Tax Deductions for Real Estate Professionals Maureen Mc

Tax Deductions for Real Estate Professionals Maureen Mc. Enroe, CFA Real Estate Broker Cell 914 588 1873

Objective • To educate and prepare Real Estate Professionals to identify and maximize deductions and maintain defensible records of their deductions.

What’s in your pocket? It is not what you make but what you get to keep that matters. This Course will guide you through what items are tax deductible, what records you need to keep, and how to maximize your deductions.

Introduction • Thanks you for giving me the opportunity to teach the Tax Deductions for Real Estate Professionals /record keeping class. I want to preface this with the fact that I am not an Accountant, I have MBA and I am a Chartered Financial Analyst. My background in Business but business planning and analysis is my forte. Part of my strength as an analyst is in forecasting and planning.

• Warning this class was designed by a non- accountant. There are some complex concepts that I have tried to simplify. After having consulted with tax professionals, tax publications, IRS documents and Publications, this class is an overview of the allowable and not allowable deductions Real Estate Professionals can utilize to legally lower their tax burden and put more money in their pockets.

• As we all know it is not what we make but what we keep that truly matters. As an independent contractor, your Brokerage will give you a 1099 to represent the revenue side of the equation • At the end of this class, you should be able to set up the necessary records and documents to monitor and classify the various deductions available to you.

• The IRS indicates: Licensed Real Estate Agents - Real Estate Tax Tips • Most real estate professionals operate their business as a sole proprietorship. This means that you are not someone's employee, you haven't formed a partnership with anyone, and you have not incorporated your business.

• Statutory Nonemployees • Licensed Real Estate agents are statutory nonemployees and are treated as self-employed for all Federal tax purposes, including income and employment taxes, if: • Substantially all payments for their services as real estate agents are directly related to sales or other output, rather than to the number of hours worked • Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes • This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.

• This means you are essentially Independent Contractors. • IRS Publication 334 states: • Real Estate dealer. You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Rent you receive from real estate held for sale to customers is subject to SE tax. However, rent you receive from real estate held for speculation or investment is not subject to SE tax.

The Value of Tax Deductions • As a general rule of thumb, for agents/brokers earning up to $100, 000 per year, every dollar deducted from your taxable income will save you roughly $0. 50 in taxes. This assumes a 28% federal income tax, 15. 3% in self-employment taxes and an average of 6% state income taxes. In Rockland County we have a higher local tax so our savings are a bit higher. • For those lucky agents making over $100, 000 per year, your deductions are worth a bit less than $0. 50 on the dollar but still approaching $0. 40 or so.

• According to the IRS code Section 162: • Any expense for your real estate business is deductible if it is: • 1) Ordinary and necessary • 2) Directly related to your business and • 3) A reasonable amount • There is no upper limit on your deductions as long as they are reasonable, and you do not deduct more than you spend. If you have Real Estate earnings of $12, 000 and you spent $15, 000 on dues advertising, buying leads and other related business expenses, your deduction is limited to the $12, 000 earned The good news is that in most cases that other $3, 000 is not lost, it becomes a tax loss carry forward that can be used in future years against future income earned.

• Doing a quick back of the envelope calculation, I would like to quickly demonstrate the value of deductions. This hypothetical Real Estate Agent is a single 50 -year-old person. This person earned $100, 000, had business expenses of $27. 000 of which $24, 000 was deductible. We assumed a 28% federal tax rate, an 8. 375% local tax rate and a 15. 3% Self Employment tax rate. • Take that same agent and introduce the $24, 000 in itemized deductions instead of the standard deduction of $6, 300 reduces the taxable income by $17, 700. Assuming the same tax rates the agent could pay federal taxes of $20 K, State/Local taxes of $6, 000 and Self-employment taxes of $6 K. The difference in the tax burden using the allowable deductions puts approximately $7, 300 more money in this agent’s net earnings. That is like have an extra closing! So lets get deducting!!

