By Brayden Callahan, Founder Updated
As a real estate agent, you are probably running your own business. Commissions arrive in uneven chunks, your brokerage keeps its split, and the costs of the job come out of your pocket: MLS fees, license renewals, signs, gas and closing gifts.
Clarity Books AI keeps it simple. The AI does your bookkeeping; you answer a few questions a week.
The tax rules here are general and current for tax year 2026, with links to the IRS pages behind them; talk to your CPA before you act.
The IRS notes that most real estate professionals run their business as a sole proprietorship. A licensed real estate agent is treated as self-employed for all federal tax purposes when substantially all of their pay for work as an agent is tied to sales or other output rather than hours worked, and a written contract says they will not be treated as an employee for federal tax purposes. If you are unsure, ask your CPA.
As a sole proprietor (including a one-owner LLC), you report your business income and expenses on Schedule C and, if your net earnings from self-employment are $400 or more, pay self-employment tax on Schedule SE. The rate is 15.3%: 12.4% for Social Security, which applies only up to a yearly earnings limit, and 2.9% for Medicare. You can deduct the employer-equivalent portion of it when you figure your adjusted gross income.
Your brokerage pays your share of each commission after its split and any fees. If it pays you $2,000 or more in 2026, it generally has to report those payments to you and to the IRS on Form 1099-NEC. That threshold was $600 for payments made before 2026.
You report all of your business income, whether or not a form shows it, including referral fees and payments under the threshold. Compare each 1099 with your own records before you file.
Brokerages handle splits differently: some report the full commission and charge you the split and fees, others report only your share. Your books should match the form so nothing is counted twice or missed. Ask your brokerage which it does, and your CPA how to record it.
The IRS says one of the first things you should do when you start a business is open a business checking account and keep it separate from your personal checking account. For an agent, commissions go in and MLS fees, signs and closing gifts come out.
Tax is due as you earn income during the year, so self-employed people usually make estimated tax payments. You generally must make them if you expect to owe at least $1,000 for the year after withholding and refundable credits, and those will cover less than the smaller of 90% of this year's tax or 100% of last year's (110% if last year's adjusted gross income was over $150,000, or $75,000 if you are married filing separately). For tax year 2026 the payments are due April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. Paying too little by a due date can bring a penalty, even if you are due a refund when you file.
Commission income is lumpy. If most of your closings come late in the year, the annualized income installment method in IRS Publication 505 may lower your earlier payments. Ask your CPA.
Clarity connects to your bank and card accounts read-only through Plaid and imports your transactions back to January 1 of the current year. The AI categorizes each one and learns your vendors, so your MLS fee, sign company and gas station land in the right category. If you need an earlier year, email brayden@claritybooksai.com.
During setup it asks about the transactions it is not sure of. Anything you skip, and new ones it is not sure about, come back in your weekly check-in, by push notification and in the app. You can override any category anytime.
You can log drives to showings, listing appointments and closings in the mileage log, and keep receipts with their transactions. A monthly profit and loss report shows how each month went. If you pay a showing assistant or a photographer, Clarity tracks them as 1099 contractors.
At year end, the year-end packet gathers your Schedule C totals, a 1099-NEC summary and a full transaction export, and sends it to your CPA in one click. You can also give your accountant access to your books.
Clarity is $149 a month or $1,490 a year: one plan with every feature and unlimited transactions. The free trial is 30 days; a card is required, and you are not charged until day 31. Clarity keeps cash-basis books. It does not do payroll, bill pay, a balance sheet or tax filing, and no human bookkeeper is assigned to you.
Whether a cost is deductible can depend on your facts, so talk to your CPA about anything you are unsure of.
Usually, if you meet the two IRS tests described above: substantially all of your pay is tied to sales rather than hours, and a written contract says you are not an employee for federal tax purposes.
Generally yes, on Form 1099-NEC, if it paid you $2,000 or more in 2026. Report all business income either way.
Yes, up to $25 per person per year for business gifts. Incidental costs such as wrapping and mailing generally do not count toward that limit.
Generally yes, if you expect to owe $1,000 or more for the year and withholding and refundable credits will not cover the minimums above.
No. The AI does your bookkeeping, and the year-end packet goes to your CPA, who prepares and files your return.
Tax rules checked October 2026. Tax rules and amounts change every year, so confirm with the IRS or your CPA before you file.
Connect your bank, answer a short weekly check-in, and keep the final say on every category. $149 a month, one plan.