As we are approaching tax season, we are laying out some tax deductions for realtors to consider claiming. There are many ways to receive deductions while doing your taxes, but we are here to help you choose the most advantageous options for you.
If you use your vehicle for work duties like driving to open houses or meetings, you may be able to deduct those driving costs. There are two ways to calculate your deduction: actual expenses, or mileage-based deductions. For actual expenses, you will need to keep track of any expenses related to fuel, repairs, tolls, maintenance, interest on financing, and depreciation of the vehicle. Or, keep track of your mileage and take a deduction based on the number of miles you’ve driven. We suggest keeping track of both options so that you can select the higher deduction when you are doing your taxes.
Travel and Meals
The IRS allows business travelers to deduct business-related meal and travel expenses. Part of your role as a realtor is to entertain your clients, travel to conferences, and take prospective clients out to meals, so this category can be a great deduction option. In typical years, the deduction is only 50 percent of the cost, however, due to COVID-19, the government is extending the allowance for a 100 percent deduction in 2022.
When you own your own business, it’s up to you to fund your own pension plan to supplement the Social Security benefits you’ll receive when you retire. If you contribute to a pension, you can deduct the amount you contribute from your income taxes.
Lifetime Learning Credit
If you are taking any continuing education classes or going to grad school, you may be eligible for lifetime learning credit. This credit is worth 20 percent of up to $10,000 in eligible expenses including tuition and fees for yourself, your spouse, or a dependent. You can also claim the credit for any certification programs or individual classes you take to improve your job skills.
Fees and Insurance
Fees including your state license renewal, multiple listing services (MLS) fees, and professional memberships are all deductible. General business insurance and errors and omissions (E&O) insurance are also fully deductible expenses.
Home Office Deduction
If you work from home and are self-employed, you can write off any portion of your home that is used exclusively for business purposes. You can also claim other office-related expenses like stationary, printing, computers, and telephones.
We hope you will consider tracking these expenses to receive the best tax deductions for realtors during tax season! Harding Bell International has the experience and know-how to minimize your tax bill. Contact us for help with your tax preparation today.