Form used by escrow agent to report broker commissions
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
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?
In my state an attorney usually does the closing, however they hire title companies to research title.
In California, prior to closing our employing broker will send escrow a commission disbursement authorization form (CDA for short).
@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.
For me, I report agents income via turbotax each year and issue the agent a 1099. This is also automatically reported to the IRS.
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