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Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
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Form used by escrow agent to report broker commissions

Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
Posted May 25 2016, 16:18

Hello fellow agents.

Can someone please educate me to which form the escrow agent uses at the closing table to report to the IRS, broker commissions?

Thank you

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Shannon Wright
  • Escrow Officer
  • Temecula, Ca.
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Shannon Wright
  • Escrow Officer
  • Temecula, Ca.
Replied May 25 2016, 16:21

In Ca, escrow does not report commissions, that is not our role, it is the responsibility of the employing broker. Not sure about your state, but maybe it is similar?

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Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
333
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Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
Replied May 25 2016, 16:24

In my state an attorney usually does the closing, however they hire title companies to research title. 

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Fred Tu
  • Real Estate Agent
  • Santa Barbara, CA
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Fred Tu
  • Real Estate Agent
  • Santa Barbara, CA
Replied May 25 2016, 17:31

In California, prior to closing our employing broker will send escrow a commission disbursement authorization form (CDA for short). 

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Shannon Wright
  • Escrow Officer
  • Temecula, Ca.
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Shannon Wright
  • Escrow Officer
  • Temecula, Ca.
Replied May 26 2016, 11:12

@Fred Tu, he is asking about reporting to the IRS though?

@Rich Hupper, In Ca, it is my understanding that the employing broker has the responsibility of reporting. However, many brokers issue CDAs, as Fred mentioned, which alleviates the reposrting responsibility (in their opinion) because the funds never passed through their account to report, since we issue a check payable to the agent, per the brokers instructions. So, if your state handles the payment of commission similarly, then it may be viewed the same as Ca, as well.

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Brett Tousley
  • Real Estate Broker
  • Richland, WA
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Brett Tousley
  • Real Estate Broker
  • Richland, WA
Replied May 26 2016, 11:26

For me, I report agents income via turbotax each year and issue the agent a 1099.  This is also automatically reported to the IRS.

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Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
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Rich Hupper
  • Broker / Investor
  • Tewksbury, MA
Replied May 26 2016, 11:35

I guess what I'm trying to figure out more specifically is how does the IRS know how much money a broker made over the course of the year at closings