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Essential Tax Information for Real Estate Agents: A Comprehensive Guide by Walker Business Systems

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This detailed guide covers crucial tax information for real estate agents, including federal taxes, self-employment taxes, business taxes, personal property taxes, and sales tax. It outlines how these taxes apply to agents' income and expenses, provides examples for calculating income and net profit, and emphasizes the importance of maintaining proper financial records. Additionally, it lists various deductible expenses specific to real estate agents, helping optimize tax returns and improve financial management. Knowledge of these tax elements is vital for every real estate professional.

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Essential Tax Information for Real Estate Agents: A Comprehensive Guide by Walker Business Systems

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

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

  3. 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

  4. 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.

  5. 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.

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

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

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

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

  10. 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

  11. 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

  12. 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

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

  14. 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)

  15. 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

  16. 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

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

  18. 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

  19. 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.

  20. 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

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