Tackling Tax Season
SCOTTSDALE, Ariz. – Tax season is upon us! To be sure agents are getting everything out of their business, correctly doing their taxes could mean more money in their pocket! Here are some things for real estate professionals to consider when filing according to My Home Group Power Partner, The CE Shop.
April, 15th, 2021 is the tax deadline to file. It is possible to file for an extension with a deadline later this year (Oct. 15). As the countdown begins, it is imperative for agents to compile all the necessary documents, receipts, etc. to properly file before the deadline.
Almost all agents are considered to be independent contractors and are required to pay self-employment tax as a result. This is in addition to your federal, state and local income taxes, so be sure to file accordingly and keep track of incomes. It is beneficial to prepare yourself for tax season if you set aside 20-30 percent of each commission for taxes. Since commissions are not taxed when you receive your check, you will be taxed on these incomes when you file each year.
Prepare Your Expenses
- Create a filing system to keep up with your expenses throughout the year
- Confirm all transactions and incomes are directly related to your real estate business when including it in your business expenses
- Keep spending at a reasonable amount
- Be sure to obtain your gross receipts for income
- Keep your purchase records and expense reports up-to-date frequently
- Hold onto your travel and transportation receipts
- Combine your asset records for any property that you own and use for business purposes
- Home office deduction
- Standard auto deduction
- Office supplies and equipment
- Software and business tools
- Marketing and advertising expenses
- Fees, licenses, memberships, and insurance
Keep in mind that with the pandemic and new laws, agents should pay special attention to the rules regarding the CARES Act, Stimulus checks, PPP and PPE loans, 529 plans and unemployment benefits if they pertain to an agent and their business. In addition, the SECURE Act will have an effect on any IRA’s or retirement 401k Plans.
Finally, tax season can be daunting for some people. My Home Group is not a tax consultant or licensed CPA, so If you’re not a numbers person or want to pull your focus towards your business, hiring an accountant will be your best bet. For more information on filing, visit myhomegroup.theceshop.com to learn more.