How Is Findom Taxed and Other Questions You Only Ask Your Furry CPA
Some definitions…
First, let’s define what a CPA does and get some liability stuff out of the way. CPA stands for Certified Public Accountant. This means I am licensed by the state where I live, California, to provide accounting services to the public across the United States. My day to day is breaking a problem down to its smallest parts and then putting it back together. I analyze the what, why, how, when, and who of monetary transactions, mostly focusing on tax and bookkeeping.
Information in this article is not direct tax advice for the reader; make sure to contact a qualified tax professional to discuss your specific situation.
How is Findom Taxed?
First , a working definition of Findom. Findom is the act of “Financial Domination” and a subset of BDSM in which the dominant “forces” the submissive to give the dominant money with no benefit to submissive. Like a bully taking your lunch money, but you asked them to.
Findom is taxed rather simply. It really is just the exchange of money for services; the service in this case is mostly taking the submissive’s money. Since it is an exchange of money for services, that means that as a dominant in a Findom setting, you ARE running a business. (Side note: I did research to see if I could find anything that back up that logic, however, the IRS does not seem to have taken a stance on findom income specifically. It never hurts to be proactive about these things, though!)
What is a Business?
The IRS defines a business as: “generally [including] any activity carried on for the production of income from selling goods or performing services”. If you are not going after income, then you have a hobby. There’s a huge tax difference between a hobby and a business, so this distinction is important. A person running a business claims the income and expenses and is then taxed on the difference, (AKA, your net income). A person with a hobby claims the income but cannot currently take any expenses.
We’re Sounding Too Normie; Back to Furry Stuff… Is My Fursuit Deductible?
First, we’ll break it down: Fursuits are essentially clothing, and the deductibility of clothing is complicated. It has to meet a few conditions (As set by Tax Court Memo 2004-199):
It cannot be suitable for general or personal wear (street clothes)
Must be required or essential to the taxpayer’s employment
It is not used for general or personal wear
While number one is easy to meet as a fursuit, numbers two and three are more contentious. I believe you could argue those points if you get audited, though..
AUDIT?! You Didn’t Tell Me That I’d Get audited!!
Whoa there, Strawman that I created for this article! Deep breaths, you’re fine. A typical audit is fairly straightforward. The IRS will send you a letter asking about something you claimed and what THEY think should be done with it. Then, we contact the IRS and argue our position. From there, an IRS agent makes the judgment on whether or not it fits the rules.
Is a Con Deductible? What Can I Deduct There?
If you are doing business at the convention, you can definitely deduct parts of it. Be sure to ask yourself “What expenses am I paying for that I wouldn’t be paying for if I weren’t going to the convention?” Your portion of hotel, travel expenses (How did you GET to the con?), meals at the convention (only 50% deductible), and purchases that benefit your business.
How much should I set aside for taxes?
This depends on your business entity (like a partnership or corporation or sole proprietorship). If you are a sole proprietor (this includes a single-member LLC) then you’ll want to set aside around 30-35% of each sale. That will help you cover the 15.3% self-employment tax (which pays into social security and Medicare for you) and whatever your ordinary tax rate is (which goes from 10% all the way to 37%).
I hope this answered some of your questions! If you have any others, you can always reach me at Furry.Accountant!
