Tax season is upon us, and even the most tax-savvy real estate professional can fall victim to tax filing mistakes. Check out the following list to ensure you have everything ready to go by this year’s deadline.
Real estate professionals can rack up a ton of deductible business expenses over the course of a year. It’s hard to forget your large expenses, like the cost of your home office space, vehicle usage, advertising, or commissions paid to other agents or employees. But even the little expenses—think office supplies, coffee or meals with clients, and software costs—add up to a large sum of money by the end of the year!
Remember, you can also deduct expenses like fees for licensing, professional memberships, and education or training beyond your minimum state educational requirements.
One of the most frustrating things about doing taxes is the number of forms, records, and receipts you need to have on hand to ensure everything is accurate.
Before you even start working on your tax forms, gather the following documents: business earnings, receipts, a list of business expenses, and deductions.
As a self-employed real estate agent, you’ll likely need to file the following forms: a 1099-MISC outlining the amount of money you made as an independent contractor, Form 1040 to report your individual income to the IRS, and your state’s applicable income tax forms.
If you’re unsure about anything tax-related, a qualified accountant is a great investment that may save you more money than they cost. They can help you organize your records and receipts, and they'll stand by your side if you're ever audited by the IRS.
Missing the tax filing deadline is easy to do as a busy real estate agent. Commissions aren’t paid on a set schedule, and when you factor in multiple filing dates for self-employed professionals, it’s even more likely to slip your mind.
Self-employed real estate agents are responsible for paying their taxes quarterly on income earned during the previous quarter. In general, that means your income taxes (along with Social Security and Medicare) are due in January, April, June, and September.
Don’t get saddled with interest and late-payment fees. Set reminders for future due dates and make sure you accurately calculate your estimated tax payments well before they’re due each quarter.
Contact an accounting professional before making any financial decisions. The material in this article is for your information only and not intended to be used in lieu of seeking additional consumer or professional advice.