Tax Deductions for Real Estate
Professionals
Maureen McEnroe, CFA
Real Estate Broker
Cell 914 588 1873
Objective
• To educate and prepare Real Estate
Professionals to identify and maximize
deductions and maintain defensible records of
their deductions.
What’s in your pocket?
It is not what you make but what you get to
keep that matters. This Course will guide you
through what items are tax deductible, what
records you need to keep, and how to maximize
your deductions.
Introduction
•Thanks you for giving me the opportunity to teach
the Tax Deductions for Real Estate Professionals
/record keeping class. I want to preface this with
the fact that I am not an Accountant, I have MBA
and I am a Chartered Financial Analyst. My
background in Business but business planning and
analysis is my forte. Part of my strength as an
analyst is in forecasting and planning.
• Warning this class was designed by a nonaccountant. There are some complex
concepts that I have tried to simplify. After
having consulted with tax professionals, tax
publications, IRS documents and Publications,
this class is an overview of the allowable and
not allowable deductions Real Estate
Professionals can utilize to legally lower their
tax burden and put more money in their
pockets.
• As we all know it is not what we make but
what we keep that truly matters. As an
independent contractor, your Brokerage will
give you a 1099 to represent the revenue side
of the equation
• At the end of this class, you should be able to
set up the necessary records and documents
to monitor and classify the various deductions
available to you.
• The IRS indicates:
Licensed Real Estate Agents - Real Estate Tax Tips
• Most real estate professionals operate their
business as a sole proprietorship. This means
that you are not someone's employee, you
haven't formed a partnership with anyone,
and you have not incorporated your business.
• Statutory Nonemployees
• Licensed Real Estate agents are statutory
nonemployees and are treated as self-employed for all
Federal tax purposes, including income and
employment taxes, if:
• Substantially all payments for their services as real
estate agents are directly related to sales or other
output, rather than to the number of hours worked
• Their services are performed under a written contract
providing that they will not be treated as employees
for Federal tax purposes
• This category includes individuals engaged in appraisal
activities for real estate sales if they earn income based
on sales or other output.
• This means you are essentially Independent
Contractors.
• IRS Publication 334 states:
• Real Estate dealer. You are a real estate dealer if
you are engaged in the business of selling real
estate to customers with the purpose of making a
profit from those sales. Rent you receive from
real estate held for sale to customers is subject to
SE tax. However, rent you receive from real estate
held for speculation or investment is not subject
to SE tax.
The Value of Tax Deductions
• As a general rule of thumb, for agents/brokers earning
up to $100,000 per year, every dollar deducted from
your taxable income will save you roughly $0.50 in
taxes. This assumes a 28% federal income tax, 15.3% in
self-employment taxes and an average of 6% state
income taxes. In Rockland County we have a higher
local tax so our savings are a bit higher.
• For those lucky agents making over $100,000 per year,
your deductions are worth a bit less than $0.50 on the
dollar but still approaching $0.40 or so.
• According to the IRS code Section 162:
• Any expense for your real estate business is deductible if it
is:
• 1) Ordinary and necessary
• 2) Directly related to your business and
• 3) A reasonable amount
• There is no upper limit on your deductions as long as they
are reasonable, and you do not deduct more than you
spend. If you have Real Estate earnings of $12,000 and you
spent $15,000 on dues advertising, buying leads and other
related business expenses, your deduction is limited to the
$12,000 earned The good news is that in most cases that
other $3,000 is not lost, it becomes a tax loss carry forward
that can be used in future years against future income
earned.
• Doing a quick back of the envelope calculation, I would like
to quickly demonstrate the value of deductions. This
hypothetical Real Estate Agent is a single 50-year-old
person. This person earned $100,000, had business
expenses of $27.000 of which $24,000 was deductible. We
assumed a 28% federal tax rate, an 8.375% local tax rate
and a 15.3% Self Employment tax rate.
• Take that same agent and introduce the $24,000 in
itemized deductions instead of the standard deduction of
$6,300 reduces the taxable income by $17,700. Assuming
the same tax rates the agent could pay federal taxes of
$20K, State/Local taxes of $6,000 and Self-employment
taxes of $6K. The difference in the tax burden using the
allowable deductions puts approximately $7,300 more
money in this agent’s net earnings. That is like have an
extra closing! So lets get deducting!!
