Stop Guessing on Your Taxes · From a Creator Who’s Been There
Before the numbers get scary, let’s remind ourselves real quick: taxes are not the enemy. Lack of information is.
Ahead of our September 1st webinar, Taxes for Adult Industry Professionals, we sat down with Mia Lee, who will be walking Creators through what actually holds up on a return, and what costs You money every year. Straight talk. Here’s what she told us.
Before we get into deductions and audit risk, let’s back up and get to know You. How did you end up being both an IWC Artist and a CPA?
I was a survival finance worker and a sex worker by choice. I came to the U.S. as a Chinese political refugee as a child and spent my adolescence in foster care. If you’re not familiar with foster care, it’s the system of indigent care we have for children in the U.S. in lieu of orphanages in other countries. I graduated early and went off to university when I was 16, not because I was a genius, but because of gang activity in my 5th and final high school. Then I graduated from university early with a Bachelor of Science in Accounting when I was 19, again, not because I was a genius, but because I was broke and my scholarship ran out. I was recruited into a leading global Wall Street firm during my undergraduate business schooling, and considering my choices were poverty/homelessness and working 14 hours a day for six figures, I chose the latter. 12 years later, I was up for partner at my firm. That same year, 2018, I developed pretty bad clinical depression and anxiety and had to take a 4-month medical leave. I started working in the adult industry on my medical leave when I realized I needed a career with better hours and less stress than finance. A few years after that, I diversified my adult entertainment income streams to include content creation and stripping.
What’s the biggest tax myth You hear from Creators in this industry, and why does it keep costing Them money?
Oof, it’s tough to choose just one, but I guess it’s probably the myth that you need an LLC right away to operate your business. Having an LLC comes with administrative costs and burdens, as well as the risk of disclosing your legal name and other identifying information to the entire internet. For a lot of Creators starting out, their profit isn’t high enough to justify the cost of forming and maintaining compliance for an LLC. You can claim all of your legitimate business expenses, such as sex toys, costumes, and video editing software without an LLC. More importantly, most states require the public disclosure of beneficial ownership for LLCs and other business entity types. So if you formed your LLC in one of those states, you may not realize you just gave your legal name and address to the entire internet.
You’ve probably seen every version of “creative” bookkeeping. Can You hint at one mistake that turns into an actual audit?
I can tell you about one that turned into an actual audit where the client hired us to amend their tax return pursuant to an audit. An entertainer double-claimed their business expenses as a personal deduction on their state tax return. I don’t know if the mistake was intentional or not.
Furthermore, when I reviewed this client’s expenses and income, I noticed that cash income had been underreported and some expenses were claimed that were not allowable, while many allowable deductions were missing.
A few salient examples:
- Gym memberships and cosmetic procedures are not tax-deductible.
- Cash is taxable when earned, not when it is deposited into your bank
- A portion of the entertainer’s home was used as a work space, however no rent, utilities, insurance, repairs or other expenses were claimed as deductions.
If You could get every Artist to do just one thing differently this year, what would it be?
Know how much you’re making and what your earnings really are after expenses and taxes. I’ve seen too many talented Creators make more money than they’ve ever imagined, then retire 5 years later with nothing to their name except a couple of Chanel bags and some tax debt.
Without giving the whole webinar away, what’s one thing attendees will walk away being able to do immediately?
Hopefully a reduction of tax and financial anxiety and a few immediately actionable tasks to improve their financial independence and safety.
Who is this webinar for? Artists just starting out, or someone who’s already scaling and got overwhelmed along the way?
This webinar is appropriate for both Artists just starting out who want to set themselves up correctly from a financial and tax standpoint, as well as Creators who are already scaling and got overwhelmed along the way.
September 16th at 5 PM (EST). Live Webinar. Taxes for Adult Industry Professionals. No guessing.
Join Mia Lee for the full breakdown: deductions, deadlines, and how to work with professionals who actually get it.
