How does one go about handling taxes for someone who makes a living assigning contracts and not actually buying property? I am not dealing am I?
I’m not sure of Texas laws reguarding assignments, however in Pa we assign for a living and it’s run through our S-corp at tax time reflecting the deductions on our personal income. If we didn’t have a business than the IRS would consider it a business after selling 4 or more properties. We also have to pay a double transfer tax with assignments with record of the transaction on the HUD statement leaving a paper trail.
Your assignment profits are taxed as ordinary income and self employment income taxes may also apply.
no, you’re not dealing.
yes, ordinary income.
Sch C (unless you have an entity)
keep track of ALL business expenses: biz cards, meals, MILEAGE (a big one), advertising, office supplies, postage, etc to reduce the income as much as possible. the total tax on self employment income is particularly brutal.
The best advice I ever followed was to buy a tax code book and READ it!! Do not take anyone’s opinion including your CPA. Ask 50 CPA’s; get 50 different responses. Read the tax codes, highlight, index, do whatever is necessary for you to understand the truth in the tax codes. Then when you go to your accountant, you will be informed and make confident decisions.
Rob