You’re out there hustling, closing deals, and building your brand but are you accidentally handing thousands of dollars to the IRS?
Let’s be real: Taxes are probably the least exciting part of being a realtor (right after dealing with flaky buyers and last-minute contract changes). But here’s the thing: small tax mistakes can add up to serious money lost.
At Insogna CPA, a leading Austin, Texas CPA firm, we help real estate agents keep more of their hard-earned commissions by avoiding tax traps and maximizing deductions. Let’s break down the five biggest tax mistakes realtors make and how to fix them.
1. Filing Late & Getting Hit with Avoidable Penalties
You never miss a contract deadline, so why miss a tax deadline?
Filing late isn’t just a minor inconvenience. It comes with:
- IRS penalties up to 25% of what you owe.
- Interest that keeps growing every month.
- The stress of scrambling at the last minute.
How to Avoid This Mistake:
✔ Mark tax deadlines on your calendar (April 15 for annual taxes, quarterly estimates due in January, April, June, and September).
✔ Work with a tax pro (like Insogna CPA, a trusted CPA firm in Austin, Texas) to keep you on track and penalty-free.
Pro Tip: The IRS loves early filers. The sooner you file, the sooner you get your refund (or avoid last-minute panic).
2. Mixing Business & Personal Finances (A Fast Track to an Audit)
Swiping your personal card for business expenses? Depositing commission checks into your personal account? That’s a huge IRS red flag and a bookkeeping nightmare.
Why This is a Problem:
- You’ll miss deductions (or worse, forget what was business vs. personal).
- You’re more likely to be audited (the IRS loves disorganized records).
- It’s a mess at tax time (sorting through receipts = headache).
How to Avoid This Mistake:
✔ Open a separate business bank account for all commission deposits and expenses.
✔ Use a business credit card for all marketing, gas, and work-related purchases.
✔ Keep organized records—a simple spreadsheet or bookkeeping software can save you hours of frustration at tax time.
Need help setting up a clean system? Insogna CPA, a trusted small business CPA in Austin, can get you organized.
3. Ignoring Tax Deductions & Overpaying the IRS
Would you leave free money on the table? That’s exactly what happens when you don’t claim all your deductible expenses.
Deductions Realtors Often Miss:
- Mileage & Vehicle Expenses – Every mile you drive for showings, closings, and client meetings adds up to tax savings.
- Home Office Deduction – If you have a dedicated space for work, a portion of your rent or mortgage is deductible.
- Marketing & Advertising – Social media ads, business cards, website costs, and signage? Write it off.
- Phone & Internet – If you use your phone and WiFi for work, a percentage is tax-deductible.
Want to ensure you’re claiming all your deductions? Insogna CPA, a top Austin tax accountant, can help you maximize your write-offs.
4. Not Setting Up an LLC & S-Corp (AKA, Paying Too Much in Self-Employment Tax)
As a self-employed realtor, you’re on the hook for both income tax AND self-employment tax (15.3%!). That adds up fast.
How an LLC & S-Corp Can Save You Thousands:
✔ An LLC protects your personal assets.
✔ An S-Corp lets you take part of your income as a distribution (which isn’t subject to self-employment tax).
✔ This could save you thousands per year in taxes!
Not every realtor should switch to an S-Corp. It depends on your income and tax situation.
Not sure if an S-Corp is right for you? Insogna CPA, a leading tax advisor in Austin, will analyze your income and set up the best structure for tax savings.
5. Skipping Quarterly Tax Payments (And Getting Slapped with a Huge Tax Bill)
Realtors don’t have taxes withheld from their commission checks. That means if you’re not paying estimated taxes throughout the year, you could end up with a massive tax bill (plus penalties) in April.
How to Avoid This Mistake:
✔ Make quarterly estimated tax payments in January, April, June, and September to avoid IRS penalties.
✔ Save 25-30% of each commission check in a separate account for taxes.
✔ Work with a tax pro to estimate your payments so you never underpay or overpay.
Need help calculating your quarterly tax payments? Insogna CPA, a trusted CPA firm in Austin, Texas, will make sure you stay ahead of IRS deadlines.
Realtor Tax Mistakes = Lost Profits. Let’s Fix That.
Your real estate business should be making you money, not costing you extra in IRS penalties and missed deductions. Avoid these common tax mistakes, optimize your tax strategy, and keep more of your hard-earned commissions.
Don’t leave money on the table. Let’s optimize your tax strategy today!
Schedule a consultation with Insogna CPA, your go-to Austin, TX accountant, and let’s build a tax plan that works for your business!