Tax Deductions - Realtor

[NiceGuy123]

What is the name of your state? Minnesota

My girlfriend is a realtor. She gets a 1099 Misc from the company she works for, because the realtors are all contractors.

She has 2 cars. One is fully paid for and the other is not.

If she only uses the one that she still has a loan on for real estate and uses the other for everything else, can she deduct the actual loan payment, and actual gas, and actual maintenance costs?

Can she deduct the insurance for that car?

Can she also deduct her health insurance, since she is an independant contractor?

Obviously she can deduct her business phone line, and the portion of her house which is her primary office. But what about her cell phone, which she uses for real estate, but also some personal use?

And obviously any services or thing purchased soley for the business can be deducted, pens, paper, printer ink, computer accessories, etc.

And since she is self employed, all this comes out prior to soc sec / medicare, but soc sec / medicare is double, correct?

Are clothes deductible, since she needs to look professional around clients?
If so, what about hair cuts, and makeup?

The thing is that she has made some money this year, but not alot. But, she hasn't paid estimated quarterly taxes. I am trying to help her out so that when tax time comes she will at least know what she can and cannot deduct, so she can know what to expect. I am suspecting that with the interest from her mortgage, and other deductions, that she will not owe anything to federal or state, but will only owe soc sec and medicare.

 

[abezon]

Since she's an agent, she should hire a professional tax preparer. She can ask her fellow agents for refererences to good schedule C tax preparers.

1. Can't deduct loan payments, only interest or lease payments.
2. Yes. All actual expenses for the year are combined & multiplied the the ratio of business miles over total miles. Compare this to 37.5 cents per mile & take the larger deduction. This requires her to keep a mileage log all year long.
3. She deducts it as an adjustment to income on the 1040, not on the schedule C. Malpractice insurance would be deducted on schedule C.
4. Yes, but she has to prorate the year's cell phone expenses by business usage over total usage. And she has to keep records like a mileage log.
5. Clothes & grooming: NO! You cannot deduct street clothes even if you wouldn't wear them unless you had the fancy job.

The biggest help you can give her (& a nice holiday present) is to pay for her to see a good tax pro who can spend a little time with her & go over what kind of records she needs to keep in 2005. She could inadvertently make all kinds of "elections" when she files taxes herself the first year & be disadvantaged in later years.