Comparing Standard Deduction to Itemized Deductions
Income
Std Deduction
Itemize. Deduc tion Difference
$100,000
$100,000
Expenses
$27,000
Deductible Expenses
$24,000
Std Deduction
$6,300
Tax Exemption
$4,000
$4,000
Taxable Income
$89,700
$72,000
$17,770
Federal Taxes
$25,116
$20,160
$4,596
State/Local Taxes
$7,512
$6,030
$1,482
Self Employ Taxes
$6,337
$5,087
$1,250
Value of Deductions
$7,328
Banking And Tax Planning
• As a new or even an experienced Agent or Broker, how exciting is it
to get that big check. Lets take a step back and detail how you
should be looking at this check.
• As an Independent Contractor, most accountants recommend filing
quarterly taxes. You can’t take the deductions until year-end when
you file the fiscal year taxes, but the estimated taxes are calculated
off your anticipated gross revenue for the current year. In order to
facilitate this, I recommend taking each check and depositing it into
two separate accounts. Open a separate savings account that is
not connected to your checking account.
• If you are in the 28% tax bracket, immediately
deposit at least 25%-28% of each and every check
into this saving account. This will be the account
from which you will pay your quarterly tax
payments.
• One piece of advice I can give every agent. Do
not count on the check until the deal is closed.
Deals fall apart for all kinds of reasons. If you
have already spent the money, or earmarked it
for a vacation or event, not only do you lose the
deal but you also lose that vacation which is even
more upsetting.
Self-Employment Tax
• Employees pay a 15.3% FICA Social Security/Medicare tax. This is
split evenly between the employer and the employee, so the
employees paycheck is reduced by a 7.65% FICA line item. Workers
pay into the Social Security and Medicare systems. Self-Employed
workers are given credit for Social Security and Medicare
contributions via the Self Employment Tax so these workers will be
included in these two safety net programs. Self-employment tax is
15.3% of 92.35% of the Independent Contractors Net Income.
However in this case the government makes an attempt to be fair.
Given that there is no employer with which to share this expense,
the IRS allows Independent Contractors to deduct 50% of their Selfemployment tax. This is itemized on the Schedule SE that has to be
submitted annually with your tax return.
Tax Deductions For Real Estate Professionals
• 1) Car/Truck A) If you are good at record
keeping keep track of all your car expenses and
figure out your annual deduction (Add up how
much you spend for gas, oil, repairs, car washes.
Maintenance etc.)
OR
B) Track how many miles you have used your car
for business and use the standard deduction for
mileage, which is $0.575 per mile in 2015. Note
the mileage you use driving to and from work is
not deductible only the mileage used in
previewing, showing, doing CMA, Open Houses
and taking clients around are deductible.
• 2) Office Expenses If you have a home office you may
be able to deduct the rent and utilities you spend for
that office. Renters and owners can take this
deduction.
• 3) Business travel If you go out of town for business
you can deduct airfare, transportation costs,
hotel/lodging expenses, 50% of the cost of meals while
you are away. (Conferences, seminars, education,
designations etc.)
• 4) Meals and Entertainment If you take a client out
and have a serious business discussion before, during
or after the meal/event, you can deduct 50% of the
cost of that meal or entertainment as a legitimate
business cost. Food at Open Houses is 100%
deductible.
• 5) Depreciation Property you buy and use for
business can be depreciated over time. Items like cars,
property, computers and office furniture can be
depreciated over time. IRS Code section 179 allows an
agent to deduct the full price of business equipment,
furniture and other long term items purchased for your
personal use in a home or brokers office in the year
purchased
• 6) Supplies Business items you use up in less than
one year such as paper ink/toner for printers,
paperclips, postage etc. computer software, internet
and phone service fees
• 7) Legal/Professional Services Any fee you pay to an
accountant, lawyer, consultant or other professional is
deductible.
