Keep more of what you earn
Michael Robideau didn’t show up to scare anyone, but he didn’t sugarcoat things either. Within the first few minutes of his talk, it became clear: most real estate agents and investors aren’t breaking the law, but they’re often paying more than they should. Not because they’re reckless, just… uninformed. And the IRS doesn’t exactly reward guesswork. One unexpected letter can be enough to uncover years of missed deductions or poor structure.
This wasn’t a technical seminar filled with jargon. It felt more like a conversation over coffee with someone who’s seen it all, someone who’s sat through audits, cleaned up QuickBooks disasters, and explained the same overlooked deductions for the hundredth time. His goal? Help people stop leaving money on the table, plain and simple.
And what he shared wasn’t theory. It was full of those “Wait, seriously?” moments. Like how you can pay your kid to work for you and turn their tennis shoes into a write-off. Or how mileage tracking apps and a properly structured LLC can quietly save you thousands. The good news? With a few smart changes, you really can keep more of what you earn, and avoid learning the hard way.
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The Rule, the Law… and the Exception
According to Michael, the IRS doesn’t just hand out rules. It hands out riddles. There’s the law, then the rule, and then, almost always, the exception. And that exception? It’s often where the opportunity lives. That’s why he urges people to ask one more question when talking to their CPA: “What’s the exception in this case?” It’s a small habit that could save you thousands.
Take self-employment tax, for instance. When you’re self-employed, you wear both hats, employer and employee, which means you pay both halves of payroll tax. That’s 15.3% right off the top, before you even factor in income tax. By the time it’s all added up, it’s not unusual to see a third of your income (or more) disappear to taxes.
But here’s where things shift. Not all income is taxed the same. Some types – like passive income – aren’t subject to self-employment tax at all. That’s the beginning of the strategy, and the reason Michael says understanding income classification isn’t just helpful – it’s essential.
Earned Income vs. Passive Income
Michael broke it down in plain English – because the concept, while powerful, isn’t all that complicated. Earned income includes things like your W-2 wages or 1099 commissions, and it’s taxed three different ways: Income tax, Social Security tax, and Medicare tax. That’s the triple hit most self-employed folks are used to.
Passive income, on the other hand, plays by a different set of rules. Whether it’s interest from a bank, stock dividends, capital gains, or rental income, it’s typically only taxed once – as income. No payroll taxes, no self-employment tax. That alone can make a major difference in how much you keep.
So, if you can legally shift a portion of your income from earned to passive, you’ve just saved yourself 15.3%, no loopholes, just strategy. And that’s where LLCs start to matter. Because the way your business is structured can open the door to those savings, or close it completely.
Why LLCs Aren’t Just Legal Shields
Most agents and investors set up an LLC thinking mainly about liability. And sure, that’s part of it – protecting personal assets, adding a layer between you and a lawsuit. But what often gets overlooked is the tax flexibility an LLC can offer, especially if it’s taxed as a partnership.
Here’s where things get interesting. If your spouse isn’t involved in the business, they can be listed as a limited partner. That might sound like a small detail, but it’s a big deal: the IRS doesn’t treat limited partners the same when it comes to self-employment tax. Their portion of the income might not be subject to it at all.
And while this doesn’t change how much money actually lands in your bank account, it shifts how the IRS views it. These are just numbers on paper, but in the tax world, those numbers can make a very real difference.
Missed Deductions Start With Missed Records
Michael’s biggest frustration – hands down – is seeing people overpay taxes simply because they didn’t keep good records. Not because they missed some complicated loophole, but because they didn’t track the basics.
“The biggest loss of deductions,” he said, “is not capturing the data.” And he’s right. It starts with something simple: open a separate business bank account. Then layer in tools like QuickBooks or MileIQ to track your mileage and spending. Just 10,000 business miles can mean over $5,800 in deductions, and that’s a low estimate for most real estate pros.
But it goes beyond mileage. Your phone, your internet, that staging software you pay for each month, it all counts. Even your Starbucks meeting with a client could be deductible, if you can prove it. So save the receipt. Even if it’s a crumpled napkin with a note on it. Imperfect records are still better than no records at all.
