Agents at the Jacksonville Women’s Council of REALTORS® meeting learned a few tips from Marshall Gunn, a certified public accountant, to save money this tax season, so I thought I would share them with you.
“The mileage rate for 2002 was 36.5 cents a mile and you all know what has happened at the pump,” said Gunn. “Well, for 2003, they lowered the mileage rate to 36 cents a mile. That’s called Internal Revenue Service infinite wisdom. Go figure.”
He said independent contractors can either choose to deduct mileage or actual expenses of their vehicle and they can flip flop their choice from year to year.
“If you have an expensive vehicle or you don’t drive a lot, then actual expenses might be a better deduction for you,” said Gunn.
Actual expenses include things such as gas, car washes, repairs, oil changes, detailing as well as depreciation and interest on the car.
He said you need to discuss with whoever is preparing your taxes which option is better for you.
“Keep track of your mileage and your expenses so you don’t sell yourself short,” said Gunn.
Entertainment is another deduction that REALTORS® can take advantage of.
“Bringing food into the office is a 100 percent deduction, but if you go out to eat it’s only a 50 percent deduction,” said Gunn.
Other entertainment items for business such as Jacksonville Jaguar tickets, theater tickets or concert tickets — all are also 50 percent deductible.
Advertising is another way to save a buck.
“You can’t do enough advertising and it is 100 percent deductible,” said Gunn. “You want to promote yourself in every way possible whether it is sponsoring a luncheon or marketing items as give-a-ways at events.”
Joining professional organizations is not only good for your business, but the dues are 100 percent deductible.
“It is important to promoting your business and causing your business to grow,” said Gunn. “The networking, interacting and fun that you have goes a long way to your longevity in your particular profession.”
Gunn said that in 1966 Congress passed a law that says that if you give gifts, the maximum you can deduct for any gift for one person per year is $25.
“In 1966, think what you could buy for $25,” said Gunn. “In 2003, what can you buy for $25? Not a whole lot relative to what you could get in 1966 and Congress has still not changed the law. So, If you have a couple who is buying a property, you are limited to $50, $25 for each person. But, if you were to give them entertainment tickets like tickets to the Alhambra or a Jaguar game, that would be 50 percent deductible for you.”
Computers and cell phones, an integral part of any real estate agents business, are 100 percent deductible.
“As an independent contractor, health insurance is 70 percent deductible off the face of your 1040,” said Gunn. “It is not a medical expense in the itemized expense area, it is a face reduction as I like to call it. It includes not only your health, but dental, cancer and eye care policies too.”
Gunn stressed how important it is to keep good records.
“You cheat yourself if you don’t,” said Gunn. “You need to use a Palm pilot, day timer or something on your lap top keeping track of all of your expenses. These are things you spend money on everyday. Every dollar helps.”