Close the Deal on Taxes: The Ultimate 2024 Year-End Planning Guide for Real Estate Agents

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It’s that time again - you’re navigating buyers wanting a shiny new home before January 1st and sellers who refuse to accept the state of the market and lower their asking price…but the one thing that’s not on your mind: Taxes. 

Let's face it: in the world of real estate, you're used to helping others build their dreams. But what about your own financial future? That's where smart tax planning comes in. It's like finding that hidden gem in an up-and-coming neighborhood – get in early, make the right moves, and watch your wealth appreciate. So let's dive into how you can set yourself up for a financially fabulous new year!

1. Prep for 1099 Season

The minute the ball drops in the new year, you have 31 days to issue your 1099s. Here's how to avoid a paperwork nightmare:

• Review all the contractors you paid throughout the year (think: photographers, stagers, handymen). Hint: This is super easy if you use QuickBooks or similar software and add vendor names to each payment!

• Collect a W-9 from each vendor so you have all the details you need to fill in their 1099 when the time comes. (Note: You only need to issue a 1099 for any vendor who you paid over $600 via cash, check, or direct fund transfer including Zelle/Venmo, etc.!)

Pro tip: Next year, grab those W-9s before you even think about issuing payment!

Learn more about 1099s first hand from the IRS: https://www.irs.gov/forms-pubs/about-form-1099-misc

2. Payroll & Benefits: Don't Leave Money on the Table

Time to make sure you're not overpaying Uncle Sam (or underpaying yourself):

• S-Corp owners, listen up: We're grossing up those health insurance premiums. What this means is that you have to include the health insurance that your business paid on your behalf as part of box 1 wages on your W2. (Confused yet? Use payroll software to help walk you through all of this - reach out for reccomendations!) 

• Review your compensation (Is it reasonable? Is it enough? Too much?) Striking the perfect balance here can help you minimize payroll taxes, but also remain compliant with the IRS.

• Process any year end bonuses well in advance! There are lots of bank holidays at the end of the year and you don’t want those payments delayed.

• Double-check those retirement contributions – future you will thank present you.

3. Retirement Planning: Because Dream Homes Don't Pay for Themselves

Let's set you up for that dream retirement (or early retirement, if that's your vibe):

• Evaluate your options: SEP IRA? Solo 401(k)? As a self employed individual you have SO MANY options that will help you both fund your future and save taxes now. 

• Calculate the maximum you can fund based on your company’s income and your cash flow and plan that contribution. 

• Consider Roth conversion opportunities (if you are in a low tax bracket, this could be a good year to convert some contributions to Roth to avoid taxes later while taking a smaller hit now!)

• PS: Working with a financial planner AND a tax accountant can be hugely beneficial as they each have different areas of expertise. Let them each excel in their areas and then connect them with eachother and you can ALL have a year end planning meeting together.

4. Strategize Your Tax Position

Time to put on your CEO hat and make some power moves:

• Book that planning session with your favorite CPA (hint: it's me 😉)

• Evaluate your business structure. Is it serving you? Or does the new year call for a change?

• Analyze your Profit: What do the projections show the year will finish at?  (Hint: Check out PROFITWAY to help analyze your financials)

• Strategically plan income and expense timing – because sometimes, you gotta spend money to save money. Maybe it's time for that new CRM system or a website upgrade?

• Vehicle expenses: Are you tracking your mileage to showings and open houses? This could be a big deduction!

• Feeling generous? Let's plan those charitable contributions.

5. New Year, New Listing Energy

Set yourself up to crush it in 2025:

• Update your trackers (mileage, home office space, etc.): future you will be so grateful

• Review your commission splits: are you getting what you're worth?

• Listing agreements: Make sure they’re updated and send 'em out to make sure you're legally protected by outlining expectations

• Team check: Do you have the support staff you need to meet your sales goals next year?

6. Mark Your Calendar

Miss these dates, and you'll be in a long-distance relationship with the IRS (trust me, you don't want that):

• October 15, 2024: Last call for those extended tax returns

• October 31, 2024: Q3 payroll taxes due (Form 941) 

• December 31, 2024: Deadline to set up certain retirement accounts

• January 15, 2025: Q4 estimated taxes due

• January 31, 2025: W-2 and 1099 distribution deadline

Let's Wrap This Up

Look, I know tax planning isn't as thrilling as closing on that dream property or landing your ideal client. But here's the deal: this stuff is the foundation of building real wealth in your real estate business. And isn't that why we're all here?

Think of it this way: every showing you do, every open house you host, every late-night offer you negotiate – they're all building blocks of your financial future. By nailing down these tax strategies now, you're not just preparing for April 15th; you're laying the foundation for a penthouse-level lifestyle down the road.

Remember, in real estate and in finance, it's all about location, location, location. So let's make sure your hard-earned money is positioned in all the right places to grow and thrive.

Ready to turn your tax strategy into your secret weapon for success? Let's chat. Book a call with me, and let's make some money moves. 💸

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Disclaimer: While this guide provides valuable insights, it's important to note that every business has unique circumstances. For personalized advice tailored to your specific situation, please consult with a qualified tax professional. Our goal at CBFS is to empower you to make informed decisions that support your business growth and personal wealth-building objectives.

Disclaimer: Some of the links in this post may contain affiliate links that will provide compensation. 

Disclaimer: AI may have been used to help create, enhance, or review this content. All relevant financial information has been reviewed by a licensed financial professional.

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