Comparing Standard Deduction to Itemized Deductions Std Deduction Income Itemize. Deduc tion Difference $100, 000 Expenses $27, 000 Deductible Expenses $24, 000 Std Deduction $6, 300 Tax Exemption $4, 000 Taxable Income $89, 700 $72, 000 $17, 770 Federal Taxes $25, 116 $20, 160 $4, 596 State/Local Taxes $7, 512 $6, 030 $1, 482 Self Employ Taxes $6, 337 $5, 087 $1, 250 Value of Deductions $7, 328

Banking And Tax Planning • As a new or even an experienced Agent or Broker, how exciting is it to get that big check. Lets take a step back and detail how you should be looking at this check. • As an Independent Contractor, most accountants recommend filing quarterly taxes. You can’t take the deductions until year-end when you file the fiscal year taxes, but the estimated taxes are calculated off your anticipated gross revenue for the current year. In order to facilitate this, I recommend taking each check and depositing it into two separate accounts. Open a separate savings account that is not connected to your checking account.

• If you are in the 28% tax bracket, immediately deposit at least 25%-28% of each and every check into this saving account. This will be the account from which you will pay your quarterly tax payments. • One piece of advice I can give every agent. Do not count on the check until the deal is closed. Deals fall apart for all kinds of reasons. If you have already spent the money, or earmarked it for a vacation or event, not only do you lose the deal but you also lose that vacation which is even more upsetting.

Self-Employment Tax • Employees pay a 15. 3% FICA Social Security/Medicare tax. This is split evenly between the employer and the employee, so the employees paycheck is reduced by a 7. 65% FICA line item. Workers pay into the Social Security and Medicare systems. Self. Employed workers are given credit for Social Security and Medicare contributions via the Self Employment Tax so these workers will be included in these two safety net programs. Self-employment tax is 15. 3% of 92. 35% of the Independent Contractors Net Income. However in this case the government makes an attempt to be fair. Given that there is no employer with which to share this expense, the IRS allows Independent Contractors to deduct 50% of their Selfemployment tax. This is itemized on the Schedule SE that has to be submitted annually with your tax return.

Tax Deductions For Real Estate Professionals • 1) Car/Truck A) If you are good at record keeping keep track of all your car expenses and figure out your annual deduction (Add up how much you spend for gas, oil, repairs, car washes. Maintenance etc. ) OR B) Track how many miles you have used your car for business and use the standard deduction for mileage, which is $0. 575 per mile in 2015. Note the mileage you use driving to and from work is not deductible only the mileage used in previewing, showing, doing CMA, Open Houses and taking clients around are deductible.

• 2) Office Expenses If you have a home office you may be able to deduct the rent and utilities you spend for that office. Renters and owners can take this deduction. • 3) Business travel If you go out of town for business you can deduct airfare, transportation costs, hotel/lodging expenses, 50% of the cost of meals while you are away. (Conferences, seminars, education, designations etc. ) • 4) Meals and Entertainment If you take a client out and have a serious business discussion before, during or after the meal/event, you can deduct 50% of the cost of that meal or entertainment as a legitimate business cost. Food at Open Houses is 100% deductible.

• 5) Depreciation Property you buy and use for business can be depreciated over time. Items like cars, property, computers and office furniture can be depreciated over time. IRS Code section 179 allows an agent to deduct the full price of business equipment, furniture and other long term items purchased for your personal use in a home or brokers office in the year purchased • 6) Supplies Business items you use up in less than one year such as paper ink/toner for printers, paperclips, postage etc. computer software, internet and phone service fees • 7) Legal/Professional Services Any fee you pay to an accountant, lawyer, consultant or other professional is deductible.

