Richmond Real Estate Agent

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Richmond Real Estate Agents

• Elena Skripnichenkos

102-7080 River Rd.Richmond, BC
1 [phone]
www.richmondrealestateagent.ca
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Steve Eubanks, RA (Richmond Agent)

• A tax professional since 1986.
• BBA and MBA in Finance.
• Licensed by the U.S. Department of the Treasury
  to represent taxpayers before all administrative
  levels of the Internal Revenue Service (IRS),
  including examination, collection and appeals
  functions as Enrolled Agent.
• Enrolled Agents adhere to a code of ethics and
  professional conduct and are required by IRS to
  take Continuing Professional Education.
• Provide tax preparation, representation, tax
  planning and other financial services to
  individual and business taxpayers.

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Introduction

• Licensed Real Estate Agents
• IRS ruling Statutory NonEmployee Independent
  Contractor. Treated as Self-employed.
• Substantially all payments for their services
  relates directly to sales or output rather than
  hours worked.
• Their services are performed under a written
  contract providing that they will not be treated
  as employees for Federal Tax purposes.
• Form 1040, Schedule C reporting for Real Estate
  Agents as Sole Proprietorships

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Schedule C
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Schedule C Income

• Income
• Report on Schedule C, Line 1
• 1099-MISC, Box 7, Nonemployee Compensation (600
  or more)
• Commissions
• Referral Fees

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Schedule C Income
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Schedule C Expenses

• Expenses
• Ordinary and Necessary
• Auto (actual expenses or standard mileage rate)
• Meals and Entertainment (50 limitation)
• Depreciable Assets (Form 4562)
• Home Office (net income limitation) (Form 8829)

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Schedule C Common Expenses

• Advertising Costs Signs, newspaper advertising,
  flyers, online advertising, post cards,
  promotional materials, and anything else that was
  used to market your business may be deductible.
• Professional Fees Your MLS Board Dues, Realtor
  Dues, Renewal fees with your state board, Errors
  Ommissions Insurance, and any other
  professional fees you incur may also be
  deductible.
• Education Materials Any continuing education
  classes or seminars, books, magazines, etc.
• Car/Driving Expenses This is an obvious one most
  agents remember - but many often get confused
  about how much mileage they can deduct or how to
  separate personal and business use. Another
  confusing thing for many agents is deducting
  depreciation if you own your car or lease
  payments if you lease. You can choose to deduct
  per mile driven or you can also do the actual
  cost of insurance, gas prices, repairs
  maintenance, and other vehicle expenses.
• Office Equipment Office equipment can include
  desk fees if you have them at your office,
  computer/software, phone fees (including cell
  phone), cameras, office supplies, and anything
  else related to necessities of running your
  office.
• Business Entertainment You can deduct fees for
  dinners, event tickets that are business
  oriented, entertaining for business at home, and
  anything else related to costs you incurred for
  entertaining business clients. Be careful with
  this one - be sure it was really for business
  before claiming it.

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Business Use of Home (Form 8829)

• To deduct expenses for business use of the home,
  part of your home must be used regularly and
  exclusively as one of the following
• The principal place of business for your trade or
  business
• The place where you meet and deal with your
  patients, clients, or customers in the normal
  course of your trade or business or
• In connection with your trade or business, if you
  use a separate structure that is not attached to
  your home.
• Where the exclusive use requirement applies, you
  cannot deduct business expenses for any part of
  your home that you use for both personal and
  business purposes. For example, if you are an
  real estate agent and use the den of your home to
  make appointments and also for personal purposes,
  you may not deduct any businessuseofyourhome
  expenses. Further, under the principal-place-of-bu
  siness test, you must determine that your home is
  the principal place of your trade or business
  after considering where your most important
  activities are performed and most of your time is
  spent, in order to deduct expenses for the
  business use of your home.
• Deductible expenses for business use of your home
  include the business portion of real estate
  taxes, deductible mortgage interest, rent,
  casualty losses, utilities, insurance,
  depreciation, maintenance and repairs. You may
  not deduct expenses for lawn care in general or
  for painting a room not used for business.

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Schedule SE

• Self-employment tax (SE tax) is a social security
  and Medicare tax primarily for individuals who
  work for themselves. It is similar to the social
  security and Medicare taxes withheld from the pay
  of most wage earners.
• You figure SE tax yourself using Schedule SE
  (Form 1040). Social security and Medicare taxes
  of most wage earners are figured by their
  employers. Also you can deduct half of your SE
  tax in figuring your adjusted gross income. Wage
  earners cannot deduct social security and
  Medicare taxes.
• SE tax rate. The self-employment tax rate is
  15.3. The rate consists of two parts 12.4 for
  social security (old-age, survivors, and
  disability insurance) and 2.9 for Medicare
  (hospital insurance).
• Maximum earnings subject to SE tax. Only the
  first 102,000 of your combined wages, tips, and
  net earnings in 2008 is subject to any
  combination of the 12.4 social security part of
  SE tax, social security tax, or railroad
  retirement (tier 1) tax.
• All your combined wages, tips, and net earnings
  in 2008 are subject to any combination of the
  2.9 Medicare part of SE tax, social security
  tax, or railroad retirement (tier 1) tax.

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Adjustments to Income

• Retirement Contributions
• A traditional IRA lets you contribute only 5,000
  annually in pretax income toward retirement
• while a Keogh or SEP-IRA lets you contribute the
  lesser of 25 percent of earned income or 46,000.
• A SIMPLE IRA lets you reduce your pretax income
  by 10,500 a year, plus your company can
  contribute a match of up to 3 percent of your
  compensation.
• Health Insurance
• 100 of cost
• Not eligible for any group insurance
• Net income limitation
• Adjustment for one-half self-employment tax
  calculated.

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Estimated Tax Payments

• You must pay estimated tax (Form 1040-ES) for
  2009 if both of the following apply.
• You expect to owe at least 1,000 in tax for 2009
  after subtracting your withholding and credits.
• You expect your withholding and credits to be
  less than the smaller of
• 90 of the tax to be shown on your 2009 tax
  return, or
• 100 of the tax shown on your 2008 tax return.
• Due dates for Form 1040-ES
• April 15
• June 15
• September 15
• January 15

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Business Common Tax Forms

• Form 1040 Individual Income Tax Return
• Schedule C Profit or Loss from Business
• Form 4562 Depreciation and Amortization
• Schedule 8829 Business Use of Home
• Schedule 2210 Underpayment of Estimated Tax
• Form 4868 Automatic Extension for Time to File
• Form 1040-ES Estimated Quarterly Tax Payments
• Publication 334 Tax Guide for Small Businesses

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Questions?