Northern Virginia Tax Service Tips for Real Estate Professionals
April 26, 2022at4:00 AM
Closing a deal is a thrilling feeling for real estate professionals, but the sensation can quickly become tempered when you remember how much of the commission you’ll have to set aside for the upcoming tax season. No one likes having money taken out of their pocket, but luckily, there are strategies you can use to reduce the amount you owe Uncle Sam.
You work hard for your money, and the team here at Beyond Accounting & Tax works hard to help you keep it. That’s why we’re happy to share these Northern VA tax service insights for real estate professionals.
Tax service strategies for Northern Virginia real estate workers.
Determine what your filing status is for the current year.
Numerous real estate professionals have an employer who hires them on as a W-2 employee. If that’s your case, the taxes are automatically taken out with each paycheck which makes filing much more straightforward.
However, many individuals in real estate are classified as self-employed or an independent contractor. In this case, you have to take your taxes out yourself and make quarterly payments to the IRS.
Understand your deduction options.
In 2015, the government passed the Protecting Americans from Tax Hikes (PATH) Act, which changed many aspects of tax services for real estate professionals. It provides individuals with additional relief from business-related purchases and allows you to immediately deduct all or a portion of them.
Some of the standard deductions include marketing materials, licensing and renewal fees, transportation, and home office expenses. Even if the cost is minor, you should take advantage of every tax deduction possible.
Be strategic when giving out gifts.
Real estate is a highly personable field. You’re constantly serving in a people-facing role, and many professionals use gifts as a way to build those relationships and help close deals. Those small touches aren’t just good for business; they’re also good for your taxes because they can be deducted from the total amount you owe.
However, that doesn’t mean you can write off any gift of any size. Gifts are only deductible up to $25 per person per year or up to $50 per year if the client is a couple. So being strategic about when and how many gifts you give out can help save you money on your Ashburn, VA tax services.
Keep accurate records throughout the year.
Your tax services in Northern Virginia will go much more smoothly if you come prepared with all of your financial records from the previous fiscal year. Keep track of everything, including travel, meals, business events, and entertainment expenses. Your records should include the amount spent, date, time and place, and the business purpose.
Beyond just keeping records, it’s also helpful to start the process as early as possible, especially if you are self-employed. Taxes for real estate professionals tend to be complicated and involved, so if you wait too long, you could miss the filing deadline.
Consider income shifting.
Any real estate worker with children in their house should consider this strategy. Income shifting is when you hire your kids to help with your business and pay them for their services. You can then write off the money you spend for their help as a legitimate business expense.
Not only does this create better tax write-offs for you as a real estate professional, but having them help with small things like marketing, prepping homes for showings, or doing research teaches them the value of hard work.
Get the most out of your taxes.
Here at Beyond Accounting & Tax, we specialize in helping real estate professionals just like you with their tax planning and preparation. We utilize creative strategies that can save you thousands in taxes, and our technology makes filing a breeze. Learn more about our real estate tax services, or schedule a consultation with our easy-to-use online booking tool.