I have a professional wrestler attempting to do his own taxes. (Oh yeah, I write interesting stuff.) The main point holding me back is I’m Australian and am fairly immersed in the Australian tax system. Prepare for half a book of questions for two throwaway lines.
Basically – C is ruled an independent contractor, contracted to one large national organisation where he gets paid either per appearance or with a downside guarantee - I get conflicting reports about each. He also has an agent who books him out to other businesses with an agreed-upon sum per appearance.
I cannot figure out for the life of me how his income and tax situation works. The info I get on independent contractors says they do not have tax withheld by an employer. Would he then pay something to the IRS every few months (as somewhat the equivalent to Australia’s PAYG system) or pay a lump sum towards the end of the financial year?
Would he have to keep records regarding which appearances he does outside his main job and how much he gets paid for each of these, or does each company using his services report his income/their expense to the IRS? With this I have found “any company that pays more than $600 to an independent contractor in one year is required to report this to the IRS as well as to the contractor” (like the Australian group certificate, yeah?) - would these come at the end of the financial year or upon completion of each appearance with each company?
Independent contractors can apparently write off safety gear and tools – as a pro wrestler, could C attempt to write off things like knee braces and elbow pads? Could he go as far as writing off his tights and boots? He also has a lot of travel, meaning gas, hotel stays, flights, possibly car rentals: anything here he’d be thinking of writing off?
Searched combinations of the following, plus Wiki’d each of these terms: United States taxes, independent contractor, independent wrestler pays, wrestling/wrestler taxes, tax purposes pro wrestling, comparison Australian United States tax systems, financial year, IRS withholding, tax withholding United States, employees vs independent contractors. Different term suggestions would be awesome, as anything more technical might just make my eyes roll back in my head.