• 8) Insurance that you buy just for your business is deductible. Business liability insurance (E&O). If you have a home office, you may be able to deduct a portion of your homeowners insurance. Self-employed people are allowed to deduct 100% of their health insurance premiums from their income taxes. Medical expenses when they reach a certain limit and health savings account contributions may also be deductible. • 9) Marketing/Advertising This is a category often under reported and therefore deductions are missed. Deductions include funds spent on websites, mailing lists, newspaper or online advertising, flyers, postcards, Just Listed Just Sold Cards, promotional materials, logo clothing. If you order pens, calendars or seeds to give to clients these are all deductible. Did you take a Real Estate Ad out in a local journal or fundraising event—it is deductible. Pictures can be another deduction.

• 10) Business Gifts Many agents hand their client a gift at the closing. Each gift can be deducted for up to $25. Unfortunately that $100 or $200 restaurant gift certificate cannot be fully deducted. • 11) Desk Fees Not all Brokers charge Desk or Technology fees, but if they do, those fees are deductible. • 12) Professional Dues, Fees, Subscriptions The HGAR, NYSAR and all professional Real Estate Organization fees and dues are deductible. Your monthly e. Key charge and your bi-annual license renewal fees are also deductible. Any Real Estate print or online magazines and periodicals you purchase are deductible.

• 13) Education Classes you take in person or online that are necessary to maintain your license or further your education—the cost of these classes are deductible. The cost of the 22. 5 credits we must take every two years is a deduction. Please note the cost of obtaining the Sales Agent or Brokers License is not deductible. • 14) Retirement Plan Contributions If you make a contribution to a retirement plan, 401 k Roth IRA etc. , that contribution is a nice deduction. • 15) Interest on business loans or interest paid for a business credit card is deductible.

• Brokerages have several other tax deductions available including, Office expenses like rent, cleaning and maintenance, utilities, office supplies, Referral Fees and commission rebates, franchise fees, taxes including payroll taxes for employees, state and local business taxes, wages and benefits paid to employees.

Accounting Expenses • Accounting related to your business, your LLC or S Corp. You can deduct the cost of an accounting system installation or accounting/record keeping applications purchased to manage your business.

Advertising /Marketing Expenses • Business cards, home demonstrations, promotional activities performed in person, online, mailed. Signs, internet Ads, fundraiser sponsorships, Ads in Periodicals, Flyers, Just Listed/Just Sold Cards, Logo Clothing, Postcards, EDDM mailings, Lead Generation, Premium Agent fees in Trulia, Zillow Realtor. com etc.

Automobile Deductions • Cost of car, Garage, parking, gas, insurance, interest, licensing, registration, inspections, lease expenses, oil and lubrication, repairs, tires, washing and detailing. Vs. Mileage deductions. • If you are using the simpler mileage deduction method you can switch to the actual cost method at any time, but once you switch to actual cost method, you cannot go back to mileage method for the life of that vehicle.

Business Conventions Travel • Travel and lodging expenses for business related trips, conventions, trade shows, Business meals and entertainment – 50% deducted. Business start-up costs have to be amortized. Expenses for magazines, newspapers, periodicals used for business. • Records must show amount spent, time and place, business purpose and names and business associations of individuals involved.

Commissions/ Referrals • Commissions paid to agents for sales purchase, leases and rentals are deductible for the broker not for the agent. • Referral Fees, Commission Rebates, Franchise Fees are all deductible for the Broker.

Computer Hardware & Software • The cost of Computers generally have to be amortized over their useful life. So a $1500 laptop may provide a $500 deduction per year for three years. • Computer Software leased or purchased has to be amortized.

Dues • MLS Fees, Professional Organizations or designation societies, Local and State Realtor Associations, Chamber of Commerce and Desk Fees are deductible.

