Schedule C deductions
Commission income on 1099-NEC goes on Schedule C. The typical real estate agent's deductions include:
- Vehicle mileage (the single biggest deduction for most agents)
- MLS fees, board dues, and franchise fees
- Marketing: signs, photography, online ads, print materials
- Continuing education and license renewal
- Home office (exclusive and regular use)
- Phone and internet (business-use percentage)
- Client entertainment (50% deductible)
S-corp election
Agents earning $60,000+ in commissions typically save meaningful payroll tax by electing S-corp treatment. The election splits income between reasonable salary (subject to payroll tax) and distributions (not subject to payroll tax). We model the break-even for your actual numbers before recommending the structure.
Quarterly estimates
Self-employment tax runs 15.3% on top of federal income tax. Without quarterly estimates, you face underpayment penalties plus a large April balance. We calculate and schedule the quarterly 1040-ES payments.
Real estate professional status and your own rentals
Agents who also own rental property sit closer than anyone to real estate professional status, which lets rental losses offset ordinary income instead of being trapped as passive. The tests are hour-based and strict (more than half of working time and more than 750 hours in real property trades, plus material participation in each rental), and the IRS audits the logs. Agents who qualify get one of the strongest planning positions in the code. Agents who almost qualify get nothing, so the hour log is worth keeping properly.
Commission timing and the lumpy year
Closings cluster, and a big fourth quarter can push an agent into a bracket nobody planned for. Prepaying deductible expenses, timing equipment purchases, funding a retirement plan, and setting the S-corp salary correctly all work better before December 31 than after it.
Common questions
- When should I form an S-corp?
- Typically once net commission income clears $45,000 to $60,000. Below that, the cost of payroll and corporate filings exceeds the tax savings. We run the math both ways.
- Can I deduct my car or should I use mileage?
- Most agents come out ahead with the standard mileage rate due to high annual miles. Actual expenses win in specific situations (heavy vehicle, lease arrangement). We compare both methods the first year.
- Do I need to send 1099s to my assistant or photographer?
- If you paid an unincorporated vendor enough during the year to cross the reporting threshold for services, yes. The penalties for skipping them stack per form, so we build it into January.
- Are staging, photos, and open-house costs deductible?
- Yes. They're ordinary marketing expenses on Schedule C or through your S-corp, same as signs and ads.
Related
Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Tax Planning
Year-round tax planning for individuals and business owners. We project the year's income quarterly and model decisions before they become tax liabilities.
Florida Business Incorporation
Form an LLC, S-corp, or C-corp with the Florida Division of Corporations. Entity structure, EIN, sales tax account, and IRS election in place from day one.
We also work with
Tax Services for Clergy & Ministers
Ministerial housing allowance, SECA self-employment tax, Form 4361, and dual-status filing for pastors, priests, and ministers. We handle it every year.
Tax Services for Truckers & Tradesmen
Per-diem deductions, fuel logs, tools, meals, Section 179 equipment depreciation, and 1099 contract income for over-the-road truckers and skilled tradesmen.
Tax Services for Daycare Providers
Time-and-space calculations, CACFP food program income, home-use expense allocation, and state licensing deductions for in-home daycare providers on Schedule C.
Tax Services for Mechanics & Auto Body Shops
Tool deductions, shop overhead, Section 179 for lifts and paint booths, and parts inventory accounting for mechanics, auto body shops, and self-employed techs.