W-9s, 1099s, and the IRS’s Favorite Question
If you’re paying someone more than $600 for services, say a stager, a photographer, or a contractor, you’re probably required to issue them a 1099 at the end of the year. But here’s the catch: you can’t do that unless you’ve got their W-9 on file.
Michael’s advice was simple and firm: always get the W-9 first. Before the job, before the check, before anything. If you don’t – and the IRS comes asking – you’re technically supposed to withhold 25% of that payment for taxes. Most people have no idea that rule exists until it’s too late.
And it doesn’t matter how you pay them. Venmo, Zelle, cash – it’s all the same to the IRS. What matters is that you have the documentation. You’re responsible for tracking it, reporting it, and proving it. No exceptions.
The IRS Wants to Know
If there’s one question the IRS cares about more than any other, it’s this: Are you reporting all your income? That’s where most audits start, and sometimes where they end. Not because someone’s trying to hide money, but because they didn’t realize how the IRS defines “income” in the first place.
Michael explained how simple it is for the IRS to dig. They’ll request your bank statements, scroll through your deposits, and assume every single one is taxable income. It doesn’t matter where the money came from, unless you can prove otherwise. That’s the default position. So unless you’ve got documentation that says, “Nope, this was a reimbursement,” or, “That was a loan from a family member,” you’re left trying to explain every dollar after the fact.
He told a story that hit especially hard. A woman who worked in outside sales would submit expense reports to her employer each month – mileage, meals, all the usual stuff. Her company would reimburse her, and she’d deposit the checks. Straightforward, right? Until she got audited. By then, the company was out of business. The records were gone. And she hadn’t kept copies of her expense reports. So the IRS treated all of those reimbursements – every last dollar – as taxable income. She was stuck paying tax on money she never really earned, just got reimbursed for.
It wasn’t fraud. Wasn’t even bad accounting. It was just… incomplete documentation. And that’s all it takes. In the IRS’s eyes, no paperwork means no argument. The takeaway? If you’re reimbursed for something, keep the proof. Scan the report, save the email, print the receipts, whatever it takes. Because someday, if the IRS asks, the burden isn’t on them to prove it wasn’t income. It’s on you to prove it wasn’t supposed to be taxed.
The “20% Rule” and Quarterly Pitfalls
Michael keeps his tax advice refreshingly straightforward: set aside about 20% of your income for taxes. That’s a solid rule of thumb whether you’re an agent, an investor, or anyone earning 1099 income. You can choose to pay it all at once when you file, or spread it out by making quarterly estimated payments – which, for many, is the safer route.
But here’s where it gets tricky. If you decide to make those payments online, and you misread the form or leave something out, the IRS might not handle it the way you expect. In fact, they might do something… aggressive. Michael shared a painful story about a client who intended to make a $5,000 estimated payment. Thanks to a form error – one wrong click, maybe a missing field – the IRS pulled $30,000 from his account. No warning. No option to undo it.
That’s not an isolated glitch. It happens more often than people realize. The IRS’s online payment portal isn’t exactly intuitive, and it’s not designed to protect you from yourself. If you don’t specify exactly which tax year the payment is for, or which form it should be applied to, it might not count the way you intended. Or worse, it might vanish into some black hole of “unapplied funds” that take months to sort out.
What’s the fix?
Michael’s fix? Go old-school. Write a paper check. Yes, really. Mail it with the 1040-ES form and include, right on the check, your Social Security number, the tax year you’re paying for, and the form type. That way, even if the check and the form get separated (which they often do), the IRS will know what to do with it.
It might feel outdated, but in this case, low-tech means more control. Because once the IRS has your money, getting it back, or even redirected, is a lot harder than you think.
Turning Your Kids Into Tax Deductions
This part of Michael’s presentation might have been the biggest eye-opener. If you own a business, you can pay your child for legitimate work – up to $13,850 per year – without them owing any federal income tax. And here’s the best part: you get a full business deduction for that payment. It’s a smart way to turn money you were already going to spend (on clothes, food, or activities) into a tax write-off.
