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Agents risk higher tax bills by staying in Schedule C setup

Commercial Observer says high-earning agents filing as sole proprietors may face self-employment taxes in addition to income tax, adding an estimated $10,000 to $30,000 in annual costs.

Reported · Written up by our desk · Industry

Commercial Observer argues that real estate agents often focus on revenue totals like gross commissions income, but then discover that how they structure their business can make tax outcomes inefficient. The outlet says many agents start as solopreneurs and file as sole proprietors using Schedule C, which may work when deal volume is low. However, it says the same approach can become a financial drag when agents reach higher earnings, because they face income tax plus self-employment taxes on every dollar they earn.

Commercial Observer estimates the additional burden as a potential $10,000 to $30,000 “convenience fee” that agents can effectively pay to the government each year if they do not structure their business differently.

It also points to rising tax complexity in 2026, citing changes such as shifting SALT cap limits and new surcharges on high-income filers in hubs like New York, along with the practical challenge of managing quarterly estimated payments when income is uneven.

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