Tax Services for Real Estate Agents since 1983

How Much The Wrong Tax Preparer Can Cost You

If your tax preparer does not specialize in real estate agents they may cost you plenty.

There are three areas where you could be paying more in taxes or receiving less of a refund. These critical areas are in taxes, penalties and interest, and audits.

Income tax rates range from 10% to 35%. Real estate agents are also affected by the self-employment tax, which is 15.3%.

How would you be affected, if a tax preparer does not know all of the deductions, applicable to real estate agents? Let’s look at an example. We will assume you are an average taxpayer in the 28% tax bracket. We would also add on the 15.3% self-employment tax. Your combined taxes would be 43.3%.

For every $100 in deductions, a preparer misses, it would cost you $43.30. Too many missed deductions may add up to a hefty amount of money!

The next area for you to be concerned about is the areas of penalties and interest. There are many different types of penalties and interest. The general rule here is avoiding mistakes will save you penalties and interest.

Finally, a tax preparer who specializes in real estate agents can save you money in the area of tax audits.

People are often selected for a tax audit by computer analysis. The IRS computers compare average expenses for each type of profession. If your expenses are out of line in comparison with other real estate agents your chances of being audited are more likely.

Here is an example. Let’s say on average real estate agents, with gross commissions of $50,000, have office expenses of $2,500. You have gross commissions of $50,000, but you report office expenses of $15,000. This is a red flag on your tax return.

Although you do not want to raise red flags on your return, you also do not want to cheat yourself out of any deductions you are entitled to. A tax preparer who specializes in real estate agents, should have a good feel for a proper balance.

Haven't Filed Your Taxes in a Long Time?

I frequently prepare tax returns for people who have not filed their income tax returns for 5, 10 and even more years. If you are in this situation you are not alone.

A lot of real estate agents, come from a background as an employee of a company. When they were an employee, their company withheld income taxes, from each paycheck. When you become a real estate agent you are totally responsible for all of your withholding.

Many people find the transition from an employee to self employed agent to be difficult, and may not pay their estimated taxes. Soon they do not have the money, to pay their taxes, and feel they are in a hopeless situation. Before they know it they are behind many years filing their tax returns.

If you continue to not file your tax returns, and not pay your taxes, the Internal Revenue Service can confiscate your assets to satisfy your debt. Anything you own can be confiscated, i.e. bank accounts, your home, your car, etc.

If you are in this situation your first step is find the best tax preparer for real estate agents. The most knowledgeable person, for real estate agents, can look for deductions which will help lower your tax bill. If you owe the government you may owe income taxes, self-employment taxes and penalties and interest.

The next step is to prepare your tax returns as soon as possible. You need to do this so you will know how much taxes you owe and what steps you can use to pay them.

I recommend you use the spreadsheets on my website to help you accumulate your expenses. The spreadsheets are specifically geared to your expenses as a real estate agent.

Many people mail or fax their information for me to prepare their tax returns. When they mail their information, I ask they also send me other information. The other information is the spreadsheet they filled out and any other information they feel is pertinent to preparing their taxes. The other information usually includes items such as the mortgage statement of their residence, charitable contributions, rental information, etc.

It is also important for me to have a copy of the last tax return they had prepared. This tax return may have additional information I need to prepare future years plus information to save penalties and interest.

Once I have all the information I need to start I begin work of the tax returns. I almost always have many additional questions the purpose of which is to save more taxes. I continue to work, with the client, until I have exhausted every means possible to save the taxes, penalties and interest they owe.

Once I am done preparing the tax returns, I discuss with the client, whether they have enough money to pay their taxes. If not then I look at different ways for the client to pay what is owed.