Real Estate Agents are required to pay many types of business-related taxes. They pay sales tax on purchases, property taxes on business vehicles, real estate, and business equipment, payroll taxes on employee’s payroll, business and occupational taxes, income tax municipal taxes, and several government fees. Agents also pay for numerous licenses required to do business, such as business licenses, state organizational fees, and the cost of obtaining and renewing real estate licenses.
Tax and license fees paid by Real Estate Agents are deductible on Line 23, Taxes and Licenses, of Schedule C. Many taxes and license fees get deducted on this line. Others are deducted elsewhere on Schedule C. Some aren’t deductible at all. This article, drawn from our Real Estate Agent, Tax-Cut Library, will help you accurately report tax and license costs on Line 23 (and make sure you do not expense costs that are illegal to deduct).
Taxes are levies imposed by government entities during the ordinary course of business. Interestingly, many taxes paid by agents do not get reported on the line called “Taxes and Licenses,” and some of the most significant duties paid by a realtor are not deductible as business expenses (or deductible at all!).
Here’s a list of taxes commonly deducted on Line 23, Taxes and Licenses:
Taxes NOT Deducted on Line 23: There are quite a few taxes that get deducted elsewhere on schedule C and a some you cannot deduct at all. Here’s a list:
Licenses are certifications required to conduct business in a jurisdiction or specific profession. Real Estate Agents pays the government and professional regulatory agencies for a variety of licenses. Here’s a list of deductible, routinely purchased licenses:
License Costs Not Deductible on Line 23: Several licensing fees do not get deducted as Taxes and Licenses on Line 23 of Schedule C:
Take Away: Tax and License Costs deducted on Line 23 of Schedule C are business costs imposed by the government or professional governing agency for property ownership or the privilege of doing business. As with many Schedule C deductions, not all items called taxes or licenses are not deductible as business expenses on the most obvious line. Others are not deductible at all, particularly federal, state, and self-employment tax income tax.
Summary and Invite: We hope this article helps you to understand better the deductibility of Taxes and Licenses on Schedule C. If you’d like to learn more about cutting your highest cost: TAXES, check out our Real Estate Agent Tax-Cut Library. The Real Estate Agent Tax-Cut Library includes over eight hours of video broken into twenty-nine searchable volumes and covers every possible deduction a Real Estate Agent can take on their tax return. Our Broker Version will help your entire agency cut their taxes! We also invite you to browse our courses.
All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.
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