Education Expenses • The expense of classes used to maintain or improve your skills for your realtor business are deductible. The 22. 5 CE credit costs are deductions; taking a course to get an additional designation is a deduction. • The cost of getting your Real Estate license is not deductible

Employee Expenses & Payroll • Gift deductions are capped at $25 or the cost whichever is lower, health insurance, E&O Insurance, Internet/Websites fees-if you pay, Listing Books, RE website Premier ads on Trulia, Zillow etc. , local transportation to and from CMA, showings, property previews, listing fees if any, desk fees, technology fees, supplies, referral fees, franchise fees are deductible. Start up costs must be amortized.

Need Help? Hire Your Children • If you need help during your busy time, hire you minor children. The wages you pay the child is deductible by you and taxable to your child (probably at a much lower tax rate than yours) • Wages paid to children under 18 is not subject to payroll taxes unless you operate as a corporation.

Home Office Expenses • Rent, utilities, interest, RE taxes, cleaning and maintenance, Office Supplies, Postage expenses, RE license fees, rent on any business properties, retirement plans, subscriptions and professional journals.

Occupancy Expense • Rent, utilities, interest, Real Estate Taxes, depreciation, cleaning and maintenance are deductible. • Office equipment and furniture must be depreciated.

Phone Service • Cell Phone, pagers, Internet services are deductible.

Retirement Plans • Contributing to some Retirement plan lowers your taxable income while building your retirement nest egg. • There are many types of plans in addition to Retirement Plans-IRA (contributions are pretax while distributions are subject to taxation. ), Roth IRAs (contributions after taxation but distributions are not taxed)

Record Keeping • Documentation is your friend when it comes to deductions. The devil is in the details. The IRS has strict terms and conditions for deductions and the burden is on us to provide the required proof of all expenses and deductions. • Need to keep records/ receipts for 7 years.

Separate Accounts? • Some agents open a separate checking account and credit card for their Real Estate utilization. • Deposit all commission checks and pay all Real Estate expenses from their account. This makes for simple record keeping and tracking. • Car and home office expenses should not be paid out of this account.

Budgeting and Saving • If you maintain a separate business account, pay yourself a salary of no more than 50% of Gross or 60% of Net income. • The remaining money can be used for business expenses, taxes and some leeway for months when your commissions are lean.

• How do you track your mileage? • If you use some appointment monitoring system like Outlook or Google Calendar, you can use these to notate mileage for each trip. What I recommend doing is to track and record your mileage daily in a little book that you keep in your car. On a weekly or monthly basis, take all those trips and transcribe them into an Excel spread sheet

• The IRS requires a 3 -month log to prove auto deductions, however our business can be seasonal, so only tracking your mileage for three months may under report the actual mileage you have logged. H&R Block and several other accountants have developed nice worksheets that can be used to track your expenses. I have included a few examples in your handouts

• I have a spreadsheet I developed where I input expenses and mileage as they accrue. I included my summary sheet in the handout. I submit this to my accountant. I filled in a few items in the September worksheet they total up to $811 in advertising, $183 in mileage deduction, for a total of $1, 408 in deductible expenses.

• For those of you with a more technological bend, there are several Apps that are available for free or for purchase that track mileage and or expenses. I have included a few of these Apps.

Apps for Tracking Business Mileage • 1) Mile IQ free app https: //itunes. apple. com/us/app/mileiq-miletracker-mileage/id 578830929? mt=8 • 2) TRIP LOG GPS Mileage Tracker free App $10 a year for advanced features https: //triplogmileage. com • 3) Auto Miles (Magical Miles) up to 100 miles for free $4. 99 unlimited https: //itunes. apple. com/us/app/auto-milesautomatic-mileage/id 817598888? mt=8

• Mile. IQ Mile Tracker & Mileage Log for Tax Deduction • This free app uses an innovative drive-detection technology to automatically record your trips and calculate their costs for you. The App uses your i. OS device integrated GPS before using current gas prices to calculate the expenses before uploading them for secure storage on the developers cloud server. Can track parking costs and tolls etc. Allowed 40 free drives per month. For $5. 99 you can track unlimited drives that month. Downside is I believe it uses data during the mileage calculations

