I have met with several real estate agents this week who have asked some variation of this question: “If I am preparing my own income and expense summary, what am I paying you for? Should I just file on my own?”
Know the rules for your IRA contributions. Many taxpayers can take a deduction for money they contribute to a traditional IRA each year, but it depends on some rules. You must have earned income to qualify, know the type of IRA you are contributing to, and understand the IRS limit on the total amount of contributions that can be deducted.
So how much do you pay? This is a pretty heavy question that you should be consulting with your tax pro on. The IRS requires that you be all paid in AHEAD of time, or they hit you with a penalty. You get this penalty even if you fully pay your taxes when you file your return (on time) since you didn’t give it to them in line with the dates I gave you above. Nice, huh? Pay too little in and you get stuck with a big tax bill come tax time (when you thought it was covered) and a penalty for not paying enough, pay too much in and you gave money to the IRS during the year as a piggy bank that you didn’t need to (and you owe back tax, you won’t get it back when you file). The best thing you can do is be on top of your numbers so you know how much money you are making and consult with your tax pro on how much you should be paying. Tax planning is super important here, so please connect with your tax pro to make sure you are in line with where you should be!
I ALWAYS recommend to clients when they have a chunk of money set aside, and can either pay the tax due on the return (but be cleaned out) or do a payment plan and put that money towards the current year taxes (not filed yet) to do the latter. Too often we see them pay off the old tax, then they can’t pay the new tax, and it’s a struggle every year. Fix your mindset so that going forward you are current, payoff the old tax as soon as you can, and then you don’t have to freak during the year because you used all your savings up on last year’s tax bill.
In today’s world, it is SO common for people to use their personal cell phones and home internet for many facets of their lives, including personal social scrolling, a virtual school for their kids, and running their business. Have a look at another post I wrote to see if you are eligible for a home office deduction. Logically, this leads us to another commonly missed expense on our real estate agent’s tax returns: Home internet and personal cell phone used for business.
The stimulus money you received is not taxable, but you do need to know the amount received in order to properly file your 2020 tax return and to claim the Recovery Rebate Credit if you are eligible. The stimulus money you received is not taxable, but you do need to know the amount received in order to properly file your 2020 tax return and to claim the Recovery Rebate Credit if you are eligible.
The recovery rebate c…
One of the (obviously) super common everyday norm’s for a real estate agent (even before the Covid world changed) is the ability to work wherever and whenever you like. So, naturally, the next question we get is agents asking if they are allowed to write off their home office. The answer? It depends.
One of the (obviously) super common every day norm’s for a real estate agent (even before the Covid world changed) is the ability to work wherever and whenever you like. So, naturally, the next question we get is agents asking if they are allowed to write off…
With so many people working from home, I am often asked about deducting home office expenses. Self-employed taxpayers may claim a business deduction for expenses arising from qualifying use of all or part of a residence. Employee’s are no longer allowed to deduct home office expenses. To clai…
The IRS allows you to take either your actual costs of driving your vehicle as a business expense(gas, insurance, repairs, etc) or to track your miles driven, and use the standard business mileage rate. You would then multiply your miles driven for business against this rate, and voila, there’s your expense. For 2021 the standard business mileage rate is .56 cents per mile (it was .575 in 2020). You can’t do both actual costs and miles driven as that would be double dipping. For purposes of this blog, we are going to assume you are tracking miles in lieu of using your actual costs. So, lets’ say you drive 15,000 business miles, your expense on your taxes would be $8,400 (15,000 x .56). Easy enough. However, we will now shift over to the question at hand: how necessary is it to actually track this?
We are NOT going to go into the different ways you can write off your vehicle expenses in this article, never fear, I will do another one on this topic by itself! You need to be tracking your business miles, and we will leave out all the rest for this articles purposes. This is likely your biggest expense, and it is also your most audited expenses (and most loosely tracked). If you are old school, you can keep a notebook in your car and jot down by hand every business mile driven in a pen and paper log.
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