Should I record my commission check or the gross commission as income?

Record the gross commission shown on the brokerage's disbursement statement, then book the split and any fees as a separate business expense. If you only record the net deposit, you understate gross income and miss a deductible expense in the same transaction — and lenders or underwriters will ask for the gross number if you ever apply for a mortgage.

What percentage should real estate agents set aside for taxes?

Many agents set aside somewhere in the 25 to 30 percent range of each commission to cover both income tax and self-employment tax, though the right figure depends on your tax bracket and deductions. The more important habit is moving that percentage to a separate account the same day the commission clears, rather than trying to save from a future check.

What mileage counts as deductible for a real estate agent?

Driving to showings, listing appointments, inspections, closings, and errands like picking up signage or lockboxes generally counts, as long as you're not deducting a home-to-office commute you're already claiming through a home office deduction. Track mileage contemporaneously with dates and purposes rather than reconstructing it later.

Bookkeeping for Real Estate Agents: Commissions, Splits, and 1099 Income

Commission income doesn't arrive on a schedule and it never hits your bank at the gross number. Here's how to track splits, deductions, and quarterly tax set-asides without losing track of what you actually earned.

Why realtor income doesn't look like a paycheck

Most real estate agents are independent contractors, even when they work under a brokerage's name and sign. That means no withholding, no steady biweekly deposit, and income that can swing from zero for two months to a five-figure commission the week a deal closes. Bookkeeping built around a regular paycheck doesn't fit — you need a system built around irregular, lumpy deposits that still has to answer "what did I actually make this quarter" on demand.

The commission check itself is also rarely the full story. What hits your bank account is usually already net of the broker's split, and sometimes net of a transaction fee or E&O insurance charge the brokerage deducts before cutting your check. If you record the bank deposit as your commission income, you've understated your gross commission and missed a deductible brokerage expense in the same transaction.

Tracking commissions and broker splits

Get the commission disbursement statement from your brokerage for every closing, not just the deposit. That statement shows the gross commission on the sale, the broker's split, any franchise or transaction fees, and the net paid to you. Book all three: gross commission as income, the split and fees as a business expense, and the net matched to the actual bank deposit.

This matters most at tax time, and even more if you're ever applying for a mortgage or a loan yourself — underwriters want to see gross commission income, not the post-split number, and they'll ask for the disbursement statements if your bank deposits don't match a tax return showing higher gross income.

Keep a simple closing log: property address, close date, gross commission, split percentage, net deposit, and date the deposit hit the bank. Over a year this becomes your income reconciliation without any extra work — you can check it against the bank statement any time a number looks off.

Deductible expenses: mileage and marketing

Real estate is one of the few professions where the deduction list genuinely moves the tax bill. The two categories that matter most:

Mileage — showings, listing appointments, inspections, closings, and driving to pick up signage or lockboxes all count if you're using your own vehicle and not commuting from a home office you already deduct. Track it contemporaneously; a mileage log built from memory in April doesn't hold up.
Marketing — listing photography, staging, signage, postcards, digital ads, your MLS and association dues, and website or CRM subscriptions are all ordinary and necessary expenses for the job.

Beyond those two, track continuing education, E&O insurance if you pay it separately from the brokerage split, home office expenses if you qualify, and client gifts within the deductible limit. All of it should run through a business account or card kept separate from personal spending — mixing the two is what turns a clean Schedule C into a guessing exercise every March. See how to break out a Chase business statement if that separation is still a work in progress.

Setting aside for quarterly taxes

No employer withholding means the IRS still expects estimated payments four times a year, and most agents underpay because a commission check feels like found money rather than taxable income the moment it lands. Set a fixed percentage aside from every commission deposit — many agents land somewhere in the 25–30% range to cover both income tax and self-employment tax, though the right number depends on your bracket and deductions — and move it to a separate savings account the same day the commission clears.

Don't wait for a slow month to "catch up" on saving. Because commission income is lumpy, the tendency is to spend a big check and plan to save from the next one. Automating the set-aside the moment a deposit lands removes that decision entirely.

Building a clean income and expense picture

At quarter-end or year-end, you want one clean view: gross commissions by month, splits and fees, deductible expenses by category, and net taxable income. If you've kept the closing log and a separate business account, most of this falls out of the bank statement directly.

When a full year of statements needs to be reconstructed — a common ask from a new accountant, or when you're catching up after a slow bookkeeping year — converting your bank statements to a spreadsheet turns twelve PDFs into one sortable ledger you can filter by deposit versus expense and hand straight to whoever's filing your return. It won't replace the commission disbursement statements for gross-versus-net detail, but it gives you the verified bank-side numbers to check everything else against.