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• • Free version enables GPS mileage tracking, actual driving routes on maps, and vehicle fuel economy and expense tracking. The $10 annual fee includes auto-start on power, Bluetooth, daily back up to the cloud, take a picture of receipts and upload them to the cloud, tracks unlimited data history. IRS Publication 463 Travel, Entertainment, Gift, and Car Expenses Generates IRS Compliant trip reports

• Magical Miles • Needs i. OS 8 or higher to work. Automatically logs miles using your GPS. Can track deductible and other trips and export the data. Fully automatic mileage logging! There's no need to remember to track your drives, because Magical Miles senses when you're driving and does it for you. 
Automatically calculated trip distances and deductions based on your actual routes driven. 
 Effortlessly export your logs as a spreadsheet to share with your accountant, your boss, or the IRS.

How Should I Manage My Receipts? • The tried and true old-fashioned method of saving receipts is to mark the utilization on the receipt and save it in a folder or a shoebox. When its time to figure out your taxes and your deductions, pull out the folder or shoebox and go through all the receipts categorize them and show them to your accountant.

• Alternatively, there are some great Apps that help you scan, save and categorize receipts. This list is not exhaustive, but I want to share with you several apps that can help you be organized and make sure you don’t overlook deductions. • 1) Neat. Receipts http: //www. neat. com/ • 2) Certify http: //www. certify. com/ • 3) Shoeboxed https: //shoeboxed. com/ • 4) One. Receipt https: //www. onereceipt. com/ • 5) Receipts https/appcenter. evernote. com/app/receipts/ipa d • 6) IQBoxy https: //www. iqboxy. com

• Neat Receipts is a PC based program this one is not free it cost $150 to buy you get a scanner and the software. Eliminates data entry. Very simple to use you run the receipt through the provided scanner and hit the scan button. The program uses optical character recognition to turn the receipt into a searchable document. You can save the receipts in folders, create expense reports and other documents. Send docs to Excel, Quick. Books, Turbo Tax and it can integrate with CRM. Essentially Neat extracts the key info from your receipts or business cards or documents and integrates that with accounting, contact management and business software.

• Certify $8 per month Cloud-based app used to track your receipts. You have to upload your receipts to a “Certify Wallet” then you enter and categorize the receipts.

• Shoeboxed $9. 99 per month Tracks receipts, mileage, business cards. Take a picture of your receipt with you camera and the app extracts the vendor, total amount, payment method, and date. It takes the data and categorizes the receipts. Can create expense reports, integrate with most accounting and bookkeeping solutions. One-click mileage tracking.

• One. Receipt Stores your receipts in the cloud and automatically pulls in e-receipts. indexes your spending. Free download of the application.

• Receipts Free –Does not make you set up an account to use. Can track your personal and business income, expenses and mileage, create budgets, and make detailed expense reports. Backups can be saved and restored to Evernote.

• IQBoxy • Turns bills and receipts into financial data. Uses Optical character recognition with receipt detection technology to convert photos to text. Can email, scan, cloud connect, or snail mail receipts to IQBoxy for collection and processing.

Home Office Deduction Requirements • To be eligible for deductions the IRS indicates that part of your home must be used for one of the following: • Exclusively and regularly as your principal place of business • Exclusively and regularly where you meet and deal with clients in the normal course of your trade/business • A separate structure used exclusively and regularly in connection with your trade/business not attached to your home • On a regular basis for certain storage use • This space cannot be used for any other purpose

• Part of home office deduction: • Mortgage interest, casualty losses, property taxes repairs depreciation maintenance condo association fees • Rough way to calculate the deduction: take the total square footage of your home/condo and divide that by the square footage of your home office. For example if you have a 2000 square foot home and your office is 150 square feet the office represents 7. 5% of your home. (150/2000). You can deduct 7. 5% of your mortgage interest, property taxes, home repairs, home depreciation, home maintenance and condo fees. So say this agent’s home expenses are $25, 000, their home office deduction could be $1, 875, which translates into roughly $900 is tax savings. •

