Niche tax advice is this woman’s passion. And, yes, condom purchases are tax deductible.
January 5, 2024 at 5:00 p.m. EST
Mia Lee at her home in Lower Manhattan on Oct. 18. (Celeste Sloman)
Comment on this storyCommentAdd to your saved storiesSave
NEW YORK — More than three dozen women gathered in a semi-circle, laptops open to TurboTax, receipts and 1099s in hand. They were there to learn how to fill out their tax returns.
Their questions were unique, to say the least: Should I tell the IRS that I left my job to become a full-time dominatrix? Will my bank close my account if I say I’m an escort? If a tax form asks whether you met with customers in your “home office,” does prostitution in your bedroom count as a client meeting?
The women at the seminar were all sex workers, as is their instructor. One elicited giggles when she asked: Were they really going to tell the IRS how they earned their living?
Yes, sex workers can and should pay their taxes, said the instructor, who goes by the name Mia Lee. After all, she does it herself.
“The IRS’s policy is even if you’re doing something that is illegal, simply filing your taxes [won’t] get you arrested or anything like that,” Lee said. (The Washington Post is identifying her by her professional name because of the nature of her work.)
Lee used to be a forensic accountant on Wall Street and kept her CPA license current after leaving her job. Nowadays, she spends her days working as an escort, stripping in a club and performing sexual acts on webcam. But in her free time, she helps fellow sex workers do their taxes.
She started giving financial advice on Reddit soon after she started escorting five years ago. Then she launched an annual tax seminar, which grew into office hours for personal one-on-one free tax preparation. Most recently, she launched a YouTube series called “Money Talks with Mia” geared toward sex workers.
An adept self-promoter who made a name for herself for an unusual job change as a banker-turned-sex worker, Lee said she thought when she first tried sex work that it might be a detour for a year or two. Now, she envisions a long-term career combining her two areas of expertise, helping sex workers improve their financial literacy.
At a New York tax seminar at the start of last year’s tax season, Lee answered every query tactfully, with none of the laughing or leering that these women might face from another accountant. It helps that she is already familiar with the field: Questions covered such complex topics as how to deduct fees paid to rent a dungeon and how to report income paid in bitcoin from a platform called “Spankpay.”
She said she is accustomed to working with people in precarious financial circumstances. One woman confessed, “I’ve just been totally off the grid as far as taxes for, like, a long time.” She said she was nervous about filing now. “I finally got Medicaid last year, and they don’t know my actual income. So now if this is on the books? Part of why I haven’t reported my income is that I need [health care].”
Sex workers are often wary of connections to the mainstream economy. They fear arrest, since prostitution is illegal in most of the United States. They fear that banks and credit card companies will shut down their accounts because of what they do. That means they often don’t pay taxes, like others who earn their money illegally. One 2021 study estimated the average sex worker would pay more than $5,000 more in taxes per year if sex work were legalized.
All of that means that sex workers end up outside of the financial systems that most Americans use. Most of their transactions are in cash and poorly regulated cryptocurrencies.
Few cryptocurrency gains appear on tax returns. That’s supposed to change.
And while it’s hard to come by reliable statistics on how much money sex workers really earn, a study by British criminologists who surveyed hundreds of sex workers found that more than half had an annual income below about $25,000, with most making less than half as much.
Lee’s income is much higher end; she said she made more than $1 million last year. But in her view, sex workers at any income level can benefit from filling out an annual tax return. It’s not just their civic duty, she said, but it’s an important step toward improving their finances. For low-income sex workers, it can mean an infusion of immediate cash, like a child tax credit if they have dependents. And it can establish a financial history that would help them, for example, to apply for a mortgage someday.
“We all live here. As legitimate members of society, we should contribute,” said Lee, whose T-shirt bore the slogan “Your boyfriend buys my nudes.”
For a recent one-on-one tax preparation session with a New York City woman who works as a stripper and prostitute, Lee invited the woman into her condo with views overlooking the Hudson.
“How do you proceed if I want to go legit?” asked the woman, who has been stripping for seven years and hadn’t recently filed a tax return. She mused that many sex workers must find themselves thinking: “I’ve been on the illicit side for so long.”
The woman had a long list of Cash App, Venmo and Zelle payments and tips from clients, ranging from $30 to $3,000. In total, she earned more than $100,000 last year. Then she deducted expenses — $1,191 for “uniforms” for her work in strip clubs, $449 for safety supplies.
Lee scrutinized the woman’s accounting, questioning her about a lengthy period in which she didn’t buy any condoms. The woman said she wasn’t working as an escort at that time, just dancing in a club.
Many women ask Lee about deductions. During the tax seminar, Lee used her own two-bedroom apartment as an example when explaining home office deductions. “I can’t write off my primary bathroom. I can write off my second bathroom because I stream my showers and charge for that,” she said. “Nice,” one of the sex workers said.
Another tricky subject is what counts as payment for services, which the women must report, versus gifts, which they don’t. The stripper told Lee that she was recently on a trip “and the guy got me diamonds.” They ultimately decided the gems were a gift with no expectation of services in return.
In total, Lee calculated that the woman owed more than $15,000 in federal taxes. The woman thanked her.
“It’s great to talk to someone who’s actually in the industry,” she said, “and judgment-free.”
Source link: https://www.washingtonpost.com/business/2024/01/05/sex-worker-taxes/