Excellent record keeping and the selection of competent tax professionals who understand the business are essential for Illinois REALTORS®.
Investors need tax professionals familiar with the type of investments they use: stocks, mutual funds, real estate, etc. If you haven’t already submitted your tax return, consider these tips to prepare for meeting your tax professional in the next several months:
1. Get your records organized. Ask your tax professional to send you an organizer to assist you in identifying and collecting the records needed for the 2014 return. This organizer will include the items and the amounts entered on the 2013 return, which will serve as reminders for the records you need. Don’t just drop off your tax information with your preparer and forget it. Make sure your preparer has all that’s needed and before the return is completed, make sure you get answers to any questions you have.
2. DO NOT fudge on income or deduction items. Do it right and do it ethically, just like you do every day in your real estate practice. Even though the IRS audit rate is significantly decreased, unreported income found in an audit can result in FRAUD charges, which to say the least, is a career-ending problem. I cannot tell you the number of times I have been contacted by REALTORS® in the past several years who have had severe problems with the IRS over unreported income or significant overstating of deductions.
3. Check and double check for missing legitimate deductions. Most self-employed professionals have a general idea of the types of deductions that can be claimed, but are you considering everything? Have you considered the:
- business promotion (100 percent) vs. entertainment (50 percent) issue?
- office in home new safe harbor rule?
- heavy SUV or pickup truck enhanced write-off?
- possible deduction of concealed carry and firearms training issues?
- use of the Subchapter S Corporation for your business?
4. Do not wait until the last minute! It is a proven fact that the more you rush in preparing for the tax return, the lousier you will do. This will result in missed deductions and – in some cases – estimating income and expense items, which is always a bad thing to do.