Real Estate Agents Face Rising Costs

A Post in philly.com by Alan J Heavens, Inqirer Real Estate Writer claims that "Eight out of 10 real estate agents are independent contractors, not salaried or commissioned employees." Many real estate agents are small businesses, facing costs and uncertainties

In the small Western Carolina Board of REALTORS, where I'm a member, that figure is closer to ten out of ten agents. There are a couple of agents who also work as employees, but all of our local real estate agents are paid on a 1099 and not a 1040.

This means agents are responsible for the entire tax burden. There is no employer to share federal taxes with; agent's pay their own SE or self employment tax. Agents are responsible for their own benefit packages, if they can afford one, and they are responsible for maintaining records and filing taxes just the same as any other small business.

The IRS has put together some great material for small businesses, including some excellent videos and they even host a Small Business/Self-Employed VIRTUAL Tax Workshop.

As the cost of doing business rises, and uncertain times loom, you can't afford not to understand the tax ramifications of working as a 1099 Contract Laborer. And heed the advice I give to all new agents. When you get a check, set aside at least 15% for taxes. You'll be glad you did.