Estimated Taxes • As an Independent Contractor, if the total amount of taxes due is greater than $1, 000, you are obliged to make quarterly estimates tax payments to the IRS. Our federal tax system is a pay as you go system, so if you wait to pay the entire amount when you file your annual tax return, The IRS will assess late pay penalties and interest charges. • To estimate taxes you need to estimate your 2015 commissions and your 2015 total business expenses. Take the Commission anticipated and subtract the estimated expenses to come up with your estimated Net Income from Real Estate activities.

• Assume a single head of household for calculations • • Step 1 Estimate your Net Income from Real Estate Activities: – Commissions anticipated • • Less operating expenses anticipated Net Income Step 2 Multiply Net Income by 15. 3% to calculate Self Employment Tax Step 3 Divide Self Employment tax in half Step 4 Subtract half of self employment tax from your Net Income • Step 5 Estimate itemized deductions or take the standard deduction • Step 6 Subtract itemized deductions from Step 4 •

• Step 7 Subtract Personal Exemption allowed from Step 6 • • Step 8 Look up the current year tax rates from the IRS website • http: //www. irs. com/articles/2015 -federal-tax-ratespersonal-exemptions-and-standard-deductions) • • Step 9 Calculate Federal Tax based on Step 7 income • • Step 10 Subtract tax credits and child tax credits from estimate tax on step 9 if any • • Step 11 Add the total estimated federal tax due to the estimated self employment tax due and divide by 4

• The IRS very generously provides the tools we need to calculate our estimated taxes. Publication 505 and Form 1040 ES include this 12 -page information and tax estimation worksheet, which is used to estimate next year’s taxes. http: //www. irs. gov/pub/irspdf/f 1040 es. pdf

• Essentially you take the last year’s income and have to guestimate if the current year is likely to be higher, lower or similar to last year’s. If you had a really great year in 2014, congratulations! Did your production go up because you are getting more referrals, more repeat customers, spending more on advertising? Did you have one or more really large sales that you don’t anticipate to recur in 2015? These are things you have to figure out before you can estimate your taxes. Pages 6 and 7 in this booklet are the important worksheets. On page 6 you estimate your selfemployment taxes and on page 8 you do all the other calculations to figure you estimated annual tax burden for 2015. At the bottom of page 8, they simply take your 2015 estimated taxes and divide it into 4 payments. Estimated tax payments are due April 15 th, June 15 th, September 15 th and January 15 2016. The IRS has even seen fit to include Payment vouchers to send with your money. If you use an accountant to prepare your taxes, he or she will work with you to estimate your taxes and prepare the vouchers for you. • Next Slide Estimated Taxes Worksheet

Business Structure Many Real Estate Agents and Brokers operate and file taxes as Sole Proprietors. The Self Employment tax we discussed earlier is due under this taxable entity. Some agents opt to form an LLC or an S Corporation, which reduce your self-employment tax liability. An S Corporations allows you to reduce Self Employment tax by splitting salary and dividends.

• As an S Corp, you can classify some of your income as salary and some as a distribution. You only have to pay self-employment tax on the salary part of the income, and you just pay ordinary income tax on the distribution portion of the income. The caveat is the IRS says you must designate a “reasonable” amount of your income as wages rather than a distribution. An S corporation also provides protection for your personal assets that the Sole Proprietorship does not. The negative with an S Corp is the cost to start up and maintain the S Corp. NY state charges a franchise fee on S Corps S corps with revenue of $0 -$100, 00 pay $25. There is a set scale –for revenue $100, 001 -$250, 00 you pay $75. • If your taxable income is $61, 000 and we assume 75% is income and 25% a distribution, this could save the agent approximately $2, 100 in self employment taxes. (Calculating Self employment taxes on $45, 750 instead of $61, 000) This more than offsets the $25 franchise fee you will have to pay.

