As a real estate agent, one of the most significant challenges that you are likely to face is managing your taxation. Since it’s such a wild and out-there industry, it can be easy to be seen as trying to be unscrupulous to the authorities if your numbers don’t quite match up as they should. If you want to avoid this kind of insulting accusation, then you should do all that you can to be fair and honest in your taxation.

For example, have you thought about hiring a CPA?

They can help you to make sure that everything is reported as it should be, with clear justification for each and every little investment that you need to make. Real estate IRS red flags, though, are still very easy to walk into. To help you avoid that mistake, we recommend that you take the following approach to the potential for red flags:

  • A lack of quarterly taxation. Real estate agents should be managing quarterly taxation, which can make life so much easier than it might seem today. Pay up quarterly taxes in a fair and fast manner and you can avoid any audits as to why you cannot make payments from taking place.
  • Also, avoid major deductions such as huge home office costs or unreasonable add-ons such as a new pool installation or a new, flash car. Make sure that what you are putting on there is a fair and honest appraisal of what you are investing in the business – not just nice things that you want to avoid paying tax on!
  • Car expenses need to be honest, too. Keep as many receipts as you can and make a clear and easy way to build up a list of how far you travel – even a little notepad that you add up at the end of the day. So long as you stay within the fixed IRS mileage rate, you should be OK, though.
  • Lastly, the main red flag are deductions that seem out of reality with what you earn. Excessive deductions on a smaller income is sure to have questions being asked at HQ. if you have deductions that you cannot justify for the workplace or your income, then you can have an audit on your hands before you know it.

With all of this in mind, then, you should know what to avoid. If you are still unsure of what you are processing, hire an expert for assistance.