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Level 1

Question

I am to receive a real estate broker commission totaling $100,000. I must pay, from my share, another broker $30,000. How do I make sure the IRS doesn't tax me on $100k

Forum|Forum|7 years ago
May 30, 2019
5 replies
46 views

Since my net income is $70,000, I want to avoid getting taxed on the $100,000 next April. I'm assuming I can send the broker I am paying a 1099 along with the $30k, when I file taxes next year, would there be some area in my return to indicate I made $100K but paid $30K of it?

Level 15

If the commission is not split at the closing and you get the entire fee then using the 1099 is the correct way to handle it. On the Sch C there is a category for commissions paid so you are not taxed on the entire amount. Have the broker fill in a W-9 for you so you have the information to complete the 1099-misc in January and to keep for your records. https://www.irs.gov/pub/irs-pdf/fw9.pdf

Level 15

see here for how to record nominee income paid to someone else.

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

List yourself as the Payer and the other broker as the Recipient.

Alumni - Champ

You may want to send an estimated tax payment to avoid any penalties.