Prostitutes paying taxes risk being punished for their work. In such a situation, paying taxes requires true nobility and patriotism. This is an unusual effect of decriminalization, and not the legalization of prostitution.
April 15 is approaching. This is the deadline for Americans to file their federal individual income tax return. This means that the community of people working as prostitutes will again be tested for the strength of their moral principles. Prostitution, with the exception of 10 counties in Nevada, (1) is illegal throughout the United States. Every year 70-80-thousand prostitutes are arrested in the United States, which costs taxpayers $200 million or $2500-2857 for each arrest. (2)
However, this sector of the economy is growing despite the opposition of the authorities. In 1856, the turnover of the prostitute market in the United States was $6.3 million, which was more than the total value of the shipping and brewing industries. (1) In 2022 this value was $14.6 billion! (3) And this is more than the turnover of the car-wash industry! (4) The estimated number of prostitutes in the United States has increased over the past 50 years from 450 thousand (5) to 1 million. (6)
Every year these people are faced with a moral dilemma. Pay taxes at the risk of being punished for prostitution, or not pay taxes and leave everything as is. We do not know what decisions prostitutes make. But perhaps a little information will help people make a choice.
Paying taxes on illegal activities is not grounds for punishment. Also, the punishment for tax evasion is much stronger than the punishment for prostitution. Paying taxes can bring significant benefits. Here's what a tax professional says about it.
"Provided that she is a US citizen or Green Card holder, she could receive child tax credit, earned income credit and use the time she is working to qualify for social security. I'd recommend that she take payments via a cash app such as Venmo, PayPal or cash app or deposit cash in a bank account. We have childcare providers who work this way and we are able to satisfy IRS audits of their income," said President of Popular Tax, Inc., Lee Slater.
Therefore, paying taxes does not seem stupid. But it has some risks. Therefore, prostitutes should not take risks and openly talk about their activities.
"She can say she is a dancer and fill out schedule C as an independent contractor. She would need to keep good business records by tracking her income contemporaneously," said Lee Slater.
There is also another option. When filing Form 1040, income from prostitution is reported on Schedule C as self-employment income or on line 21, "other income". It is better not to indicate the profession "prostitute". No need to lie. But it is possible to use a creative approach. Therefore, in the profession column it is better to write "service provider" or not make entries at all.
In field "B" you will need to enter a code from the list of codes for your main activity or professional activity. It is better here just use code 812990, "All other personal services". These are the basic rules for filing Form 1040.
The situation with tax deductions is more complicated. You can deduct the cost of uniforms and safety equipment (contraceptives). You can also deduct the cost of a second bathroom that clients use if they pay for it. The ideal option is to consult a tax advisor on this matter. However, the law does not completely guarantee the confidentiality of such consultations. And this may cause information about your activities to leak to the government. (7)
In US domestic policy there is a trend towards the decriminalization of prostitution. This involves prostitutes paying taxes on a voluntary basis but with the threat of being punished for the service for which the prostitute pays taxes. This won't change anytime soon. After all, current politicians oppose the legalization of prostitution, which would make paying taxes mandatory but safe.
"I stand absolutely against legalized prostitution, this would just be a further breakdown of the moral fiber of our society. It would empower women as supporters claim, it would further objectify and demoralize women. Especially refugee women would be opened to all types of abuse," said Chairman Bronx County Conservative Party, Patrick McManus.
In the current situation, prostitutes can be called the most noble taxpayers in the United States. If they want to pay taxes, they will take a greater risk than other taxpayers. How many of them want to do this will only be known on April 15!
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