Taxes for Texas Real Estate Agents: Self-Employment Basics

Why are agent taxes different from a normal job?

At a regular job, your employer takes tax out of every paycheck. Most agents do not have that. Your commission is paid through your sponsoring broker, and the amount is usually paid to you in full. You are the one who sets money aside and sends it to the IRS.

How you are classified matters. Our guide on independent contractor vs employee for Texas agents explains the difference. This article assumes you are a self-employed sole proprietor, which is common for new agents. It is general education only and does not replace a CPA or enrolled agent.

The IRS pages cited below were checked on October 29, 2026. Tax rules change, so always confirm the numbers for the year you are filing.

What is Schedule C?

The IRS says to use Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), to report income or loss from a business or profession you run on your own. For an agent, this is where your commission income and your business expenses meet.

The basic math is simple. Business income minus business expenses is your net profit or loss. You file Schedule C with your regular Form 1040 return. Publication 334 says that for calendar-year filers the return is due April 15 of the next year.

Your brokerage may send you a Form 1099 at the end of the year. Treat it as a check on your records, not a replacement for them. Your own totals should match, or you should know why they do not.

What is self-employment tax?

Employees split Social Security and Medicare tax with their employer. When you work for yourself, you pay both halves. The IRS says the self-employment tax rate is 15.3%. That is made of 12.4% for Social Security and 2.9% for Medicare.

You must pay it and file Schedule SE if your net earnings from self-employment were $400 or more, according to the IRS. Schedule SE is the form that figures the tax.

Two details help. First, the IRS says you can deduct the employer-equivalent part of your self-employment tax when you figure your adjusted gross income. Second, an Additional Medicare Tax of 0.9% can apply above income thresholds, such as $200,000 for a single filer and $250,000 for married filing jointly. A new agent is unlikely to see that second one soon, but a growing one might.

Self-employment tax is separate from income tax. You can owe both. This guide covers federal IRS rules only, so ask your tax professional about anything at the state level.

Do you have to make quarterly estimated payments?

Often yes. The IRS says sole proprietors and similar filers generally must make estimated payments if they expect to owe $1,000 or more when they file. Use Form 1040-ES.

The year is divided into four payment periods, each with its own due date. Publication 334 lists the Form 1040-ES due dates as the 15th day of the 4th, 6th and 9th months of the tax year, and the 15th day of the first month after the year ends. For a calendar-year filer, that is April 15, June 15 and September 15, then January 15. The IRS says a due date that falls on a weekend or legal holiday moves to the next business day.

You can pay by mail with Form 1040-ES, or online, by phone or through the IRS app. You can also pay through your online account at IRS.gov.

How much do you need to pay to avoid a penalty?

The IRS gives a general rule. You usually avoid the underpayment penalty if you owe less than $1,000 after withholding and credits, or if you paid at least 90% of this year's tax or 100% of the tax shown on last year's return, whichever is smaller.

The IRS page also says special rules apply to some higher-income taxpayers. Publication 505 covers those. If your income is high or swings a lot, ask a professional to run the numbers.

Your first year is the hard one. You may not know what you will earn. Many agents earn nothing for months and then close several deals in a row. When a commission arrives, move a share into a separate savings account right away, so you are not forced to find the cash months later. Your tax professional can suggest the share that fits you. Use the first-year budget guide to plan for the gap between closings.

What counts as a business expense?

Publication 334 says that to be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field. A necessary expense is one that is helpful and appropriate for your business.

These are items agents often ask about. Whether each one is deductible for you depends on the facts, so confirm with a professional.

• License costs, such as renewal, continuing education and association dues.
• Marketing, such as signs, photos, a website and advertising.
• MLS and technology fees.
• Mileage and other car costs for business trips, with a log.
• Desk fees or other fees you pay your brokerage.
• Professional help, such as a CPA or a bookkeeper.

What about expenses that are partly personal?

Publication 334 warns that if an expense is partly for business and partly personal, you must separate the two. The personal part is generally not deductible.

A phone you use for clients and for family is a common example. So is a car. Decide a fair business share, write down how you got it, and apply it the same way each year. Do not guess at the end of the year.

The IRS also notes that it discontinued Publication 535, Business Expenses, after the 2022 revision. Use Publication 334 for small-business basics and ask a professional for anything beyond it.

What records should you keep?

The IRS says you can use any recordkeeping system that clearly shows your income and expenses. The law generally does not require a special type of record. You should keep records for as long as you need them to prove the income or deductions on a tax return.

For a new agent, a simple system works. These steps take about fifteen minutes a week.

• Open a separate bank account and card for the business so your records do not mix with personal spending.
• Save every receipt and invoice, or take a photo of it the same day.
• Log each business trip with the date, the place and the reason.
• Record each commission when you receive it, with the property and the closing date.
• Review the month's numbers at the same time each month, then once more before each quarterly payment.

What mistakes do new agents make?

Most tax trouble for new agents comes from planning, not from the rules.

• Spending the whole commission check and having nothing left in April.
• Missing quarterly payments because no one sent a reminder.
• Mixing personal and business spending in one account.
• Deducting expenses without receipts or a mileage log.
• Waiting until tax season to find a tax professional.
• Assuming a 1099 shows everything you earned and spent.

How The Bauer Group fits

The Bauer Group is a Frisco brokerage welcoming licensed DFW agents. Opportunities are earned, not guaranteed. If you would like a calm conversation about how an office supports new agents with training and planning, you can start on the join page.

Education only, not legal, tax or financial advice. Confirm licensing rules with TREC and ask a CPA or enrolled agent about your own taxes. Last reviewed October 29, 2026.