tax tips for real estate agents
TRANSCRIPT
• Andrew’s Background
• The Enrolled Agent License
• Insight Tax Services – What We Do
• Small Businesses & Self-Employed
1. Taxes 101
2. Immediate Strategies
3. They Let Us Do That?!
4. Questions & Answers
1. Payroll Tax
2. Income Tax
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Taxed upon employment income
to fund social programs.
1. Payroll Tax
2. Income Tax
Taxes all income “defined as
taxable” (not just employment)
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Marginal vs. Effective Tax Rates
FROM SCHEDULE C:
Gross Income
− Business Expenses
Net Income
Net Income
× 0.153*
Self Employment Tax
*Assumes income <$113,700 for
simplicity of calculation.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Self Employment Tax + Net Income Tax = Total Tax
Both pay almost exactly the same two taxes
(payroll and income).
What’s the problem?
Employees pay IRS out of each paycheck.
They don’t feel the pinch.
Self-employed people feel it!*
The solution?
• Quarterly estimated payments
• Implementing a tax strategy.
*This is excellent job security for Andrew
1. Taxes 101
2. Immediate Strategies
3. They Let Us Do That?!
4. Questions & Answers
FROM SCHEDULE C:
Gross Income
− Business Expenses
Net Income
Net Income
× 0.153*
Self Employment Tax
*Assumes income <$113,700 for
simplicity of calculation.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Self Employment Tax + Net Income Tax = Total Tax
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Marginal Tax Rates
FROM SCHEDULE C:
Gross Income
− Business Expenses
Net Income
Net Income
× 0.153*
Self Employment Tax
*Assumes income <$113,700 for
simplicity of calculation.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Self Employment Tax + Net Income Tax = Total Tax
It doesn’t matter what you
make…
it's what you keep.
15.3% SE Tax
25% Marginal Income Tax
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Get a System
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•• Ordinary & Reasonable
Know What Counts
FROM SCHEDULE C:
Gross Income
− Business Expenses
Net Income
Not if you want to go
home today.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Self Employment Tax + Net Income Tax = Total Tax
1. Taxes 101
2. Immediate Strategies
3. They Let Us Do That?!
4. Questions & Answers
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Know your limitations
Tax exclusion for capital gains on qualifying main home
•• Five year window
• 2+ years owned
• 2+ years main home
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•• Compatible with inflation
•• Exclusion on gains
Qualifying for & using the exclusion
0
250,000
500,000
750,000
1,000,000
1,250,000
2016 2018 2020 2022 2024
Added
Prior
Don’t pay more self employment tax than required
FROM SCHEDULE C:
Gross Income
− Business Expenses
Net Income
Net Income
× 0.153*
Self Employment Tax
*Assumes income <$113,700 for
simplicity of calculation.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Self Employment Tax + Net Income Tax = Total Tax
Let’s reduce this
type of
income…
…to avoid too
much of this tax.
Income derived from labor = SE tax + income tax
Passive income = usually just income tax
Potential Solution: S-Corporation & Payroll
S-Corporation & Payroll
•• GlassDoor.com
• Monster.com
• Don’t get greedy
• Don’t make the IRS agent laugh
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•• Quarterly: IRS Form 941
• Quarterly: FDOR Form RT-6
• Annual: IRS Forms 1120S, 940, W2, W3
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Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Consider your filing status
Don’t let tax law
determine whether you
marry or divorce.
Net Income
− (adjustments, exemptions & deductions)
Gross Taxable Income
− Tax Credits
Net Taxable Income
× Various Tax Brackets per Filing Status
Net Income Tax
Consider your filing status
Don’t let tax law
determine whether you
marry or divorce.
OK, maybe consider it a
little.
Consider your filing status
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1. Taxes 101
2. Immediate Strategies
3. They Let Us Do That?!
4. Questions & Answers