Estimating Tax Based on Commission

real-estate-532x266-1 Estimating Tax Based on Commission

A real estate broker I worked with years ago had a simple way of keeping up with his estimated tax payments.

Every year he would look at his tax return and divide his total taxes (income and self-employment tax this is the number on line 16 of your 1040) by his gross commission income( the amount on line 1 of your Schedule C). This gave him a percentage of each new commission to put away for his taxes. It was simple but very effective. Every year he owed very little or got a small refund.


Total Taxes / Gross Commission Income = Commission % to put aside for taxes


I share this now because we are headed into 2021 and we don’t know how the market will be. Not a good time to fall behind with your taxes.

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