26 Jul Realtors: Save $10,000 On Your 2019 Taxes By Making This One Change
A real estate agent client of ours had $135,000 on her Schedule C for a single year. Her income tax was $25,199, and her self-employment tax was an additional $19,075. In total, her tax payment for that year was a whopping $44,274! If you’re not careful, your 2019 taxes could look the same way!
That was almost one-third of her income for 2017!
Many real estate agents can find themselves in the same situation. They make a good net profit, but the addition of self-employment tax on top of income tax can harm their income regularly. What if I told you there was a way you could cut those self-employment taxes and walk away with more money not only on your 2019 tax returns, but EVERY YEAR AFTER THAT?
All it takes is to file as an S-Corporation for your 2019 taxes.
An S-Corporation (S-Corp for short) is a business that elects to pass corporate income, losses, deductions, and credits to their shareholders for tax purposes. Shareholders then report the flow of income and losses on their personal tax returns. Because the tax is assessed on the shareholders’ individual returns, the S-Corp avoids the double taxation on corporate income.
In short, as a real estate agent, filing as an S-Corp means that your total income for the year will remain unchanged, but you’ll end up paying less taxes. The difference is that the money is simply being allocated differently. It can sound confusing, but the results speak for themselves. On average, our real estate agent clients save $9,540 in taxes on a $100,000 income.
What could you do with an extra $10,000 a year?
There are certain factors to keep in mind with this process. Filing as an S-Corp means that you must fill out a form 2553 with the IRS.
This can be a tricky process, and I’ve never seen a taxpayer do it correctly on their own.
Tax mistakes can be very costly, so we recommend having a skilled business accountant to handle that process for you. Hiring one can range from $500-$1000, which would just be a small fraction of the money you would save on your taxes.
This is where we come in. Give us a call at 614-524-4888 and we can transform your real estate business into an S-Corp and save you thousands of dollars on your 2019 taxes.