In less than a month we will have passed the tax filing deadline; and if you’re a real estate agent unfamiliar with the credits and deductions you’re entitled to, you may be forfeiting more than you have to.
Do you drive from listing to listing? Do you pay association dues? Do you take continuing education courses? If you’re an active agent, you said yes to at least one of those, and that means you’re due a deduction.
You still have time to file this year and maximize your return with these deductions and credits:
- You drove, right? – The National Association of Realtors estimates that its agents drive an average of more than 30,000 miles annually. Considering small businesses are allowed to deduct the costs of a car used for business – which includes gas, tolls, insurance, parking, repairs, maintenance, license, loan interest and depreciation – it’s no surprise that those expenses are the single most claimed deduction. If an agent would prefer to calculate a deduction more simple than the comprehensive costs of car operation – which require more documentation – they may also deduct by the IRS’s standard mileage method.
- License? Check. Association member? Check – If you’re a real estate agent, you have a license, which you pay for; and that means you’re due a deduction. On top of that, dues to associated professional organizations, like the National Association of Realtors, also fall into deductible territory, so keep your receipts.
- Save on your meals – The lax criteria that once defined “business lunches” have become something we associate with the old world of Mad Men. If you’re going to deduct meal expenses for your business, the meal must be eaten during a business trip or have significant relevance to your business. Those meals are still only 50 percent deductible. However, while most business owners will find it difficult to skirt this rule, there are special exceptions for real estate agents. For instance, if you’re sponsoring an open house, the food and beverages you provide are 100 percent deductible.
- Educational refunds – Every agent is required to take several hours of continuing education each year. Keep track of the costs, because those classes are deductible. In addition to the education required to maintain a license, agents may also claim deductions for industry publications and books.
- Cheaper healthcare – As the sole head of their business, agents are entitled to “above the line” deductions on health insurance costs – which includes the monthly premiums and up-front costs for doctor visits and care, for both you and your family.
- Supplement supplies and office space – If you’re using paperclips or postage stamps or really anything that you purchase for work, those expenses are write offs. And if you’re working out of your home, that home office is a valuable deductible – and can include writing off a portion of your home’s utility bills, insurance and maintenance expenses.
- Legal claims – The professionals an agent may need to enlist to provide adequate service to their clients are almost exclusively deductible, from lawyers to accountants to consultants, and beyond.