April 15th is coming faster than the speed of light.
Avoid procrastination– or rather, more procrastination– by starting on your income tax now. You can earn the maximum refund – or lowest payment – you deserve by calculating tax-deductible business expenses.
Solo Realtors and employees understand how important business expenses are for tax season, but the head-scratcher is determining what counts as a business expense.
Here’s a list of things you can deduct as an independent contractor:
- Vehicle deductions
- Business travel
- Office supplies
- Office expenses
- Depreciation
- Business insurance
- Professional services
- Meals/entertainment
From running business errands to showcasing houses with clients, vehicles are the most common tax deduction. You can select one of two routes: record keeping or the standard mileage rate.
If you have receipts, feel free to calculate your annual deduction. The standard mileage rate is for non-record keepers who rather remember the miles driven than receipts.
It’s very important to stress that commuting to work isn’t tax deductible. And since we’re on the subject of travel, traveling out of town using a vehicle, cab, bus, train or plane is tax deductible. You can include all lodging expenses and half of food expenses too.
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The real estate office is a tax-deductible smorgasbord.
Office supplies bought during the year such as postage stamps, printer ink and paperclips are tax deductible. Office expenses like rent and utilities are eligible. Do you work at a home office? It’s tax deductible as well.
In depreciation, purchased real estate property, computers, cars and office furniture are available every year it depreciates until the value reaches zero. Small businesses can speed up the process with bogus depreciation and get all the savings in one year.
Money paid to attorneys, accountants, consultants and staff members are tax deductible as long as the arrangement relates to the real estate business. Business liability insurance, business property insurance and homeowner’s insurance for home offices is also eligible.
Retirement accounts and company benefits are eligible, too. Even meals and entertainment activities are eligible. It’s vital for meals and entertainment activities to relate to business. Moreover, only half of the year’s total meals is tax eligible.
Depending on your business, other business related tax write-offs exist. Realtors must think carefully about every business-related interaction or errand performed during the year. The IRS expects evidence of these expenses, so gather receipts now to prepare for possible audits later.
Whether you use tax software, a tax accountant, a tax service or a tax lawyer, the opportunity to save money on your tax returns is in front of you.
Tonya Jones is a writer who specializes in real estate. She has written various content for Textbroker, My SEO Articles and Blogmutt.