• 8) Insurance Insurance that you buy just for your business
is deductible. Business liability insurance (E&O). If you have
a home office, you may be able to deduct a portion of your
homeowners insurance. Self-employed people are allowed
to deduct 100% of their health insurance premiums from
their income taxes. Medical expenses when they reach a
certain limit and health savings account contributions may
also be deductible.
• 9) Marketing/Advertising This is a category often under
reported and therefore deductions are missed. Deductions
include funds spent on websites, mailing lists, newspaper
or online advertising, flyers, postcards, Just Listed Just Sold
Cards, promotional materials, logo clothing. If you order
pens, calendars or seeds to give to clients these are all
deductible. Did you take a Real Estate Ad out in a local
journal or fundraising event—it is deductible. Pictures can
be another deduction.
• 10) Business Gifts Many agents hand their client a
gift at the closing. Each gift can be deducted for up to
$25. Unfortunately that $100 or $200 restaurant gift
certificate cannot be fully deducted.
• 11) Desk Fees Not all Brokers charge Desk or
Technology fees, but if they do, those fees are
deductible.
• 12) Professional Dues, Fees, Subscriptions The
HGAR, NYSAR and all professional Real Estate
Organization fees and dues are deductible. Your
monthly eKey charge and your bi-annual license
renewal fees are also deductible. Any Real Estate print
or online magazines and periodicals you purchase are
deductible.
• 13) Education Classes you take in person or
online that are necessary to maintain your license
or further your education—the cost of these
classes are deductible. The cost of the 22.5
credits we must take every two years is a
deduction. Please note the cost of obtaining the
Sales Agent or Brokers License is not deductible.
• 14) Retirement Plan Contributions If you make a
contribution to a retirement plan, 401k Roth IRA
etc., that contribution is a nice deduction.
• 15) Interest Interest on business loans or
interest paid for a business credit card is
deductible.
• Brokerages have several other tax deductions
available including, Office expenses like rent,
cleaning and maintenance, utilities, office
supplies, Referral Fees and commission
rebates, franchise fees, taxes including payroll
taxes for employees, state and local business
taxes, wages and benefits paid to employees.
Accounting Expenses
• Accounting related to your business, your LLC
or S Corp. You can deduct the cost of an
accounting system installation or
accounting/record keeping applications
purchased to manage your business.
Advertising /Marketing Expenses
• Business cards, home demonstrations,
promotional activities performed in person,
online, mailed. Signs, internet Ads, fundraiser
sponsorships, Ads in Periodicals, Flyers, Just
Listed/Just Sold Cards, Logo Clothing,
Postcards, EDDM mailings, Lead Generation,
Premium Agent fees in Trulia, Zillow
Realtor.com etc.
Automobile Deductions
• Cost of car, Garage, parking, gas, insurance,
interest, licensing, registration, inspections, lease
expenses, oil and lubrication, repairs, tires,
washing and detailing. Vs. Mileage deductions.
• If you are using the simpler mileage deduction
method you can switch to the actual cost method
at any time, but once you switch to actual cost
method, you cannot go back to mileage method
for the life of that vehicle.
Business Conventions Travel
• Travel and lodging expenses for business
related trips, conventions, trade shows,
Business meals and entertainment –50%
deducted. Business start-up costs have to be
amortized. Expenses for magazines,
newspapers, periodicals used for business.
• Records must show amount spent, time and
place, business purpose and names and
business associations of individuals involved.
Commissions/ Referrals
• Commissions paid to agents for sales
purchase, leases and rentals are deductible for
the broker not for the agent.
• Referral Fees, Commission Rebates, Franchise
Fees are all deductible for the Broker.
Computer Hardware & Software
• The cost of Computers generally have to be
amortized over their useful life. So a $1500
laptop may provide a $500 deduction per year
for three years.
• Computer Software leased or purchased has
to be amortized.
Dues
• MLS Fees, Professional Organizations or
designation societies, Local and State Realtor
Associations, Chamber of Commerce and Desk
Fees are deductible.
Education Expenses
• The expense of classes used to maintain or
improve your skills for your realtor business
are deductible. The 22.5 CE credit costs are
deductions; taking a course to get an
additional designation is a deduction.
