Like other business professionals, real estate agents must be conscientious of keeping their expenses in order throughout the year so that they’re prepared come tax season.
That means knowing what expenses qualify as deductibles and keeping receipts organized on a regular basis so that agents aren’t scrambling to get it all in order before the filing deadline.
To optimize their refund each tax season, agents can reference the following list of items that are, are not, or sometimes are tax-deductible.
The expense: Paid out commissions
Deductible? Yes
Even though splitting commissions with other agents is part of the job, it may feel less painful to do so knowing that those commissions paid out to other agents are deductible. Keep careful track of all those commissions paid out throughout the year because they can help out a lot come tax season.
The expense: Vehicle costs
Deductible? Yes
Most real estate agents spend a lot of time in their cars. Between gas, mileage, maintenance and the toll all that driving does on a car, the expenses add up. Fortunately, all of those expenses are tax-deductible for the agent who uses their vehicle to drive to and from showings and other work-related activities — including toll fees and parking.
The IRS offers two types of deductions for vehicle expenses: a standard mileage deduction and a deduction for all tracked auto expenses. Claiming the standard deduction usually helps individuals who drive at least 10,000 miles for business…
