As a REALTORÂ®, you’re on call around the clock for your clients. Every day is different, and the variety is one of the many reasons it’s such an attractive profession. Despite the flexibility that being a REALTORÂ® affords you, there’s one element that must follow a firm schedule: your taxes.
The Basics of Quarterly Taxes
Whether you work under a large broker, an independent broker, or totally on your own, the government considers REALTORSÂ® to be self-employed. As such, you are required to pay quarterly taxes on your estimated income for the year. These quarterly tax payments will then cover your tax obligations to pay the income tax and self-employment tax that you owe.
Since self-employed people often end up paying more in taxes than those who are employed by others, the IRS requires quarterly payments so they don’t risk people not having the adequate cash on hand for a once-a-year lump sum.
Self-employment taxes cover Medicare and Social Security taxes, which the majority of wage earners have automatically deducted from their paychecks by employers. Since it is your responsibility to file these taxes as a self-employed individual, it is critical to keep paperwork for your business expenses organized.
As the name implies, quarterly taxes are due four times a yearâ€”on January 15, April 15, June 15 and September 15. Paying your quarterly taxes by the deadline is critical, and failure to do so will result in penalties and interest charges.
Set Yourself Up for Success
Every REALTORÂ® needs to save their receipts and stay organized to get the most back in tax deductions; however, with today’s digital tech, you can skip the shoeboxes full of receipts and spreadsheets detailing your expenses. Instead, make technology work for you and save yourself time.
Use Quickbooks Self-Employed, a National Association of REALTORSÂ® (NAR) Member Benefits Program partner, designed with entrepreneurs like real estate agents in mind.
Create a tax profile to easily see how much you owe for your taxes each quarter. Then use the tax reports feature to create professional reports to send to your CPA so they can have all the information they need. The software also has tools like receipt capture and a mileage tracker to make keeping track of expenses easier.
Generally, when estimating your quarterly tax payments, you will use your income and taxes owed from the previous year. QuickBooks will automatically calculate your estimated quarterly payments, but you can also calculate them using the Estimated Taxes IRS form.
If you have a more complicated income situation, it may be in your best interest to consult a tax professional for guidance tailored to your specific situation to avoid paying too much or too little in quarterly taxes.
QuickBooks Self-EmployedÂ is a proud partner of the National Association of REALTORSÂ® REALTOR BenefitsÂ® Program. REALTORSÂ® receive a free 30-day trial and 50% off their first year subscription of QuickBooks Self Employed.
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