Taxes for New NJ Real Estate Agents: 1099 Income, Estimated Payments and Deductions
The short answer: If you're paid commission as an independent contractor, your broker generally doesn't withhold tax from your checks. Federal law treats licensed real estate agents as self-employed when their pay is based on sales and their written contract says they aren't employees (IRS Pub. 15-A). That means you report your income and expenses on Schedule C, owe self-employment tax of 15.3% on top of income tax, and usually make quarterly estimated payments to both the IRS and New Jersey (IRS; NJ Division of Taxation).
This page explains how the system works so you can plan for it. It isn't tax advice. Your numbers depend on your whole situation, so work with a tax professional.
Why doesn't my broker withhold taxes?
Under federal tax rules, a licensed real estate agent is a "statutory nonemployee." They're treated as self-employed for all federal tax purposes if substantially all of their pay is tied to sales or output rather than hours worked, and they work under a written contract saying they won't be treated as an employee (IRS Pub. 15-A). Read your broker agreement to see which way yours is written. NJ rules allow either an employment or an independent-contractor relationship (N.J.A.C. 11:5-4.1(j)). Our salary vs. commission guide covers how pay itself works.
Will I get a Form 1099-NEC?
Probably. A business generally files Form 1099-NEC for each person it paid at least $2,000 for nonemployee services during the year. The IRS says that threshold increased to $2,000 for tax years beginning after 2025, and it may be adjusted for inflation starting in 2027 (IRS Instructions for Forms 1099-MISC and 1099-NEC).
The form is a report, not the rule. The Schedule C instructions say to "report all income attributable to your trade or business from all sources," whether or not a 1099 arrives (IRS Schedule C instructions). Keep your own record of every commission check.
What is self-employment tax?
It's Social Security and Medicare tax for people who work for themselves. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You figure it on Schedule SE, and it applies if your net earnings from self-employment are $400 or more (IRS).
Two points that help:
- You can deduct the employer-equivalent portion of your SE tax when figuring adjusted gross income. That deduction reduces your income tax, not the SE tax itself.
- The Social Security part stops at an annual wage base, and an extra 0.9% Medicare tax applies above certain income thresholds. Look up the current year's figures on the IRS page.
Do I have to pay estimated taxes?
Federal: individuals, including sole proprietors, generally must make estimated payments if they expect to owe $1,000 or more when they file. You use Form 1040-ES (IRS).
New Jersey: you must make estimated payments if you expect to owe more than $400 in NJ income tax after withholding and credits, either online or with Form NJ-1040-ES (NJ Division of Taxation).
For calendar-year 2026, both use the same due dates (IRS Pub. 505; NJ-1040-ES instructions):
| Income earned | Payment due |
|---|---|
| Jan 1 – Mar 31 | April 15, 2026 |
| Apr 1 – May 31 | June 15, 2026 |
| Jun 1 – Aug 31 | September 15, 2026 |
| Sep 1 – Dec 31 | January 15, 2027 |
If a due date falls on a weekend or legal holiday, the payment is on time the next business day.
How do I avoid an underpayment penalty?
The IRS says most taxpayers avoid the penalty if they owe less than $1,000 after withholding and credits, or if they paid at least 90% of this year's tax or 100% of last year's, whichever is smaller. Higher earners have a different percentage (IRS).
Commission income is lumpy. The IRS notes that if your income comes in unevenly, you may be able to lower or avoid the penalty by annualizing your income and making unequal payments, using Form 2210. For NJ, missing required payments can mean interest when you file (NJ Division of Taxation).
One simple habit: when a commission check arrives, move a set share into a separate tax savings account right away. Ask your tax professional what share fits your situation.
What expenses can I deduct?
On Schedule C you deduct business expenses that are ordinary and necessary for your business (IRS Schedule C instructions). For agents, common categories to discuss with your preparer include:
- Car use for showings and listing appointments. You can use actual expenses or the standard mileage rate, which was 70 cents a mile for 2025, subject to IRS rules on which method you can use.
- Licensing and dues, such as your NJ license renewal ($100 every two-year term for salespersons; NJREC fees), plus MLS and board fees.
- Brokerage fees charged under your agreement.
- Marketing, phone and software directly related to the business.
- Continuing education to keep your license active.
You can't deduct personal, living or family expenses, or fines and penalties paid to a government.
What records should I keep?
The IRS says you may use any recordkeeping system that clearly shows your income and expenses. Good records help you track deductible expenses, prepare your return and support what you report (IRS Recordkeeping). Keep:
- each commission statement from your broker,
- receipts and a mileage log, and
- copies of your estimated-payment confirmations.
Thinking about an LLC? It changes how you're paid, not whether these rules apply. See being paid through an LLC. Your first-year business plan is a good place to set a tax budget.
If you're still weighing the career, Business Elementary's 75-hour pre-licensing course page explains the first step.
Sources
- IRS, Publication 15-A (statutory nonemployees): https://www.irs.gov/publications/p15a
- IRS, Self-Employment Tax: https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes
- IRS, Estimated Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
- IRS, Publication 505 (2026): https://www.irs.gov/publications/p505
- IRS, Instructions for Forms 1099-MISC and 1099-NEC: https://www.irs.gov/instructions/i1099mec
- IRS, Instructions for Schedule C (2025): https://www.irs.gov/instructions/i1040sc
- IRS, Recordkeeping: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
- NJ Division of Taxation, Estimated Payments: https://www.nj.gov/treasury/taxation/njit20.shtml ; 2026 NJ-1040-ES instructions: https://www.nj.gov/treasury/taxation/pdf/current/1040esi.pdf
- NJREC, Real Estate License Fees: https://www.nj.gov/dobi/division_rec/licensing/recfees.htm
- N.J.A.C. 11:5-4.1 (via Cornell LII): https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-11-5-4-1
Last reviewed: October 28, 2026
Related guides:
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No employer benefits? Health Insurance and Retirement Options for Self-Employed NJ Agents covers marketplace coverage, the health insurance deduction and SEP, solo 401(k) and IRA options.
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Wondering about the cost of your classes? Is Real Estate School Tax Deductible? explains the federal rules for pre-licensing, CE and the Lifetime Learning Credit.
Frequently Asked Questions
Do NJ real estate agents pay self-employment tax?
If they're self-employed and have net earnings of $400 or more, yes: 15.3% (12.4% Social Security plus 2.9% Medicare), figured on Schedule SE (IRS).
When are quarterly estimated taxes due in 2026?
April 15, June 15 and September 15, 2026, and January 15, 2027, for both federal and NJ estimated payments (IRS Pub. 505; NJ-1040-ES instructions).
Do I have to report commission if I don't get a 1099?
Yes. Report all business income from all sources, whether or not you receive a Form 1099 (IRS Schedule C instructions).
What's the 1099-NEC threshold now?
$2,000 for tax years beginning after 2025, possibly adjusted for inflation from 2027 (IRS).
Does New Jersey require estimated tax payments?
Yes, if you expect to owe more than $400 in NJ income tax after withholding and credits (NJ Division of Taxation).