Tax Information for Real Estate Agents

2. Tax Information for Real Estate Agents Presented by Walker Business Systems

3. Type of Taxes • Federal Taxes • Self-Employment Taxes • Business Taxes • Personal Property Taxes • Sales Tax

4. Self-Employment Taxes Self-Employment Tax is Social Security Tax and Medicare Tax For an employee the percentage is applied to Gross Income Social Security Medicare Total Employee 6.2% 1.45% 7.65% Employer 6.2% 1.45% 7.65% Totals 15.3% For a Self-Employed Person the percentage is applied to Net Income Example: Gross Commission Income $70,000 Business Expenses $15,000 Net Income $55,000 $55,000 times 15.3% = $8,415

5. Business Taxes – A way local governments collect more tax revenue. Businesses are charged a percentage of their gross receipts. (Real Estate agents do not normally have to have a separate business license from the company where their license hangs.) Personal Property Taxes - Examples of personal property are: vehicles, computers, office equipment, office supplies, leased equipment or vehicles. The county governments tax the businesses based on the estimated value of the assets. Sales Tax – Sales taxes are charged on goods and some services, purchased by your business. These taxes paid for business expenses are deductible from your gross business income.

6. How to Calculate a Profit & Loss John Doe Realtor • Profit & Loss Statement • 31 December 2013 • Gross Income • Income from Sales Commissions xxx,xxx • Income from Listing Commissions xxx,xxx • Income from Rental Commissions xxx,xxx • Income - Other xxx,xxx • Total Income xxx,xxx • Expenses • Advertising Expenses xxx,xxx • Car & Truck Expenses xxx,xxx • Commissions & Fees xxx,xxx • Depreciation Expense xxx,xxx • Insurance Expense xxx,xxx • Legal & Professional Fees xxx,xxx • Office Expenses xxx,xxx • Supplies Expense xxx,xxx • Taxes & Licenses xxx,xxx • Travel & Entertainment xxx,xxx • Business Meals xxx,xxx • Other Expenses xxx,xxx • Payroll Expenses xxx,xxx • Total Expenses xxx,xxx • Net Income (or Loss) xxx,xxx • The actual taxes due depends upon your business structure.

7. THREE ITEMS MANDATORY TO PROPERLY BEGIN KEEPING RECORDS FOR YOUR BUSINESS

8. 1. A SEPARATE CHECKING ACCOUNT FOR ALL BUSINESS TRANSACTIONS

9. 1. A SEPARATE CHECKING ACCOUNT FOR ALL BUSINESS TRANSACTIONS 2. A CALENDAR

10. 1. A SEPARATE CHECKING ACCOUNT FOR ALL BUSINESS TRANSACTIONS 2. A CALENDAR 3. A FILING SYSTEM

11. Tax Deductions for Real Estate Agents • Accounting & Tax Prep • Advertising • Newspapers - Giveaway Items • General Magazine - Business Cards • Proprietary Magazines - Signs • Radio - Flyers • TV - Direct Mail • Billboard - Telemarketing • Internet - 1-800 Number • Internet Design Work - IVR Technology • Web Site Maintenance Fee - Advertising - Other • Home page, access, email fees

12. Tax Deductions for Real Estate Agents • Automobile – Need to Keep a Log of all Miles • _____ Total Business Miles (Standard rate 2013 = $0.565 per mile) • _____ Total Miles in Vehicle • _____ Percentage Business Miles • Actual Automobile Expenses • Includes • Fuel • Repairs – Oil Changes, tires, other repairs • Insurance • Vehicle registration, license • Vehicle lease or rental fees

13. Tax Deductions for Real Estate Agents -Bank Charges • Checks • Service Charges • Charitable Contributions (Deductible on Personal Return) • Computer MLS Charges • Contract Labor • Technology Support • Coach • Copies • Credit Reports • Customer Gifts • Gift Albums • Certificates/Other

14. Tax Deductions for Real Estate Agents • Continuing Education • Books • Newsletters • Tapes / CDs • Seminars • Magazine Subscriptions • Depreciation / Amortization • Dues • MLS • NAR • Board of Realtors • Other

15. Tax Deductions for Real Estate Agents • Equipment Rental • Copier • Fax • Computer • Cell Phone • Interest/Finance Charges • Insurance • E&O • Insurance – Health • Property • Equipment • Legal • Sentrilock • Business Meals (Enter 100% of expense)

16. Tax Deductions for Real Estate Agents • Office Supplies • Paper • Ink & Cartridges • Other • Photography • Postage/Freight/Delivery • Printing (Non-advertising) • Professional Fees • Rent – Office • Repairs & Maintenance • Office • Janitorial & Cleaning • Computers • Copier

17. Tax Deductions for Real Estate Agents • Payroll Expenses • Staff (Gross Pay) • Runner • Telephones • CommuniKate System • Phone Line • Long Distance • Cellular Phone • Answering Service • Computer/Internet Line • Utilities – Office • Miscellaneous • Concessions – Selling Expenses

18. Tax Deductions for Real Estate Agents • Taxes • Payroll (FICA) • Payroll (FUTA) • Payroll (SUTA) • Property Taxes • State Taxes (If Incorporated) • Annual Report • Franchise & Excise

19. Tax Deductions for Real Estate Agents • Travel & Entertainment & Lodging • Airfare • Bus & Subway • Bridge & Highway Tolls • Car Rental • Computer Time Charges • Laundry • Lodging (do not combine with meals) • Meals (do not combine with lodging) • Parking • Porter, Bell Captain • Taxi • Telephone & Fax Charges • Train • Other

20. Tax Deductions for Real Estate Agents • Equipment Purchases • Date Description Amount • Home Office Deduction • In order to claim this deduction: • Business must show a Profit. • Taxpayers must use that part of their home: • Exclusively and regularly as their principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of their business, or in connection with their trade or business where there is a separate structure not attached to the home; or • On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.

21. Federal Income Taxes • 1st Installment 4/15/13 • 2nd Installment 6/15/13 • 3rd Installment 9/15/13 • 4th Installment 1/15/14 • Payment made with Extension 4/15/14