Tax Savings Tips for Realtors (Part 1)

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Dallas Real Estate Tax Help: What to Know About Taxes

Tax Savings Tips for Realtors (Part 1)

Realtors often have unique financial situations due to the nature of their work, which can include fluctuating income, numerous business expenses, and self-employment taxes. Here are some tailored tax-saving tips for realtors to help them keep more of their hard-earned money:

1. Maximize Business Deductions

As a realtor, you can deduct many business-related expenses. These include:

  • Office Expenses: Rent, utilities, and office supplies.
  • Marketing Costs: Advertising, website expenses, business cards, and promotional materials.
  • Professional Fees: Memberships in real estate associations, continuing education, and licensing fees.
  • Travel and Mileage: Deduct mileage for driving to showings, client meetings, and other work-related travel. Use a reliable app or logbook to keep detailed records.
  • Home Office Deduction: If you use a portion of your home exclusively for business, you can deduct related expenses.

2. Track Vehicle Expenses

You can choose between deducting actual vehicle expenses (gas, maintenance, insurance, etc.) or using the standard mileage rate (which for 2024 is 65.5 cents per mile). Choose the method that gives you the largest deduction. Keep meticulous records of your business mileage and expenses.

3. Deduct Client-Related Costs

Expenses incurred while entertaining clients or buying gifts for them can be deductible. There are limits and specific rules around these deductions, so be sure to understand what is allowable.

4. Leverage Retirement Accounts

As a self-employed individual, you have access to several retirement account options that offer tax benefits:

  • SEP-IRA (Simplified Employee Pension): Allows you to contribute up to 25% of your net earnings from self-employment, up to $66,000 in 2024.
  • Solo 401(k): Offers higher contribution limits and the ability to make both employer and employee contributions.
  • Traditional IRA or Roth IRA: Depending on your income level, you might also contribute to these accounts.

5. Utilize the Qualified Business Income (QBI) Deduction

The QBI deduction allows eligible self-employed individuals to deduct up to 20% of their qualified business income. This can significantly reduce your taxable income. Be sure to check if you qualify and calculate the deduction correctly.

By implementing these tax-saving strategies, realtors can reduce their tax burden and keep more of their hard-earned money. (Tax Savings Tips for Realtors (Part 1))

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