Q&A

Questions • I live 2 miles from the Brokers Office. I spend several hours at least 5 times a week at the office and log approximately 40 miles of Real Estate Travel weekly. • My weekly auto mileage deduction is: • 1) 50 2) 52 • 3) 40 4) 45

• I must maintain records for how many years in case the IRS conducts an audit. • 1) 12 2) 7 • 3) 10 4) 5

• Which Item is not deductible: • 1) This Tax Deduction Class • 2) Trulia Advertising • 3) Real Estate Licensure Course • 4) Business meals and entertainment

• Itemized Deductions are always better than taking the standard deduction • True False

• In what form are Independent Contractors annual revenue reported? • 1) W 2 2)1098 • 3) K 1 4) 1099 MISC

• Which is not subject to Self Employment Taxes • 1) Rent from an investment property • 2) Rental Commission • 3) Commercial Lease Commission • 4) Real Estate Sales Commissions

True or False • 1) Most Real Estate Professionals are LLCs • 2) The IRS tells us when we have missed a deduction • 3) Real Estate Professionals are Statutory Nonemployees

• What percentage of Self Employment taxes are deductible? • 1) 15. 3% 2) 7. 65% • 3) 92. 35% 4) 14. 1%

• Standard mileage deduction for 2015 is? • 1) $0. 575 2)$0. 57 • 3) $0. 565 4) $0. 56

Yes or No • 1) Is there an upper limit in deductions? • 2) Can you deduct more than you earn? • 3) Can you elect to file taxes annually? • 4) Can you deduct mileage and other car expenses?

IRS Code 162 Deductibility Rules Does Not include? • 1) Ordinary and necessary • 2) Directly related to your business • 3) Limited to domestic expenses • 4) Reasonable amount

Who can deduct Office Expenses? • 1) Agents that own their home • 2) Agents that rent their homes

Which is a legitimate deduction? • 1) Realtor Magazine subscriptions • 2) Trip to Las Vegas where you look at 1 listing • 3) Trip to NYC for a Foreclosure conference • 4) Computer purchased for your business

Insurance Deductions Allowed? • 1) Entire cost of Homeowners Insurance • 2) E&O Insurance paid by the Broker • 3) E&O insurance paid by the Agent • 4) Entire cost of Health Insurance

How much Can I Deduct? • 1) $100 restaurant gift certificate given to a buyer at a closing. • 2) $250 monthly Trulia premier agent fee • 3) $144 per year e. Key expenses • 4) $150 Business lunch for myself and 2 clients.

True or False • 1) I can log 3 months of auto expenses and multiply that by 4 to satisfy the IRS. • 2) I can choose the information in Include on my tax deduction receipts. • 3) I should wait until the year ends to start putting my records and expense receipts together.

Acceptable Home Offices Include? • 1) Separate room used for nothing but business • 2) Guest room where I keep my desk • 3) Computer set up on desk in kitchen • 4) Rented office where I conduct my business and meet clients.

Why do Independent Contractors have to pay Self Employment Taxes? • 1) To be fair to employees • 2) To enable IC to participate in Medicare and Social Security • 3) Because the IRS is greedy • 4) To provide another deduction

Which Form helps Independent Contractors Estimate their Tax Burden? • 1) 1098 2)1099 • 3) 1040 ES 4) Schedule SE

When are estimates Taxes Due? • 1) 4/15, 6/15, 9/15, 1/15 • 2) 3/15, 6/15, 9/15, 12/15 • 3) 4/15. 7/15, 10/15, 2/15 • 4) 4/15, 7/15, 10/15, 1/15

How can and S Corp Lower SE Taxes? • 1) Allows S Corp to take additional deductions • 2) S Corps can pass through income • 3) Franchise fees are low • 4) Allows you to split salaries and dividends