• The cost of getting your Real Estate license is
not deductible
Employee Expenses & Payroll
• Gift deductions are capped at $25 or the cost
whichever is lower, health insurance, E&O
Insurance, Internet/Websites fees-if you pay,
Listing Books, RE website Premier ads on
Trulia, Zillow etc., local transportation to and
from CMA, showings, property previews,
listing fees if any, desk fees, technology fees,
supplies, referral fees, franchise fees are
deductible. Start up costs must be amortized.
Need Help? Hire Your Children
• If you need help during your busy time, hire
you minor children. The wages you pay the
child is deductible by you and taxable to your
child (probably at a much lower tax rate than
yours)
• Wages paid to children under 18 is not subject
to payroll taxes unless you operate as a
corporation.
Home Office Expenses
• Rent, utilities, interest, RE taxes, cleaning and
maintenance, Office Supplies, Postage
expenses, RE license fees, rent on any
business properties, retirement plans,
subscriptions and professional journals.
Occupancy Expense
• Rent, utilities, interest, Real Estate Taxes,
depreciation, cleaning and maintenance are
deductible.
• Office equipment and furniture must be
depreciated.
Phone Service
• Cell Phone, pagers, Internet services are
deductible.
Retirement Plans
• Contributing to some Retirement plan lowers
your taxable income while building your
retirement nest egg.
• There are many types of plans in addition to
Retirement Plans-IRA (contributions are pretax while distributions are subject to taxation.
), Roth IRAs (contributions after taxation but
distributions are not taxed)
Record Keeping
• Documentation is your friend when it comes
to deductions. The devil is in the details. The
IRS has strict terms and conditions for
deductions and the burden is on us to provide
the required proof of all expenses and
deductions.
• Need to keep records/ receipts for 7 years.
Separate Accounts?
• Some agents open a separate checking
account and credit card for their Real Estate
utilization.
• Deposit all commission checks and pay all Real
Estate expenses from their account. This
makes for simple record keeping and tracking.
• Car and home office expenses should not be
paid out of this account.
Budgeting and Saving
• If you maintain a separate business account,
pay yourself a salary of no more than 50% of
Gross or 60% of Net income.
• The remaining money can be used for
business expenses, taxes and some leeway for
months when your commissions are lean.
• How do you track your mileage?
• If you use some appointment monitoring
system like Outlook or Google Calendar, you
can use these to notate mileage for each trip.
What I recommend doing is to track and
record your mileage daily in a little book that
you keep in your car. On a weekly or monthly
basis, take all those trips and transcribe them
into an Excel spread sheet
• The IRS requires a 3-month log to prove auto
deductions, however our business can be
seasonal, so only tracking your mileage for
three months may under report the actual
mileage you have logged. H&R Block and
several other accountants have developed
nice worksheets that can be used to track your
expenses. I have included a few examples in
your handouts
• I have a spreadsheet I developed where I
input expenses and mileage as they accrue. I
included my summary sheet in the handout. I
submit this to my accountant. I filled in a few
items in the September worksheet they total
up to $811 in advertising, $183 in mileage
deduction, for a total of $1,408 in deductible
expenses.
• For those of you with a more technological
bend, there are several Apps that are available
for free or for purchase that track mileage and
or expenses. I have included a few of these
Apps.
Apps for Tracking Business Mileage
• 1) Mile IQ free app
https://itunes.apple.com/us/app/mileiq-miletracker-mileage/id578830929?mt=8
• 2) TRIP LOG GPS Mileage Tracker free App $10
a year for advanced features
https://triplogmileage.com
• 3) Auto Miles (Magical Miles) up to 100 miles
for free $4.99 unlimited
https://itunes.apple.com/us/app/auto-milesautomatic-mileage/id817598888?mt=8
• MileIQ Mile Tracker & Mileage Log for Tax
Deduction
• This free app uses an innovative drive-detection
technology to automatically record your trips and
calculate their costs for you. The App uses your
iOS device integrated GPS before using current
gas prices to calculate the expenses before
uploading them for secure storage on the
developers cloud server. Can track parking costs
and tolls etc. Allowed 40 free drives per month.
