I've been in the buisness for a couple of years now but have only really started selling these past 8 months!

I was told to set aside 5 to 10% on each of my commission checks for taxes but is that enough? What should I really be setting aside to avoid problems in the future?

Thanks!

20%

Ack, I set aside a third.
--A

All of it - LOL
Just kidding -

I do 40% and PRAY -
Uncle Sam Loves Me -

Figure out your tax liability based on your projected income. Then set aside whatever percentage you come up with. Don't forget you must pay quarterly, not all at once when you file. Most would set aside 20-40%. It depends on your personal situation and how much of your commissions you are plowing back into the business.

I set aside 30-40 % of each check the bigger checks get 40% taken out... Then whatever I have left after taxes I will just keep in the savings account. Its an easy way to save some money.

All good advice.

I put aside 35%. Of course, the only tax system we all have in common is federal taxes. So let your local and state taxes figure in to whatever your saving.

I consulted with my accountant who suggested 35%.

Shameless plug:

If we didn't have the IRS, this wouldn't be an issue!

For more information, go to: http://www.fairtax.org

To see how the Fair Tax will affect real estate: http://fairtax.org/real_estate.html

To see how the Fair Tax will benefit Realtors: http://fairtax.org/pdfs/WhyRealtorsSupportUs.pdf (opens .pdf file)

There you go! Study this site and call your Senators and Representatives!

Thanks everyone. This really helps! One thing though ... the "quaterly" thing... can someone elaborate a little more?

I thought we filed taxes when the rest of the world file taxes?

I appreciate it.

I do 30%. But you should talk to a tax advisor to know for sure.

Amanda

Sorry didn't see that last post. You can file taxes quarterly. You instead of paying on what you did make, pay on what you think you will make. I did not do that last year. But have really been thinking about it for this one. If you over pay through out the year, they give it back to you.


Again, I would talk to your accountant or tax advisor on it all.

Good Luck and congrats on starting to sell!!

Amanda

If you don't pay quarterly, you can be hit with penalties. It's best to pay on a quarterly basis; it's not really a "filing", it's simply--send them a check with your voucher. It also helps with being hit with a big payment at the end of the year. If you overpay, you can get a refund, or credit to next years taxes.

where do I find the information I need to pay quaterly?

Sorry but I'm new to this. I really appreicate the help. Everyone's been great!

www.irs.gov or a CPA, and I think the latter is the better choice for you.

People spend years learning about taxes only to master a few areas of specialization, and an Internet forum focusing on real estate is not the place to learn about this. You either need to read the pertinent publications from the IRS and develop a strategy for your unique business, or entrust your tax advice to a CPA.

Tax code is pretty complex. I used to do it (figure my quarterly estimated tax payments, do my own tax returns) myself but no more.

Thanks

Best advice I ever got from a broker: Set aside 50%. Save what's left over for retirement.

That wouldn't be a bad idea!