How to Report Real Estate Commission Tax When Broker Isn't Issuing 1099

This is actually pretty common in real estate. When your wife receives commission directly at closing, she's essentially receiving the money as self-employment income. The broker doesn't issue a 1099 because technically they didn't pay her - the settlement company did. Your wife will need to report this income on Schedule C (Profit or Loss from Business) as self-employed income, even without a 1099. She should keep meticulous records of all transactions including the settlement statements that show her commission. These statements serve as documentation of her income. She'll also need to pay self-employment tax (Social Security and Medicare) on this income, which she'll calculate on Schedule SE. And since taxes aren't being withheld, you might need to make quarterly estimated tax payments to avoid penalties.

I discovered a service called taxr.ai that was super helpful when I was dealing with this exact situation last year! I was getting my commissions at closing and wasn't receiving 1099s either. I was totally confused about how to report everything properly. I uploaded my settlement statements and commission breakdowns to https://taxr.ai and their AI analyzed everything and explained exactly how to report it on Schedule C. They even identified some business deductions I could take that I had no idea about. Saved me a ton of stress trying to figure out all the real estate commission tax stuff on my own.

I tried taxr.ai after seeing this post and I'm genuinely impressed! I've been stressing over my tax situation since my broker also doesn't issue 1099s for direct commissions. The service analyzed my closing statements and clearly explained that I need to report all my commission income on Schedule C, even without a 1099. It also helped me understand which expenses I could legitimately deduct as a real estate agent - things like my MLS fees, license renewal, continuing education, and even a portion of my cell phone and car expenses. The step-by-step breakdown made it super clear how to handle everything correctly. Really glad I found this before tax season gets crazy!

If you're having trouble getting answers from your broker about tax stuff, you might need to go straight to the IRS for clarification. I tried calling them for weeks about a similar issue last year and kept getting the "due to high call volume" message. Finally used https://claimyr.com and got through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed that real estate agents need to report all commission income on Schedule C regardless of whether they receive a 1099 or not. They also explained that settlement statements serve as valid documentation for income reporting purposes.

I need to eat my words and apologize. After posting that skeptical comment, I decided to try Claimyr myself because I've been trying to reach the IRS for weeks about my real estate tax situation. It actually worked! After signing up, I got a call back in about 35 minutes and was connected directly to an IRS representative. I explained my situation about not receiving 1099s for my real estate commissions, and the agent confirmed exactly what others said here - I need to report all commission income on Schedule C regardless of whether I receive documentation from the broker or not. The agent also mentioned that I should keep settlement statements as proof of income. Definitely worth it to get an official answer straight from the IRS instead of relying on my broker's possibly incorrect information.

Have you asked your wife's broker if they provide any kind of year-end summary of her commissions? My broker doesn't issue 1099s either but they do give us an annual commission statement that shows all transactions. Not an official tax document but at least helps with record keeping.

Just wanted to add that your wife should be keeping track of ALL her business expenses too! Things like: - Broker fees - License renewal - MLS fees - Business cards - Office supplies - Mileage for all property showings - Portion of cell phone used for business - Home office deduction if applicable These can really add up and reduce her taxable income significantly! I use an app to track everything throughout the year which makes tax time so much easier.

Has your wife joined the National Association of Realtors? When I became a realtor, they had some really helpful tax guides specifically for real estate professionals. Might be worth checking their resources. Also make sure she understands the difference between being a real estate agent selling properties for others vs reporting income from properties you're flipping as a couple. Those are potentially taxed differently (ordinary income vs capital gains) depending on how your business is structured.

Great advice from everyone here! I went through this exact situation when I first got my real estate license. Just to add a few practical tips based on my experience: 1. Create a dedicated folder (physical or digital) for ALL settlement statements - these are your proof of income even without 1099s 2. Set up quarterly estimated tax payments right away since no taxes are being withheld - this saved me from a big penalty at year-end 3. Consider opening a separate business bank account for your real estate activities to keep everything organized One thing I wish I'd known earlier - even though the amounts seem small now ($8,500), the self-employment tax (15.3%) adds up quickly. On top of regular income tax, you'll owe about $1,300 just in SE tax on that amount. Also, since you're flipping properties AND she's earning commissions, make sure you're clear on which income is which. Commission income goes on Schedule C, but income from property flips might be reported differently depending on whether it's considered dealer vs investor activity. The IRS looks at frequency and intent when making this determination. Keep detailed records from day one - it'll save you headaches later as your business grows!

For setting aside taxes on commission income, I typically recommend saving 25-30% of each commission check. This covers federal income tax, state tax (if applicable), and the 15.3% self-employment tax. It's better to save too much than get caught short! For quarterly payments, you'll want to calculate based on your total expected income for the year (both regular W-2 income and self-employment). The IRS wants you to pay either 90% of this year's tax liability or 100% of last year's (110% if your prior year AGI was over $150k). One more tip - since you're both flipping properties AND your wife is earning commissions, consider whether it makes sense to elect to treat the real estate commissions as part of your existing property business rather than a separate Schedule C. Sometimes consolidating can simplify things, but you'd want to run this by a tax pro since it depends on your specific situation. Also, don't forget about the QBI deduction (Section 199A) - as self-employed individuals, you might be able to deduct up to 20% of your qualified business income, which can provide significant tax savings!