For college-aged kids, the opportunity gets even bigger. With the right structure, you may be able to pay them up to $30,000 annually and still avoid taxes altogether – thanks to a combination of the standard deduction and education-related tax credits. It takes some planning, but the savings can be significant.
The key is doing it correctly: move the money from your business account to theirs, keep records, and make sure there’s some form of documentation, like an invoice. Timing matters too, after age 21, this income can become subject to self-employment tax, so it’s best to use the strategy while the window is open. Read the full breakdown here →
The Home Office Deduction
If you have a dedicated room in your home that you use solely for business – think desk, chair, file cabinets, not your kitchen table – you may be eligible for the home office deduction. It’s a solid way to write off a portion of your living expenses.
There are two methods: the simplified option, which gives you $5 per square foot (up to 300 square feet), and the actual expense method, which lets you deduct a percentage of your mortgage interest, utilities, property taxes, insurance, and more, based on the size of your office relative to your home.
But there’s one big caveat: S corporations aren’t allowed to take the home office deduction. Why not? Honestly, no one seems to know. As Michael half-joked, it’s probably because “the tax code was written by drunk politicians.” Whatever the reason, if you’re running an S corp, you’ll need to explore other ways to account for those home office costs.
Buy Your Truck in Your Business Name?
Buying a truck through your business sounds like a no-brainer, especially if it weighs over 6,000 pounds. In that case, the IRS allows you to deduct the entire purchase price in the year you buy it, which can be a massive upfront tax break.
But there’s a catch. Once the vehicle is owned by the business, it’s considered business personal property, and your county may start taxing it every single year. That recurring cost, often $1,000 or more annually, can eat into the savings pretty quickly.
So is it worth it? Maybe. Maybe not. If you drive a lot for business, mileage reimbursement might be the cleaner, more cost-effective route. It really depends on your situation, how much you drive, and how your local county handles business property taxes.
For Investors: When Does an LLC Matter?
Michael’s general rule is pretty straightforward: if you own one rental by yourself, you likely don’t need an LLC. But once you start investing with partners, or if you own five or more properties, setting up an LLC becomes a lot more important.
If you go that route, don’t just throw something together online. Do it right. That means having an operating agreement, a buy-sell agreement, and getting it drawn up by a qualified attorney. It’s not cheap – expect to spend $5,000 to $10,000 – but it can protect you from messy legal situations down the road. Business partnerships don’t always end well, and without the right paperwork, you might end up tied to someone’s ex-spouse or dealing with disputes you didn’t plan for.
That said, if you’re still operating solo and only own a property or two, a simple umbrella insurance policy might be enough. For around $400 a year, you can get $1 million in extra liability protection. It’s a budget-friendly way to sleep a little better at night without diving into LLC complexity before you really need it.
Final Thoughts
Some people like the predictability of estimated tax payments. They’d rather pay a little bit each quarter, stay on the IRS’s good side, and avoid any big surprises come April. Others prefer to hold onto their cash throughout the year, run lean, and settle up when they file. There’s no perfect system, it really depends on your comfort level, your cash flow, and your tolerance for risk.
But regardless of your style, Michael’s message stayed consistent: track everything, ask smart questions, and don’t assume the default approach is the best one. The tax code is full of rules, yes – but it’s also full of exceptions. And those exceptions, the little quirks buried in footnotes and IRS forms, are often where the savings live. If you don’t know they’re there – or don’t have someone in your corner who does – you’ll miss them. Guaranteed.
Because in real estate, margins are already tight. Between commissions, marketing costs, insurance, and all the day-to-day unpredictability of the business, the last thing you need is to hand over extra money to the IRS just because you didn’t document a receipt or ask about an exception. You work too hard for that.
So whether you’re just starting out or years deep into building your portfolio, make it a point to understand your numbers, structure your business with intention, and surround yourself with people who get it. The IRS doesn’t give bonus points for overpaying, and thankfully, with a little effort, you don’t have to.