At a glance: Expense agents should track from the start – Inman | NutSocia

As we enter the fourth quarter, now is the time to get your finances in order for tax day. Here’s a quick look at what’s and isn’t deductible as you prepare for real estate tax season.

The last thing you want is financial surprises after a tough year in real estate, especially when it comes to taxes. Tax Day happens every year and most agents can’t afford it don’t plan ahead Therefore.

In “How Bad Is It? 14 scenarios for what agents can and can’t leave behind,” Inman’s Lillian Dickerson spoke to experts to find out what can and can’t get left behind, whether agents are busy, burned out or just need a break. (Spoilers: Not hoarding money for your taxes is a really bad idea.)

North Carolina-based tax expert Dalaine Bradley recommends saving at least 20 percent of your monthly income in a dedicated tax account. Some agents may even choose to pay their taxes quarterly to avoid paying a conspicuous amount on tax day, which can also feel more psychologically manageable.

There are many apps that you can use to keep track of things on the go, e.g Million Dollar Listing LA Stars James Harris and David Parnes sketch here.

However, you first need to know what is deductible and what is not. We’ve made a short list below to help you figure out what’s critical. Bookmark or take a screenshot if needed to stay up to date.

The effort: Paid commissions

deductible? Yes

Keep an eye on all those commissions that are paid out throughout the year as they can be very helpful during tax season.

The effort: vehicle costs

deductible? Yes

Claiming the standard deduction typically helps people who drive at least 10,000 miles for business, which still requires keeping a detailed logbook.

The effort: home office

deductible? Once in a while

For those with a larger office or a more expensive home, regular withdrawals can be more fruitful. The simplified method allows agents to deduct $5 per square foot up to $1,500.

The effort: desk fees

deductible? Once in a while

Desk fees are deductible regardless of agent size or whether it is a franchise, independent or otherwise. However, they are not deductible if an agent is already claiming home office expenses.

The effort: marketing and advertising costs

deductible? Yes

All promotional items such as business cards, flyers, signage and photographs and associated production costs can be claimed.

The costs: education and training

deductible? Once in a while

Any expenses related to education, training, coaching and conferences specific to the real estate industry are deductible.

The effort: licenses, memberships, fees, insurance

deductible? Once in a while

Qualifying deductibles include state license renewals, professional memberships, MLS fees, general business and error and omissions insurance (E&O), and property taxes necessary to run your business.

The effort: software

deductible? Yes

Software necessary to keep an agent’s business running — accounting software, lead generation software, CRMs, and any other product that can help track expenses or mileage — is also deductible.

The effort: speeding tickets and court fees

deductible? no

Any parking tickets or court fees incurred while working or as a result of working are not deductible – the IRS will not.

The cost: gifts

deductible? Once in a while

Customer gifts are mostly deductible. However, there are some caveats that agents must be aware of under IRS guidelines.

The cost: business lunch

deductible? Yes

Any meals consumed during a business trip or meals consumed with clients or colleagues to discuss business or generate business referrals count as a deduction.

The costs: Office supplies and equipment

deductible? Yes

Office supplies and equipment, ranging from stationery, photocopies, furniture to computers, phone and internet bills and more are deductible.

The costs: health insurance

deductible? Once in a while

If a representative and his or her spouse are not eligible for an employer-sponsored health insurance plan, health insurance premiums paid for him and his family are deductible, including health insurance, dental insurance, and long-term insurance.

The effort: donations

deductible? Yes

Agents should never hesitate to donate to important causes in their community and save those receipts for tax season.

Email to Dani Vanderboegh

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