For $5.99 you can track unlimited drives that
month. Downside is I believe it uses data during
the mileage calculations
•
•
•Free version enables GPS mileage tracking, actual
driving routes on maps, and vehicle fuel economy
and expense tracking. The $10 annual fee includes
auto-start on power, Bluetooth, daily back up to the
cloud, take a picture of receipts and upload them to
the cloud, tracks unlimited data history. IRS
Publication 463 Travel, Entertainment, Gift, and Car
Expenses Generates IRS Compliant trip reports
• Magical Miles
• Needs iOS 8 or higher to work. Automatically logs
miles using your GPS. Can track deductible and
other trips and export the data. Fully automatic
mileage logging! There's no need to remember to
track your drives, because Magical Miles senses
when you're driving and does it for you.
Automatically calculated trip distances and
deductions based on your actual routes driven.
Effortlessly export your logs as a spreadsheet to
share with your accountant, your boss, or the IRS.
How Should I Manage My Receipts?
• The tried and true old-fashioned method of
saving receipts is to mark the utilization on the
receipt and save it in a folder or a shoebox.
When its time to figure out your taxes and
your deductions, pull out the folder or
shoebox and go through all the receipts
categorize them and show them to your
accountant.
• Alternatively, there are some great Apps that help
you scan, save and categorize receipts. This list is
not exhaustive, but I want to share with you
several apps that can help you be organized and
make sure you don’t overlook deductions.
•
•
•
•
•
1) NeatReceipts http://www.neat.com/
2) Certify
http://www.certify.com/
3) Shoeboxed
https://shoeboxed.com/
4) OneReceipt
https://www.onereceipt.com/
5) Receipts
https/appcenter.evernote.com/app/receipts/ipa
d
• 6) IQBoxy
https://www.iqboxy.com
• Neat Receipts is a PC based program this one is
not free it cost $150 to buy you get a scanner and
the software. Eliminates data entry. Very
simple to use you run the receipt through the
provided scanner and hit the scan button. The
program uses optical character recognition to
turn the receipt into a searchable document. You
can save the receipts in folders, create expense
reports and other documents. Send docs to
Excel, QuickBooks, Turbo Tax and it can integrate
with CRM. Essentially Neat extracts the key info
from your receipts or business cards or
documents and integrates that with accounting,
contact management and business software.
• Certify $8 per month Cloud-based app used
to track your receipts. You have to upload your
receipts to a “Certify Wallet” then you enter
and categorize the receipts.
• Shoeboxed $9.99 per month Tracks receipts,
mileage, business cards. Take a picture of
your receipt with you camera and the app
extracts the vendor, total amount, payment
method, and date. It takes the data and
categorizes the receipts. Can create expense
reports, integrate with most accounting and
bookkeeping solutions. One-click mileage
tracking.
• OneReceipt Stores your receipts in the cloud
and automatically pulls in e-receipts. indexes
your spending. Free download of the
application.
• Receipts Free –Does not make you set up an
account to use. Can track your personal and
business income, expenses and mileage,
create budgets, and make detailed expense
reports. Backups can be saved and restored to
Evernote.
• IQBoxy
• Turns bills and receipts into financial data.
Uses Optical character recognition with
receipt detection technology to convert
photos to text. Can email, scan, cloud
connect, or snail mail receipts to IQBoxy for
collection and processing.
Home Office Deduction Requirements
• To be eligible for deductions the IRS indicates that part of
your home must be used for one of the following:
• Exclusively and regularly as your principal place of business
• Exclusively and regularly where you meet and deal with
clients in the normal course of your trade/business
• A separate structure used exclusively and regularly in
connection with your trade/business not attached to your
home
• On a regular basis for certain storage use
• This space cannot be used for any other purpose
• Part of home office deduction:
• Mortgage interest, casualty losses, property taxes repairs
depreciation maintenance condo association fees
• Rough way to calculate the deduction: take the total square
footage of your home/condo and divide that by the square
footage of your home office. For example if you have a
2000 square foot home and your office is 150 square feet
the office represents 7.5% of your home. (150/2000). You
can deduct 7.5% of your mortgage interest, property taxes,
home repairs, home depreciation, home maintenance and
condo fees. So say this agent’s home expenses are
$25,000, their home office deduction could be $1,875,
which translates into roughly $900 is tax savings.
