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Accounting and Finances
December 2, 2022

What Is Self Employment Tax as a Real Estate Agent

How Does Self Employment Tax Relate to Real Estate Agents?

When you decided to become a real estate agent you decided to become an entrepreneur and a business owner. This means you are subject to self employment tax. When you first joined your brokerage you most likely filled out a W-9 form and at the end of the year get a 1099. As a business owner, your net income is subject to the Federal Self-Employment tax. You’ll also have to pay federal and state income taxes.

Why Does Self Employment Tax Exist?

Self-employment taxes exist solely to fund the Social Security and Medicare programs. Employees pay similar taxes through employer withholding, and employers must make additional tax contributions on behalf of each employee. The self-employed are required to pay all of these taxes themselves.

When you are self employed you are essentially acting as employer and employee so the IRS created a special tax, the Self Employed Tax, to cover that amount which is 

(7.65% x 2 = 15.3%).

Talk to a CPA

If you ever have questions surrounding self employment tax it’s always best to talk to a CPA. They will be ones that can offer the best guidance that will help put your mind at ease.