Real estate agent (Schedule C, actual vehicle expenses)
A commission-based agent taxed as a sole proprietor. The centerpiece is the actual-expense method for the car: total costs times business-use percentage: versus the standard mileage rate.
The taxpayer's facts and source documents are free with an account. No card, nothing to cancel.
Taxpayer facts
Who this is and what their year looked like.
Bianca is single, a licensed real estate agent in Tampa, Florida, working as an independent contractor under a brokerage. The brokerage reports her commissions on a 1099-NEC.
She drives constantly for showings and tracks her car costs and business mileage, plus the usual agent expenses (dues, marketing, insurance). She made estimated payments during the year.
Source documents
The 2 documents you will prepare the return from: 1099-NEC (Nonemployee Compensation), Business records: Bianca R. Alvarez, licensed real estate agent.
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Create a free account to open the taxpayer's facts and every source document. No card, nothing to cancel.
Objectives
What a correct return should capture.
- Report the 1099-NEC commissions as Schedule C gross receipts (an agent is an independent contractor).
- Vehicle: the actual-expense method: add up the real car costs, including this year's MACRS depreciation, and multiply by the business-use percentage. Contrast with the standard mileage rate (70 cents a mile for 2025). You pick one method; using actual with depreciation locks you out of switching to standard later for that car. Auto info goes on Form 4562.
- Deduct the other ordinary and necessary expenses (dues, marketing, E&O insurance, phone, license, supplies). Client gifts are capped at $25 per recipient.
- Total the expenses and arrive at the Schedule C net profit (line 31).
- Compute self-employment tax and take the one-half SE-tax adjustment.
- Take the QBI deduction on Form 8995: the smaller of 20% of qualified business income or 20% of taxable income before QBI.
- Apply the estimated payments to find the refund or balance due.
- Note that Florida has no state income tax.
Check your work
The answer key and the complete return, the way a real client receives it: the 1040 and its schedules, the workpapers behind every number, and the signature forms.
Stuck? Work through it with Yehuda
A one-on-one, 30-minute tutoring session on this return with Yehuda Tenenbaum, EA. Bring the spot where you got stuck and we will work through it together: how the forms connect, why a figure lands where it does, and how to check your work. $250. This is education on the practice return, not advice on your own taxes.