•
Estimated Taxes
• As an Independent Contractor, if the total amount of taxes
due is greater than $1,000, you are obliged to make
quarterly estimates tax payments to the IRS. Our federal
tax system is a pay as you go system, so if you wait to pay
the entire amount when you file your annual tax return,
The IRS will assess late pay penalties and interest charges.
• To estimate taxes you need to estimate your 2015
commissions and your 2015 total business expenses. Take
the Commission anticipated and subtract the estimated
expenses to come up with your estimated Net Income from
Real Estate activities.
• Assume a single head of household for calculations
•
• Step 1 Estimate your Net Income from Real Estate Activities:
– Commissions anticipated
•
•
•
•
•
•
•
•
Less
operating expenses anticipated
Net Income
Step 2 Multiply Net Income by 15.3% to calculate Self Employment Tax
Step 3 Divide Self Employment tax in half
Step 4 Subtract half of self employment tax from your Net Income
• Step 5 Estimate itemized deductions or take the standard deduction
• Step 6 Subtract itemized deductions from Step 4
•
• Step 7 Subtract Personal Exemption allowed from Step 6
•
• Step 8 Look up the current year tax rates from the IRS
website
• http://www.irs.com/articles/2015-federal-tax-ratespersonal-exemptions-and-standard-deductions)
•
• Step 9 Calculate Federal Tax based on Step 7 income
•
• Step 10 Subtract tax credits and child tax credits from
estimate tax on step 9 if any
•
• Step 11 Add the total estimated federal tax due to the
estimated self employment tax due and divide by 4
• The IRS very generously provides the tools we
need to calculate our estimated taxes.
Publication 505 and Form 1040 ES include this
12-page information and tax estimation
worksheet, which is used to estimate next
year’s taxes. http://www.irs.gov/pub/irspdf/f1040es.pdf
• Essentially you take the last year’s income and have to guestimate if
the current year is likely to be higher, lower or similar to last year’s.
If you had a really great year in 2014, congratulations! Did your
production go up because you are getting more referrals, more
repeat customers, spending more on advertising? Did you have
one or more really large sales that you don’t anticipate to recur in
2015? These are the things you have to figure out before you can
estimate your taxes. Pages 6 and 7 in this booklet are the
important worksheets. On page 6 you estimate your selfemployment taxes and on page 8 you do all the other calculations
to figure you estimated annual tax burden for 2015. At the bottom
of page 8, they simply take your 2015 estimated taxes and divide it
into 4 payments. Estimated tax payments are due April 15th, June
15th, September 15th and January 15 2016. The IRS has even seen
fit to include Payment vouchers to send with your money. If you
use an accountant to prepare your taxes, he or she will work with
you to estimate your taxes and prepare the vouchers for you.
• Next Slide Estimated Taxes Worksheet
Business Structure
Many Real Estate Agents and Brokers operate
and file taxes as Sole Proprietors. The Self
Employment tax we discussed earlier is due
under this taxable entity. Some agents opt to
form an LLC or an S Corporation, which reduce
your self-employment tax liability. An S
Corporations allows you to reduce Self
Employment tax by splitting salary and
dividends.
• As an S Corp, you can classify some of your income as salary and
some as a distribution. You only have to pay self-employment tax
on the salary part of the income, and you just pay ordinary income
tax on the distribution portion of the income. The caveat is the IRS
says you must designate a “reasonable” amount of your income as
wages rather than a distribution. An S corporation also provides
protection for your personal assets that the Sole Proprietorship
does not. The negative with an S Corp is the cost to start up and
maintain the S Corp. NY state charges a franchise fee on S Corps S
corps with revenue of $0-$100,00 pay $25. There is a set scale –for
revenue $100,001-$250,00 you pay $75.
