Estimating Tax Based on Commission

A real estate broker I worked with years ago had a simple way of keeping up with his estimated tax payments.

Every year, we looked at his tax return and divided his total taxes (income and self-employment tax) by his gross commission income.

This gave him a percentage of each new commission to set aside for taxes. It was simple but very effective. Every year he owed very little or got a small refund.

Total Taxes / Gross Commission Income = Commission % to put aside for taxes

I'm sharing this now because we don’t know how the market will be. Now is not a good time to fall behind on your taxes.