Hello BP members!
I am currently a loan officer and in the transition of working as a W2 employee to now being a 1099 employee. I am also working on my real estate license and plan on having it completed by the end of the year. I already have a brokerage that I will hang my license under.
From my understanding, a 1099 employee is considered a "contractor" and are able to itemize deductions when it comes to taxes. My question that I have for any tax professionals or any other 1099 employees is what are some of the main business expenses I am able to deduct? Phone, car, mileage, computer, health insurance etc.? This is one link that I did find helpful.
I also need to know when I am able to start deducting these expenses? Am I able to right away, or once I start earning income as a 1099 employee? Will all business expenses from the beginning of the year qualify for a tax deduction or only from the time I started as a 1099 employee?
I also remember being asked if I was a RE professional last year when I did my taxes. What qualifies you as being a RE professional?
All feedback is appreciated!
Thank you in advance!
The link you have is a very good starting point.
I'm not a tax professional but I can make a few comments.
Receiving a 1099 for real estate services would probably qualify you as a RE professional.
I don't remember the numbers but it is something like you have to show a profit in two of your first five years or the IRS may disallow deductions. You don't have to show a profit before establishing that you are a RE professional but having no gross income doesn't seem likely to succeed.
If you have employer sponsored insurance you probably can't get a deduction for additional individual insurance. Self employed (contractors) can almost always deduct their health insurance costs.
It would probably be worth your while to talk with a tax professional to get set up with the appropriate record keeping guidelines and knowledge about the best way to deduct expenses.
@Jeff Keller Thanks for the feedback Jeff!