• If your taxable income is $61,000 and we assume 75% is income
and 25% a distribution, this could save the agent approximately
$2,100 in self employment taxes. (Calculating Self employment
taxes on $45,750 instead of $61,000) This more than offsets the
$25 franchise fee you will have to pay.
Q&A
Questions
• I live 2 miles from the Brokers Office. I spend
several hours at least 5 times a week at the
office and log approximately 40 miles of Real
Estate Travel weekly.
• My weekly auto mileage deduction is:
• 1) 50
2) 52
• 3) 40
4) 45
• I must maintain records for how many years in
case the IRS conducts an audit.
• 1) 12
2) 7
• 3) 10
4) 5
• Which Item is not deductible:
• 1) This Tax Deduction Class
• 2) Trulia Advertising
• 3) Real Estate Licensure Course
• 4) Business meals and entertainment
• Itemized Deductions are always better than
taking the standard deduction
• True
False
• In what form are Independent Contractors
annual revenue reported?
• 1) W2
2)1098
• 3) K1
4) 1099MISC
• Which is not subject to Self Employment Taxes
• 1) Rent from an investment property
• 2) Rental Commission
• 3) Commercial Lease Commission
• 4) Real Estate Sales Commissions
True or False
• 1) Most Real Estate Professionals are LLCs
• 2) The IRS tells us when we have missed a
deduction
• 3) Real Estate Professionals are Statutory
Nonemployees
• What percentage of Self Employment taxes
are deductible?
• 1) 15.3%
2) 7.65%
• 3) 92.35%
4) 14.1%
• Standard mileage deduction for 2015 is?
• 1) $0.575
2)$0.57
• 3) $0.565
4) $0.56
Yes or No
• 1) Is there an upper limit in deductions?
• 2) Can you deduct more than you earn?
• 3) Can you elect to file taxes annually?
• 4) Can you deduct mileage and other car
expenses?
IRS Code 162 Deductibility Rules Does
Not include?
• 1) Ordinary and necessary
• 2) Directly related to your business
• 3) Limited to domestic expenses
• 4) Reasonable amount
Who can deduct Office Expenses?
• 1) Agents that own their home
• 2) Agents that rent their homes
Which is a legitimate deduction?
• 1) Realtor Magazine subscriptions
• 2) Trip to Las Vegas where you look at 1 listing
• 3) Trip to NYC for a Foreclosure conference
• 4) Computer purchased for your business
Insurance Deductions Allowed?
• 1) Entire cost of Homeowners Insurance
• 2) E&O Insurance paid by the Broker
• 3) E&O insurance paid by the Agent
• 4) Entire cost of Health Insurance
How much Can I Deduct?
• 1) $100 restaurant gift certificate given to a
buyer at a closing.
• 2) $250 monthly Trulia premier agent fee
• 3) $144 per year eKey expenses
• 4) $150 Business lunch for myself and 2 clients.
True or False
• 1) I can log 3 months of auto expenses and
multiply that by 4 to satisfy the IRS.
• 2) I can choose the information in Include on
my tax deduction receipts.
• 3) I should wait until the year ends to start
putting my records and expense receipts
together.
Acceptable Home Offices Include?
• 1) Separate room used for nothing but business
• 2) Guest room where I keep my desk
• 3) Computer set up on desk in kitchen
• 4) Rented office where I conduct my business and
meet clients.
Why do Independent Contractors have
to pay Self Employment Taxes?
• 1) To be fair to employees
• 2) To enable IC to participate in Medicare and
Social Security
• 3) Because the IRS is greedy
• 4) To provide another deduction
Which Form helps Independent
Contractors Estimate their Tax Burden?
• 1) 1098
2)1099
• 3) 1040ES
4) Schedule SE
When are estimates Taxes Due?
• 1) 4/15, 6/15, 9/15, 1/15
• 2) 3/15, 6/15, 9/15, 12/15
• 3) 4/15. 7/15, 10/15, 2/15
• 4) 4/15, 7/15, 10/15, 1/15
How can and S Corp Lower SE Taxes?
• 1) Allows S Corp to take additional deductions
• 2) S Corps can pass through income
• 3) Franchise fees are low
• 4) Allows you to split salaries and dividends