Tax laws in the United States, at both a federal and state level are complex. For real estate professionals, staying in compliance with these laws and regulations requires expert advice.
Don’t trust your taxes with just anyone – get matched with a CPA who specializes in real estate tax deductions and filing. RLTY Tax offers exclusive access to a nationwide network of CPAs to help ease the stress of tax season.
While tax deductions can save a lot of money, real estate agents and brokers have to be careful. Tax fraud and misfiling can result in future monetary and criminal problems. RLTY can help you determine the most prudent tax deductions and credits to claim.
Using an accountant may sound expensive but the benefits far outweigh the cost, especially with the discounted rates we have negotiated for you.
Using a limited liability company provides you with the most tax flexibility.
An LLC is taxed on a pass-through basis, with the business profits or losses passed through to the owner’s personal tax return. Earnings are taxed at your applicable individual income tax rates and subject to Self-Employment taxes (which includes Social Security and Medicare taxes).
But, if the LLC meets certain IRS eligibility criteria, you can file an S corporation election with the IRS. With S corporation tax treatment, you are not subject to the Self-Employment tax. Sound complicated? Let us help. Legally avoiding self-employment taxes could save you up to $10,000 on the first $100,000 you earn in a year!
A tax deduction lowers your taxable income and reduces your tax liability. You subtract the amount of the tax deduction from your income, making your taxable income lower. Once you have an LLC or other legal entity formed, you become eligible for more than 250 tax deductions. You can apply all deductions against your overall gross taxable income, including your personal income. RLTY’s team of tax experts can help you understand how deductions work and save you thousands of dollars come tax time, ensuring you keep more of the hard-earned money you make. We always recommend you track your expenses and hire a professional to do your taxes.
Common deductions include expenses for home office deductions, business travel and meals, internet and phone bills and health insurance premiums. Additionally, self-employed individuals can deduct contributions to retirement plans and health savings accounts. Some common credits include the Earned Income Tax Credit and the Child and Dependent Care Credit.
For most businesses, the deadline for filing income tax returns either March 15th or April 15th of the following year. It is important to note that these deadlines can vary depending on your state and any extensions you may have applied for.
For most businesses, the deadline to file for an extension is March 15th or April 15th, depending on the tax year. The extension will give you an additional six months to file your tax return, making the final September 15th or October 15th.
The forms you need to file for your business taxes will depend on the type of entity you have and your tax situation. Some of the most common forms for business taxes include Form 1120S for S-Corporations, Form 1065 for partnerships and LLCs taxed as partnerships and Schedule C for sole proprietorships. Additionally, your business may be required to file other forms.
If you fail to file your tax return or pay your taxes by the deadline, you may be subject to penalties and interest charges. These penalties can add up quickly and can result in substantial amounts owed to the IRS or state tax agency. In some cases, failure to pay or file taxes can even lead to legal action.
You can deduct the cost of gas and wear and tear on your car as a real estate agent. You claim the expense in miles traveled for work, and you can claim both local travel for showings and longer travel for business trips. The IRS pays a standard mileage rate for business travel, which is 67 cents per mile for 2024 and $0.65 cents per mile in 2023.
Commissions you’re paid as a real estate agent are taxed like any self-employment income. You’ll owe 15.3% self-employment tax plus your income tax rate, which is based on your tax bracket determined by how much you earn. If you’re a single-member LLC taxed as an S Corp, you may pay yourself a salary and claim a portion of your income as business profits. In that case, the profit portion isn’t subject to the 15.3% self-employment tax.
The tax rate you pay depends on the amount of your taxable income. Your taxable income is any income you earn minus deductions you’re eligible to claim. An accountant can also help you create a personalized tax plan for the year. The two main numbers you need to know are the self-employment tax rate, which is 15.3%, and the income tax rate, which is between 10% and 37% depending on your taxable income. You’ll also be responsible for income tax your state collects.
Real estate agents who are brokers with a firm, rather than employees, are taxed as sole proprietors, LLCs or S Corps, depending on how your business is organized. In any case, the IRS considers you self-employed. You’ll owe the self-employment tax, be required to pay estimated quarterly taxes and be entitled to business-related tax deductions.
As a real estate agent, you’re generally self-employed, even if you work under the roof of a brokerage firm. That comes with all the responsibilities of running a business-of-one, including the way you file and pay taxes. Keep track of your business income and expenses throughout the year to make tax filing a smooth process, and consult an accountant periodically to stay on top of policy changes that could affect your tax bill.
If your business is selected for an IRS audit, the agency will typically notify you via mail and provide you with information on the specific items they want to review. During the audit, the IRS will review your financial records, receipts, and other documentation to ensure that your tax return was accurate and that you have paid the appropriate amount of tax.
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