Taxes can be a nightmare for everyone, but it’s even harder to navigate the process as a sex worker. There are a lot of things no one will teach you about filing your taxes for your sex work earnings. However, you need to learn them so you don’t get stuck with an audit or a huge bill at tax time.
We’re here to help you file your taxes as a sex worker. Keep in mind that you should see a tax professional, as this is not official tax advice. Also, this article will focus on taxes in the United States, but it might be helpful for sex workers in other countries as well.
Unfortunately, yes. You’re on the hook for paying taxes on your sex work income, no matter where it comes from, as long as your earnings for the year total $400 or more. Everything from private video sessions, cam work, subscriptions, and tips are all taxed. Doing your own work online might feel different from going into an office, but it’s still income. All income is taxed.
For tax purposes, you’ll be considered self-employed, even if you have another job with an employer. Self-employment means that you work for yourself, and this is even true when you work for a website like OnlyFans. They don’t count as your employer; instead, they’re just a website that you can use to conduct your business.
In some cases, websites you work for will send you a 1099 form showing all of your income for the year. Not all employers send one, so you might have to keep track of your own records. Just because you don’t have that form doesn’t mean you don’t have to report that income.
It’s important to note that there are some ways to reduce the amount you’ll owe in taxes as a self-employed person. We’ll discuss these later.
Self-employment tax rates are higher than they would be if you worked for an employer. This is because you’ll need to pay both self-employment tax and income tax.
The self-employment tax rate for 2021 is 15.3%. It is made up of two parts: 12.4% for social security and 2.9% for Medicare. Social security provides old age, survivor, and disability insurance, while Medicare provides hospital insurance when you’re older.
If you had a traditional employer, they would pay the employer part of these taxes for you. However, when you work for yourself, you need to pay both the employer and employee parts on your own. The good news is that the taxes are dependent on your income, so if you haven’t made a lot of money throughout the year, you won’t be subject to too much self-employment tax.
In addition to your self-employment taxes, you’ll need to pay income taxes. The amount you owe is based on the amount of income you make in the year, as well as other factors like family size and deductions.
Let’s look at the tax rates for a single person filing for the 2021 tax year (by April 2022).
$523,601 or more: 37%
No matter how much you make, your taxable income will be divided into chunks. If you make $100,000 a year, you won’t pay 24% tax on all of your income. Instead, you’ll pay 10% for the first $9,950, 12% for the first $40,525, and so on.
In addition to these taxes, you’ll also need to pay state and local taxes if they’re applicable in your area. Each state is different, so do your research when you’re figuring out how much you’ll be taxed.
If this is your first year filing your taxes for sex work income, your experience will be different from normal tax time. Self-employed people need to pay their taxes throughout the year. These payments are called estimated quarterly taxes.
If you think about it, people who are traditionally employed pay their taxes with every paycheck. The IRS doesn’t want to wait until April to get the revenue from all of the self-employed people in the country, so they’ve implemented quarterly taxes.
You’re required to pay quarterly taxes if you expect to owe more than $1,000 during that tax year after subtracting withholding and tax credits. You’ll need to do some research to determine whether you fit that bill, but it still doesn’t hurt to pay your taxes quarterly if you think that might be the case.
If you don’t pay your quarterly taxes and just give the government all of their money at tax time, you could be subject to a fine when you file. They can charge this money even if you get a refund, so it’s a good idea to make these payments.
For the tax year of 2021, you’ll pay estimated taxes on these dates:
1st Quarterly Estimated Payment: April 15, 2021
2nd Quarterly Estimated Payment: June 15, 2021
3rd Quarterly Estimated Tax Payment: September 15, 2021
4th Quarterly Estimated Tax Payment: January 18, 2022 (or you can file your tax return by February 1, 2022 with your full remaining payment and not submit this quarterly payment.
Fox the tax year 2022, you will need to pay your taxes on these dates:
1st Quarterly Estimated Payment: April 18, 2022
2nd Quarterly Estimated Payment: June 15, 2022
3rd Quarterly Estimated Tax Payment: September 15, 2022
4th Quarterly Estimated Tax Payment: January 17, 2023
In order to make these payments, you’ll need to submit them online through the Electronic Federal Tax Payment System on or before the due date.
