not reporting all your income, the government may assume you are doing something illegal (like dealing drugs) to make that money.
Tax Prep and SW-friendly Accountants
Other Ways to be Paid
Cash dominates this industry and is preferred by many dancers and customers. Credit card, debit card and gift card payments are sometimes your only option despite cash being the easiest. Electronic payments do come with risk. Furthermore, many processing companies and financial institutions have banned adult service transactions. Be sure to fully read the T&C, conceal your private information, and understand that the buyer is usually protected before the seller in claim disputes.
Electronic Payment Resources
- Sex Worker Helpfuls – SW Approved Payment Options, Part 1
- Sex Worker Helpfuls – SW Approved Payment Options, Part 2
Life After Dancing – Career Transition
While dancing is a fun and exciting career, there may come a time when you are ready to retire from the industry. This can be difficult when we are accustomed to making our own hours and earning fast cash among other perks of our job. Further complicating our transition is the stigma we face as someone who worked in the sex industry.
While there are certainly challenges to transitioning out of stripping, there are preemptive steps you can take to make it easier:
- Preparing A Resume Try to keep your resume updated with other activities such as a volunteer commitment, taking educational classes, or another part time job. While our time availability varies, it is important to have something outside of stripping that can be seen as relevant experience.
- Diversify Your Skills When thinking of your time in dancing, look at ways you can creatively spin your activities at the club into applicable job skills. For example, selling lap dances and champagne rooms can be considered having background in sales.
Think about what you would like to do outside of stripping. A new job? Go back to school? Once you decide on your next move, then plan the steps it will take to meet your goal. For example, if you want to start cosmetology school in a year, then break that year into 3 month, 6 month, 9 month, and 1 year periods with what you need to accomplish in each period. Try not to quit dancing until you have secured another form of income.
Career Transition Resources
- Sex Workers Anonymous