If you are a real estate agent, your taxes will be different, based on your position and situation, which can make them confusing. Here are a few tax help tips for realtors.
- First, consider hiring a tax attorney so you get advice that is tailored to your unique situation. If you are already in debt, an attorney can also help you get an offer in compromise, or will help you reach another solution.
- Real estate agents are considered to be self-employed, independent contractors, meaning the best option for taxes is to make quarterly estimated income tax payments. If you don’t pay enough in estimates in a timely manner, the IRS and your state can slap heavy penalties and fines on you.
- Expenses that are directly related to your work as a realtor, such as advertising, flyers, signage, promotional materials, marketing costs, and more, are eligible for deductions.
- A major expense that you can deduct as a realtor is your car. You drive often, and auto expenses build up over time, so make sure you keep records so you can deduct it when you do your taxes. The standard rate of deduction is 55 cents per mile, so keep track of how many miles you drive.
- If you have a child under the age of 18, there is a special deduction that allows you to ‘pay’ them up to $5,450 a year and that amount will be exempt from income tax. This is a good way to shift around your funds so that your tax total hurts less when you need to file.
