At Bob Jablonsky and Associates, we specializing in guiding Realtors through their tax issues, including staying in compliance and making estimated tax payments timely. Our goal is to help these professionals minimize their taxes while making sure that they stay out of trouble with the IRS. Realtors, like other small business owners and independent contractors, don’t have the luxury of withholding like their W-2 counterparts. Because of this, probably my biggest challenge in working with Realtors is to help them to make sure that they get their taxes withheld timely and properly. Our goals is that they avoid ending up with a huge tax bill in April that they can’t pay, with the added insult of substantial penalties and interest tacked on.
As an independent Contractor, you, the Realtor, have estimated tax payments due to the IRS on:
- April 15th for income earned from January thru March,
- June 15th for income earned from April thru June,
- September 15th for income earned from July thru September, and
- January 15th for income earned October thru December.
The first thing you may have noticed is that those aren’t consistently due quarterly, and some are due before the quarter ends. This complicates the process even further the independent contractor.
Next, think about your commissions. Are they consistent and equal and do you normally get big commission checks right around those dates? Of course not. Unless my Realtor client is a great and organized tax planner, this combination Equals Trouble and creates a big problem come tax time for some Realtors.
However, you’re not required to make payments on those quarterly dates. You are required to make them timely and by those due dates. In our firm, we recommend a system that’s a little different to our clients. We have had a lot of success with this system in keeping our clients out of trouble with the IRS.
Each time they get a commission check, we instruct them to make an estimated tax payment. We give them IRS payment vouchers, a percentage of each check to pay, and have them mail in that percentage of income, each time they get a commission check (or monthly if they get several). A Taxpayer can also make payments online using the EFTPS system. Finally, in our case, we offer to work with them and to review and mail in the payments if our clients prefer.
We’ve found this method has greatly reduced the number of our clients that end up with tax problems. It creates a process and more importantly, it matches their income with their tax payments and allows a Realtor to pay their taxes before life finds another need for that cash.
In my upcoming blogs, I’ll cover a variety of tax deductions for Realtors. My goal is to always find ways to help our Realtor Clients reduce their taxes, maximize the amount of income they keep, and to do it in a way that keeps them compliant and safe. However, I wanted to start some advice on how to avoid what is often the most challenging tax problem for the Realtors we meet.
Are You A Realtor that Needs a Tax Professional?
If you are a Realtor and need professional help with your taxes, keeping your books properly, or dealing with any IRS issues, give me a call at (972) 821-1991 or send me an email at [email protected]. Learn more about us at https://jablonskyandassociates.com/real-estate/
