Bob Jablonsky & Associates Blog

Tax Tips for Every New Realtor

by | Mar 22, 2021

While today’s blog is primarily directed to new Real Estate Agents, it may be helpful to experienced ones as well.  We’re going to give a few quick tax tips to New Realtors.

Taxation for New Real Estate Agents can be very confusing.  Many new agents come from an environment where they received a Form W-2, had their taxes auto  withholdings automatically, had very few expenses that they could deduct on their tax return (if any), and didn’t need to worry about tracking those expenses. 

The tax responsibilities and opportunities in their new positions can be overwhelming.  However, I also meet experienced agents, who are excellent and successful at what they do, but have neither the time nor the interest in exploring these tax issues.  Below we’ll cover a few of these.

What Can You Deduct?

I get this question a lot.  The IRS states that for an expense to be deductible, a business expenses must be ordinary  common and accepted in your trade) and necessary (appropriate for your business).  For a Real Estate Agent, these expenses may include, but are not limited to:

  1. Expenses Related to the Use of Your Vehicle. There are two options –
    • The Actual Method
    • The Mileage Method
  2. Home Office Expenses
  3. Broker Charges
  4. Advertising and Marketing
  5. Computer and Phone Costs
  6. Business Meals
  7. Business Travel
  8. Expenses Related to Showing a Property
  9. License and Dues
  10. Business or E&O Insurance
  11. Other Ordinary and Necessary Expenses

Responsibilities and other Issues to Keep In Mind

Here are some tips I give to all Real Estate Agents:

  1.  Keep your business transactions separate from your personal transactions. Use a separate bank account and credit card.  This will be to your benefit in making sure you capture all of your expenses as well as if you are audited down the line.
  2. Track your expenses using bookkeeping software or other methodology that works for you.  If you follow tip #1, it will make bookkeeping much easier.
  3. Use an app to log your mileage. At the end of the year, you’re going to find it impossible to remember where you drove.  Track it as you’re driving.
  4. Make Estimated Tax Payments. This is the area where I see new Real Estate Agents get into trouble.  Estimated tax payments are due quarterly but I recommend that you pay estimated tax payments to the government when you receive commissions.  By the time the estimated tax payment due date comes, your money may be gone.  How much should you have withheld?  Take a look at my earlier blog where I cover this topic in more depth

If you are a new or experienced Real Estate Agent, or other Small Business owner, who needs 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 bob@jablonskyandassociates.com.  Learn more about us at https://jablonskyandassociates.com/real-estate/

Bob Jablonsky is the founder of Bob Jablonsky & Associates. He has spent his career helping taxpayers resolve tax issues and get back on track with the IRS. In addition to tax resolution his firm also prepares hundreds of tax returns every year for both individuals and small to mid-sized businesses.

Bob is an IRS Enrolled Agent (EA), which is an elite credential issued by the Internal Revenue Service to professionals who demonstrate special competence in federal tax planning, individual and business tax return preparation, and representation matters. An Enrolled Agent license is the highest credential awarded by the IRS and is recognized across all 50 states. Additionally he is a CMA, or Certified Management Accountant, a designation for financial controllers and CFOs (Chief Financial Officers), as well as an Advanced Certified Quickbooks Pro Advisor.

Get in touch

1900 Jay Ell Drive
Richardson, TX 75081

Bob@jablonskyandassociates.com

(972) 821-1991

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