If your tax preparer does not specialize in real estate agents they may cost you plenty.
There are three areas where you could be paying more in taxes or receiving less of a refund. These critical areas are in taxes, penalties and interest, and audits.
The tax rates for 2011 tax returns; are 10%, 15%, 25%, 28%, 33% and 35%. Real estate agents are also affected by the self-employment tax, which is 13.3%.
How would you be affected, if a tax preparer does not know all of the deductions, applicable to real estate agents? Let’s look at an example. We will assume you are an average taxpayer in the 28% tax bracket. We would also add on the 13.3% self-employment tax. Your combined taxes would be 41.3%.
For every $100 in deductions, a preparer misses; it would cost you $41.30. Too many missed deductions may add up to a hefty amount of money!
The next area for you to be concerned about is the areas of penalties and interest. There are many different types of penalties and interest. The general rule here is avoiding mistakes will save you penalties and interest.
Finally, a tax preparer that specializes in real estate agents can save you money in the area of tax audits.
People are usually selected for a tax audit by computer analysis. The IRS computers compare average expenses for each type of profession. If your expenses are out of line in comparison with other real estate agents your chances of being audited are more likely.
Here is an example. Let’s say on average real estate agents, with gross commissions of $50,000, have office expenses of $2,500. You have gross commissions of $50,000, but you report office expenses of $15,000. This is red flag on your tax return.
Although you do not want to raise any red flags on your return, you also do not want to cheat yourself out of any deductions you are entitled to. A tax preparer, who specializes in real estate agents, should have a good feel for a proper balance.
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
