05
Feb
13

5 Step Tax Season Plan to Avoid Your Own Fiscal Cliff

iStock_000019829771Small-Pro_HeaderThis week tax season jumps into full swing and so do the nervous ticks and twitches that come with it.

That means you have a choice. You can be one of those agents who waits until April 15th and risk an audit, or worse—major penalties. Or, you can get smart and develop a plan for attacking this and next year’s tax season.

Take the dread out of one of every business owner’s most feared seasons. Here’s how:

1. Round up your receipts and make them electronic

While you might be tempted to dump a pile of paper onto your accountant and walk away this year, consider an intermediary step that may prevent hassle and headache down the road.

Before you turn over your paper records and risk losing your only documentation of your tax deductions, turn them into digital/electronic files. 

How?

Send your documents off to a service like Shoeboxed.com or scan them yourself to create electronic copies you can store on your computer or the cloud.

While this step seems like extra work now, if you ever get audited or, even worse, your tax preparer should misplace a critical piece of paper before you even file, having a digital backup of your receipts keeps you covered.

2. Start tracking your mileage now

One of the most commonly missed tax deductions for real estate agents is unclaimed or under claimed vehicle mileage. Cars are one of the fastest depreciating purchases for an agent and not maximizing the current deductions for their use can be a major misstep.

While 2012 is done, this tax season is the best chance to start gearing up for smart deductions in 2013.

This includes using an app like Milebug or TripLog to track your mileage all year long. Both generate easy-to-use reports that are compliant with IRS guidelines and easy for your accountant to use to make sure you get every dollar possible in tax deductions.

Also, if you just got a new Smartphone, check out these other five apps that can help you save money as a real estate agent.

3. Get your extension early if needed

It’s the end of January and most agents are only going to get busier. If you don’t have a plan to tackle your taxes already, chances are you may need an extension to get everything done on time.

If so, don’t wait until the last minute to get in your paperwork. Visit the IRS’s website to download and complete the necessary documents to apply for your tax extension now.

4. Don’t neglect the obvious

When you’re tallying up deductions, don’t forget one of the most common overlooked items by some real estate agents like licensing and education fees.

  • If you renewed your license this year or attended professional development classes, those expenses are tax deductible.
  • If you used a part of your home to do business, those expenses could be deductible.

Be sure to take all of your business-related receipts to your accountant and download our helpful handout on commonly missed tax deductions for real estate to make sure you’re maximizing your deduction opportunities. 

5. Talk to your pro about your future, too

The final step in every smart agent’s tax plan this year should be to develop a plan for the year ahead. Tax laws have changed in a number of ways for 2013 that could increase your tax liability. Talk to your accountant or certified tax professional about money management tips and tools to help make sure you’re ahead of the game and ready to maximize your deductions in the year to come.

Here are five of our suggestions for avoiding tax crises this year. What would you add to the list based on your experiences?

 

Thank you to Jovan Hackley, a Trulia Pro Blogger For Real Estate Professionals

 

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Jennifer Ferri, Owner

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