April 15th is less than a month away! Tax Day will creep up faster than you think, and taxes can be daunting as a real estate agent. Did you know that most real estate agents are considered self-employed? You will file taxes differently than simply submitting an employer’s W2, and you need to be prepared to avoid a headache. Accountants are always recommended, but if you file taxes yourself, you’ll need some guidance to avoid audits and make filing taxes less “taxing”.
Here’s 3 Simple Tax Tips for Real Estate Agents:
Double Check Your Deductions
As a self-employed worker, you can deduct all kinds of day-to-day expenses! Everything you use, from your car, to office supplies, to electronics, even the space you use in your home as an office can be deducted as a business expense.
This is especially important as you are filing quarterly estimated taxes (required for self employed workers!). Your quarterly estimated payments don’t include deductions, and you can keep track of those to lessen your estimated payments.
Use an Electronic Tracker and File Electronically
Gone are the days of storing countless teeny paper receipts! Make your life easier by using digitized documentation for your expense tracking and filing. Audits are a looming fear for everyone – avoid drawing red flags by having your expenses and filing saved on an app used for self-employed workers (Try Quickbooks for an easy start!)
Even your mileage can be tracked digitally. Using apps like MileIQ, you can keep track of miles driven for work, receipts, and more to make your filing process go smoothly.
Attach a Schedule or Statement Explaining Large Items
No one enjoys the thought of being audited. Avoid potential red flags by attaching a schedule or report to your tax return to explain large items. You can attach this schedule or report to anything you feel might cause concern, and it’s often helpful, especially when filing taxes by yourself. This gives the IRS a more detailed explanation on big ticket items, and proves that it was, in fact, a business expense. Taking the time to include this information can save you a lot of trouble down the road.
You’ve got this! Filing your taxes can be much simpler than it seems by making sure to deduct all possible business expenses, using electronic applications to track expenses and file self-employment taxes, and using accountant tips like attaching a statement to larger expenses to be upfront and avoid potential audits. Tax season doesn’t have to be taxing, and you can better prepare for next year ahead of time.
Need help? Check out our Real Estate Agent Deductions Checklist!