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Browse the siteApril 04 2013
This is the time of year most real estate agents dread – even more so than mid-June, September and January when quarterly tax payments are due. April's tax return determines what those quarterly payments will be, so naturally, right now agents are wondering about ways to turn expenses into deductions.
Forty-five million Americans claim more than $1 trillion in deductions on their itemized tax returns. An additional 92 million taxpayers claim $700 billion using standard deductions. IRS insiders, however, believe that millions of Americans pay more in taxes than they should by not taking all of the deductions to which they are legally entitled.
Last week we presented several deductions that agents often overlook when squirrelling away receipts to give to their tax preparers. This week, we'll offer some tips that may surprise you.
Although we discussed the deduction for the business use of your home last week, there's more to the story.
Real estate agents who work both from their home and from their broker's office may still qualify for the home office deduction, as long as they meet "the principal place of business test."
To determine if you pass that test, the IRS will look at the importance of the activities that you perform at both places and the amount of time you spend in each location. Administrative and management activities are what the IRS considers "significant" enough to qualify you for the deduction. These include:
As long as these activities are performed routinely at home and not your broker's office, you qualify for the deduction.