PROView - November 2007 - (Page 18)

FINANCE Year-End Tax Season Preparation by Mathias Bergendahl, Directior of Marketing & Communications 2007 is about to come to a close and as business owners, you will soon again be faced with preparing your taxes. While it’s natural to wait until spring before compiling paperwork, receipts and any other financial documents you may have, the best time to start is now. Now is when you remember all your 2007 activities the best. The sooner you start, the more likely it is that you will catch any opportunities for increasing your tax benefits. I sat down with Jay Kauffman, a St. Petersburgbased C.P.A. who specializes in working with small businesses to discuss what he suggests Realtors do before the end of this year. Q – We’re approaching the end of 2007. This time of year, what should our members do in order to prepare themselves for filing their taxes next year? A – Recognizing the challenging market we have been in this year, whether Realtors® or brokerages have been profitable or not will dictate the direction of what can be done for their benefit. First, this is the time to start collecting documents and putting together summaries for any business expenses during the current year. Business expenses for Internet use, membership dues, MLS fees and all marketing expenses, essentially all expenses invested in the business, should be summarized. Realtors® spend a considerable amount of time in their cars, they should also sum up all mileage spent for their business during the year. For those who may not have done so previously, separate accounts for business versus personal should be established. This is also the best time to do a tally of any new equipment, maybe cars or computers, which were purchased during the year. Q – If Realtors® have been profitable this year, which activities would you suggest they consider? A – If possible, Realtors should consider opening or adding to a retirement account. For those with IRA’s, funding can be done as late as April next year. However, Realtors also have the option of forming a personal 401(K), which has to be established by the end of the year. Members should also consider paying their real estate taxes and possibly make their January mortgage payments before the end of this year in order to gain the largest amount of tax deductions possible. As a point of guidance, it is very important that members consider whether they will need the highest deduction this year or next year. Q – Many Realtors have been faced with the need to take on part-time and even full-time jobs. Are there any special considerations for them? A – Even with other jobs, it’s important for members to continue to actively stay in the business as Realtors. Without proof of Realtor activity, the IRS may consider their real estate careers as a hobby. As a result, Realtors may lose any deductions and other tax benefits they may have relied upon. Simply put, in the event of negative annual financial statement, the IRS doesn’t allow for a loss on a hobby. Q – What can you do to show proof of business? A – IRS will look at the time you spend on actively marketing your services. This is also the best time to take classes and achieve additional professional designations. IRS recognizes that a business may have a loss. In fact, a couple of years of losses are acceptable. Essentially, in light of any W-2 income 18 PINELLAS REALTOR® ORGANIZATION November / December 2007

Table of Contents Feed for the Digital Edition of PROView - November 2007

PROView - November 2007 Contents Chairman’s Notes: My Year in Review The Long View: The Long View Waiting Room: Waiting Room Brokerage Design: Protecting Your “Rep” On The Internet Feature: Charting the Course for Next Year: Building Your Marketing Plan ProActive: 2008 RPAC Fundraising Chair ProActive: Legislature Sends New Property Tax Reform Ammendment to Voters Marketing: Twelve Step Plan to Make You Feel Better About this Market Finance: Year-End Tax Season Preparation What is RPAC? 2007 RPAC Donor Appreciation Marketplace Analysis Home Sales Report MLS Update MLS Mind Your Manners Your 2008 Memebrship Dues Upcoming Events Calendar of Events & Programs: November / December PROBIZ: IDX Welcome: New PRO Members and Affiliates

PROView - November 2007

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