CANADA CORRECTION - Ladies of the Night - The Happy Hooker et al - Making your Canadian Mortgae Deductible - New Art V(9) of US

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SPELLING CORRECTED
Question -  I work as an escort in New York, Boston, Philadelphia, Las Vegas and Miami.  All my work is in the US but I live in Canada.   Where and how do I file my tax return?

------------------------------------ david ingram replies:   Good question and you are not alone. Every year I prepare several similar tax returns. I presume you advertise on line as 'visiting' with websites like 'Miami Escorts' and the 'Darkside'.   A way back when in the 70's, I helped out Xaviera Hollander, AKA, 'THE HAPPY HOOKER' ( http://en.wikipedia.org/wiki/Xaviera_Hollander or http://www.timesonline.co.uk/tol/news/world/europe/article4407114.ece or http://www.xavierahollander.com/xaviera-hollander  ) when she lived in Vancouver after leaving New York and being persecuted by the Knapp Commission responsible for a major expose of the New York Police Force.   Xaviera now runs two bed and breakfasts in Holland and Spain.  she was born into a Prisoner of War camp in Indonesia in The Second World War and went on to be the Sex columnist in Penthouse Magazine.  You are in good company as they say.   Back to your question.    It does not matter whether you are an escort or selling a product LIKE DOORKNOBS in the USA as a Manufacturer's Agent FOR A CANADIAN MANUUFACTURER.   If you are working in the USA, you are supposed to be filing a US tax return.  You can find this a little clearer at www.centa.com Go to the top left hand corner box and click on Newsletters.  then click on November 2001.  the first page tells Canadians when they have to file a US tax return and the next 11 pages tells Canadians how to make their CANADIAN MORTGAGE INTEREST deductible on their Canadian return.  In your case for instance, if you pay all of your earnings down on a mortgage and have a line of credit against the house for business expenses, you can very quickly turn a non-deductible mortgage into a deductible mortgage.   (In other words, you fly to New York and gross $20,000.00   You pay all the $20,000 down on your mortgage.  You use a business line of Credit to pay for your plane tickets, hotel rooms, food and cell phone and advertising.)  Next MONTH you go to Vegas and do the same thing.  To make it work best, you have a debit card which pulls money out of your business line of credit and you have a specific chequebook which only takes money out of your business line of credit.   You are clearly self employed (illegally of course) in the USA and should be filing US tax returns.  You are exempt from income tax and Social Security Federally under Article XIV of the US Canada tax treaty up to Dec 31, 2007, but article XIV was cancelled under the new treaty.     The technical amendments that came out last month deals with the matter on Page 10, Paragraph 3 which adds paragraph 9 to Article 5 of the treaty.  This seems to say that you are still not taxable Federally in the US if you are not there for more than 183 days.  If you are there for more than 183 days more than 50% of your income has to be earned in the US for you to be deemed to have a fixed base or permanent establishment in the USA.  (I am looking forward to a comment on this from Andrew, Gary and Dan and any others because this is BRAND NEW STUFF, and I am still not even remotely sure what all the changes mean.     So you should file the US return, report your net earnings and exempt it under Article 5(9)(a) of the Tax Treaty.  New York and Massachusetts and Pennsylvania have state tax returns but Nevada and Florida, do not.   For Canada you will have to file your returns as self employed and also file a GST return.  Your GST return will report the US earnings but there will not be any GST payable if all the income is earned in the US.  What you do need to do is keep some detailed records and receipts as to income and expenses.  Get yourself a Canadian Box number and mail your receipts back to Canada every couple of days so that you: 1.    HAVE THEM for Canadian Income Tax audit purposes AND 2.    Do NOT have them in the USA where they could be used against you for possible prostitution charges. ----------------------------------- You may also be interested in this recently published book about a Vancouver Escort.  You can find   Illusions: Biography of a High Class Escort

by Ellen Thomsen


  at: www.trafford.com/08-0108     Who knows? You might get some tips.   Hope this helps

Illusions: Biography of a High Class Escort by Ellen Thomsen 232 pages; quality trade paperback (softcover); catalogue #08-0108; ISBN 1-4251-6966-X; US$19.95, C$19.95, EUR13.63, £10.30 The personal and professional life of an international escort from childhood to high-class seductress. Includes testimonials from male clients, escorting experiences in Japan, ménage-à-trois, her foot fetish web site, and more. About the Book Elysia is a high-class international escort, and in this biography she is open, honest, and often humorous about her chosen profession. She describes her transition from childhood, to street hooker, to working in massage parlors, to her entrepreneurial escorting experiences in Japan, and even into the virtual sex world with her fetish web site. She confesses her dating difficulties in her private, non-business life, including whether or not she tells her personal dates about her professional life in the sex trade. While involved in a married ménage-à-trois, Elysia discovers a truth about herself and the characteristics she admires most in a woman. She shares her torment when her family finds out about her secret profession, and about the client who thinks he can pay her to quit and belong just to him. Throughout Elysia’s narrative she describes personal seduction techniques and expertise on how to fulfil men’s fantasies. “Women of the World, you should know…” Some of her international business clients are so enchanted by her that they include personal testimonials of their experiences, revealing why they pay so lavishly for her company. This book opens a captivating window into the life, joys and sorrows of a high-class, successful seductress. About the Author Ellen Thomsen was born and raised in California. After attending the University of British Columbia in Vancouver, Canada, she stayed in Canada choosing to raise a family while building a property rental company and writing short stories and poems for children. Surprised when asked by Elysia to write this biography, Ellen informed her that she knew little about the lives of prostitutes, let alone the secret world of a high-class one and was therefore not qualified. Despite this hesitancy, Elysia won her over. Ellen turned that lack of knowledge into an advantage as she discovered this intriguing profession from the eyes of an outsider and asked the fundamentally curious questions we have all wanted to know about women - and men - in the sex trade business.