If you’re a real estate agent scrambling to get your tax filings in order before the April 18 deadline and are looking at your expenses in dread, read on for some tips to help you in the 11th hour.
Read up on tax deductions that will benefit your business the most.
In a recent blog post, we outlined five tax deductions that every real estate agent should know about.
- Commissions Paid – if you pay commission to other agents or employees that work with you
- Education and Training – if you’ve participated in classes or training, like BOLD, to further your professional education
- Advertising – if you’ve spent money on marketing materials, signage, staging, etc.
Not the do-it-yourself type? Hire professional help!
By hiring a tax accountant, you will be better positioned to rack up thousands of dollars in savings and avoid complications with the IRS. If you decide to go this route, make sure to hire an accountant that has experience working with real estate businesses and can understand your unique needs. With the clock ticking, save time by tapping into your business circles for professional recommendations.
Consider creating an SEP (simplified employee pension).
An SEP is a retirement plan that can serve as one of the best legal tax-saving strategies for self-employed real estate agents. Why? Because SEPs have high contribution limits! Since these contributions are made on a pre-tax basis, you can write them off as a business expense. For example: if you placed $10,000 in an SEP in 2016 and are in the 25 percent tax bracket, you can save $2,500 in this year’s income taxes. Disclaimer: You can only contribute either 25 percent of your annual compensation or $53,000 (for 2016, $54,000 for 2017).
Prep for tax day next year.
It’s never too early to begin prepping for next year! Avoid the last-minute stress you may be experiencing now by:
- Understanding real estate business taxes: Although April 18 is the “big day,” there are several important tax days for real estate agents throughout the year. Take a look at concepts that can help keep your business financially on track.
- Plugging into the ProfitDash app: If you’re a KW agent, you have access to unlimited commission, expense and mileage tracking so you can rack up valuable tax deductions through the year. Additionally, by participating, ProfitDash will send you quarterly and annual tax reports for free!
If you’ve filed your taxes already, feel free to share additional tips in the comments!*
*Always consult with a tax professional for your tax-related questions