Unfortunately, there’s some guesswork involved in paying your quarterly taxes. This is because you’re trying to estimate how much income tax you’ll need to pay for the year ahead. If you underestimate, you could receive a fine. If you overestimate, you’ll have less money available throughout the year, but you’ll get a big refund at tax time.
The simple way to make sure that you pay what you owe is to pay at least 100% of the tax you paid the previous year. If you have an indication that you’ll earn significantly less, you can calculate by how much and pay based on your projected income.
You should plan to put away between 25%-30% of your taxable income to pay for your quarterly taxes, as well as any additional balance you owe when you file around April.
Every time you get paid, you can put that portion of your income into a separate bank account. This separation will hopefully keep you from dipping into your tax fund throughout the year. It might feel like that money is yours, but it really isn’t. If you spend it, you could end up with a big bill to pay at tax time.
Here’s some good news: business deductions can drive your taxable income way down. Traditionally employed people can’t deduct business expenses on their taxes unless they’re very substantial. Self-employed people can, and they can really add up!
Here’s a rundown of some of the deductions you can take:
Sex workers who have a dedicated room or space where they do their work can deduct this space as a home office expense. In order to do this, you need to use the space only for your work. For example, you can’t choose your living room if you also spend time there watching TV. If you have a nook in your bedroom where you record, you can only deduct the square footage of that area, not your whole bedroom.
You can file this in one of two ways: the simplified option or the regular method. In the simplified method, you get $5 per square foot for your office, up to 300 square feet.
The regular method is more complicated, but it lets you claim expenditures involved in your home office, like maintenance and repairs, homeowners insurance, utilities, and other expenses. A tax expert can help you figure out what’s best for you, or you can do some research and file accordingly.
Most sex workers do their business online. That means your internet is a huge part of your business. Most people use their internet for both business and personal uses. To take this deduction, you’ll estimate how much of your internet use is for business. If you think you use your internet for business about 70% of the time, you can deduct that much of your bill on your taxes.
You can also deduct certain other bills that help with your business. For instance, you can proportionally deduct electricity or heat based on how much of your home is used for business. You’d need to do the standard home office method in order to reap these benefits.
Most sex workers post pictures and videos of themselves online. Although using your iPhone camera will work in a pinch, you’ll probably eventually want to get better equipment.
You can deduct a new camera and any photography equipment you need to do your job. This can also include computers, microphones, and lights.
You can deduct anything you use exclusively for your business, and that includes beauty items to make you look great on camera! Makeup, clothing, props, lingerie, shoes, and many other things are deductible. Just make sure that you can prove that you only use them for your business. It’s unlikely that you would get caught, but it’s better to be safe!
If you run advertising to promote your sex work business, you can deduct these fees on your taxes. While it can be hard to run this type of ad because of the terms of service of certain websites, you might advertise on porn sites or your preferred sex work website. Keep those receipts, because this would all be tax deductible!
Some sex workers will travel to a new location for a photo shoot. In some cases, you can deduct these expenses! You’ll need to prove that the trip was mostly for work, and there are some other hoops to jump through, but it could be worth it! Here’s some more information about how business travel works from the IRS.
Let’s say you hire a graphic designer to make some graphics for your website or a photographer to take your photos. You can deduct these expenses, as they’re obviously an important part of your business.
You can deduct any education or research for your business, including books and subscriptions. This might apply to subscribing to other sex work creators to determine how they run their business. Talk to a tax professional about whether this would be considered a deduction.
If you pay your own health insurance premiums and you’re not eligible for a spouse’s insurance plan, you can deduct all of your health and dental insurance premiums.
Contributing to an IRA or self-employed 401k? You should be able to deduct these expenses as well, up to $19,500 for the 2021 tax year.
It’s a great idea to hire a tax expert to help you file your taxes, especially if you’re new. They can help you find ways to pay the least amount of tax possible. They might also be able to set you up for an LLC or S corp, which could save you money.
It might be intimidating to talk to a tax preparer about your income when it comes from sex work. However, you don’t have to specify that you work in this field. In fact, you probably shouldn’t. Instead, you can just tell them that you’re a model or a performer.
Try to find a tax agent who specializes in helping self-employed people. It might even be possible to find someone who works with sex workers or models. It’ll make the whole experience easier.
Filing your taxes can be super scary. However, if you take advantage of deductions and do your research, you might not have to pay as much as you think!