The goal of every taxpayer should be to pay the least amount of taxes possible. I do not pay a penny more than I absolutely have to and neither should you.
The way you present your financial information to the IRS, on your tax return, can save you big money. The name of the accounts you use and the amounts contained in those accounts can save you thousands of dollars in taxes.
Knowing what to name expense accounts and how much amounts should be shown in those accounts is an art I have learned in preparing tax returns for the past 33 years.
Let’s look at an example of what I am talking about. Let’s say our example real estate agent gives his clients gifts when he sells a house. This year was a very good year for him and he gave $5,000 in gifts.
I feel that if he put $5,000, under the expense account “gifts”, on his tax return he would have a higher probability of being audited. My experience with real estate agents’ tax returns leads me to believe that if this agent split this $5,000 into different accounts, such as business promotion, advertising, etc. his chances of being audited would be greatly reduced.
In preparing tax returns I do my best to get to know my clients personally and their motivations. In this example, I know my client purchased these gifts to promote his business and for advertising purposes.
A key to maximizing your deductions, while avoiding a tax audit, is to break down your expenses into subcategories. What your tax preparer has not been telling you could have been costing you deductions and putting you at additional risk of an audit.
Let’s now look at a custom set of accounts for you the real estate agent. This is not an all exhaustive list. When you set up your own list of accounts you can add more if you think they are merited. Remember though we don’t want to put our expenses into too few accounts or that may increase your risk of an audit.
SAMPLE REAL ESTATE AGENT’S CHART OF ACCOUNTS
(This list is not all inclusive. The Chart of Accounts on my website is: http://agentstaxtips.com)
INCOME
Commissions Received
Referral Fees Received
Interest Income
EXPENSES
Advertising
Auto Expense—AAA
Auto Expense– Car Wash
Auto Expense—Gasoline
Auto Expense—Insurance
Auto Expense—License
Auto Expense—Maintenance
Auto Expense—Parking
Auto Expense—Repairs
Auto Expense—Tires
Bank Charges
Books and Journals
Brokers Opens
Copies
Draws
Dues
Education
Entertainment
Federal Income Taxes
Ferries
Freight
Garbage
Insurance
Licenses and Fees
Meetings and Seminars
Memberships
MLS Fees
Office Expenses
Professional Fees
Client Reimbursements
Storage Rent
Supplies
Telephone
Travel
Web Site
About admin
Check out My Space page for a more information on me. In your search type "Gary Sweat".
I was born and spent the first 28 years of my life in Richmond, California. I have also lived in San Diego and North Idaho. I moved to Washington State in 1991.
I have 30 years of experience as an Accountant.
• After graduation from college I worked for a financial services firm in Oakland, California. The firm was comprised of CPAs and attorneys. I was in charge of all financial needs for 25 businesses. Duties were preparation of financial statements, income tax and sales tax returns, obtaining business licenses and giving tax and operational advice to the businesses. I also prepared payroll and payroll reports for my clients. The job entailed extensive use of RIA and CCH references for tax research. Clients ranged from medical groups, delicatessen chains, transmission repair chains and many others. I was employed with this company for 3 ½ years.
• In 1983 I opened my own CPA firm in Vacaville, California. My clients required me to prepare financial statements for their companies, as well as every type of tax return (1040, 1065, 1041, 1120 and 1120S) along with state returns. Clients also needed payroll, payroll reports and sales tax returns. My duties required tax research and advice on a wide variety of topics. As a result of close proximity to Travis Air Force Base I prepared tax returns for many states due to the relocations, both civilian and military. In addition to my initial office, I opened two more offices in Fairfield and Walnut Creek, California with a total of nine employees at these offices.
• In 1992 I had an opportunity to purchase a CPA practice in Friday Harbor, Washington. Friday Harbor is located in the San Juan Islands of Washington State. Duties remained consistent with the types of work I had been performing in Vacaville, but with many more clients.
• In 2001 I relocated my firm to offices in Bothell and Bellevue, Washington.
• Over the years the majority of my clients have come to be real estate agents and their clients. Therefore, for quite some time I have specialized in preparing tax returns for real estate agents.
• I received so many requests for tax advice from real estate agents that I authored a book - “Tax & Financial Tips for Real Estate Agents.” I used ecommerce solutions to promote the book and it has sold in all 50 states. I am continually called on to provide advice concerning a wide variety of tax questions, preparation and advice, both locally and in other states.
• I am also a retired Real Estate Agent.
Check out my website: http://agentstaxtips.com
