Every single tax deduction you are or are not allowed to take is impossible to know without a helping hand. If you aren’t utilizing an accounting or tax management system, it means you’re losing a lot of money. And by a lot we mean thousands of dollars that could be in your pocket instead. Avoid overpaying on your quarterly and year end taxes with these tips:
1. Mileage – over $7,000 in deductions
You drive a lot, spending your days driving between properties, appointments and shuttling your clients. Sometimes you probably feel like a glorified Uber driver. How do you determine whether to go with the standard mileage deduction or track all your auto-related expenses?
For those who drive more than 10,000 miles per year, the IRS requires you to keep a detailed log in order to claim this deduction. It needs to include date, time, mileage and purpose of the trip. Do you use an app to track all of this? Even if the answer is yes, there’s a better app out there. QuickBooks Self-Employed is a tool that helps users track an average of $7,393 in mileage deductions per year. It automatically captures everything you need with the click of a button.
2. Meals and fun – save over $4,000 a year
You can deduct meals as a business expense in two forms: 1.) When you are travelling on business and 2.) When you are dining with clients or with other professionals for the purpose of conducting business or generating referral business. With these, you’re allowed to deduct 50 percent of your total expense, which includes tax plus tip for the meal.
Many agents save receipts in boxes and haphazardly enter them into spreadsheets or give them to an accountant later, but this leads to loss of money. QBSE streamlines this process. Simply snap a photo of your receipt with your QBSE smartphone app to digitally store it with your transactions. This process helps users save an average of $4,340 per year.
3. Marketing and ad spend
Online and social media advertising costs are quickly becoming a big part of agent spend. Agents are expected to do more for their listings than they ever have before and they need the tools to effectively do it. Did you know that production costs like writing and design fees are also deductible? This includes website design and hosting fees, search engine marketing, pay per click advertising, video production, and any other IT-related costs.
4. Home office or space
Do you have a home office or a dedicated space to work? If you do, you’re eligible for a home office deduction, even if you also have office space at your broker’s office — unless you’re deducting desk fees already.
5. Desk Fees
Your desk fees are deductible regardless of your brokerage. With QBSE, whenever you pay that desk fee, you can set a rule to automatically categorize this expense. This however is only an option if you aren’t already doing the home office deduction.
6. Big purchases
Stationary, photocopies, and any other consumables needed to run your business are deductible. The ones you need to make sure you deduct are the big ones: laptops, phones, furniture, copiers, etc.
7. Fees, Licenses, etc.
Annual fees are common costs of doing business and are deductible. In real estate, that means your state license renewal, professional memberships, and MLS dues. Also, you can deduct real estate taxes necessary for your business, but not self-employment taxes.
8. Education and travel
Given rapid industry change, continuing education is imperative. It’s also a requirement in most states. If you need to travel to attend an event or meet with a coach, make sure to track all the information correctly to ensure that you’re compliant with the IRS. One way to do that is by linking your banking accounts with QBSE. As soon as you incur an expense associated with travel, tap a button to categorize it in one of the IRS approved categories.
9. Tools and services
Any software needed to run your business is fully deductible, including subscription services. Products such as QuickBooks Self-Employed not only help you automatically track your expenses and mileage, but may be fully deducted as well.