The Mortgage Loan Officer Tax Deductions Checklist

One of the biggest advantages of working as an independent mortgage loan originator? You're running a business. And businesses get tax advantages that W-2 employees simply don't have access to. The MLOs who understand these advantages keep significantly more of what they earn and build wealth faster than those who ignore them.

Here's how to set up a simple system that keeps taxes manageable and puts more money in your pocket as you build your mortgage careerPre License Breaking Into The Mortgage Industry Resources.

How Does Self-Employment Income Get Taxed?

Understanding the basics helps you plan effectively. When you're a 1099 independent contractor (which many mortgage loan originators are, depending on state regulations and employer structure), you're responsible for self-employment tax in addition to regular income tax.

According to the IRSSmall Businesses Self Employed Self Employment Tax Social Security And Medicare Taxes Businesses, the self-employment tax rate is 15.3% of net earnings: 12.4% for Social Security plus 2.9% for Medicare. This covers the same benefits W-2 employees receive, but you're paying both the employee and employer portions yourself.

The good news: half of your self-employment tax is deductible from your adjusted gross income. And unlike W-2 employees, you have access to deductions and retirement accounts that can significantly reduce your overall tax burden. Understanding these rules early in your MLO careerPre License Is Mortgage Lending Right For You What To Expect From Mlo Jobs Resources sets you up for long-term financial success.

The 30% System: Simple and Stress-Free

The easiest way to stay ahead on taxes: set aside 30% of every commission check in a dedicated savings account.

Why 30%? This percentage accounts for self-employment tax at roughly 15%, federal income tax at approximately 10-15% (varies by total income), state income tax at 0-5% (varies by state), and a buffer of 2-5% for unexpected adjustments.

How it works in practice: A commission check arrives for a closed loan. Transfer 30% to your tax savings account immediately. The remaining 70% is yours to spend, save, or invest. Repeat with every commission, and you'll always have tax money ready when payments are due.

Many mortgage professionalsPre License Why Become A Mortgage Loan Originator Resources find this system actually reduces financial stress. Instead of wondering whether they're saving enough, they know the tax money is handled. The 70% that remains is truly theirs to use.

Quarterly Payments: Staying Ahead of the Game

The IRS offers a straightforward system for self-employed individuals: pay estimated taxes quarterly rather than one large annual payment. This keeps you current and avoids any interest on underpayments.

The quarterly due dates are generally Q1 on April 15 (for January-March income), Q2 on June 15 (for April-May income), Q3 on September 15 (for June-August income), and Q4 on January 15 of the following year (for September-December income). When a due date falls on a weekend or holiday, the deadline shifts to the next business day.

The practical approach is simple: each quarter, pay the IRS from your 30% savings account. Your payments naturally scale with your income. Bigger earning quarters mean bigger payments, and slower quarters mean smaller ones. Use IRS Form 1040-ESAbout Form 1040 Es Forms Pubs or pay online at IRS.gov/payments with no fee for direct bank transfer.

Vehicle & Mileage Deductions

• Business miles driven (use IRS standard mileage rate or actual expenses)
• Client meetings and consultations
• Property visits and appraisal appointments
• Real estate agent and referral partner meetings
• Closings and title company visits
• Industry conferences and training events
• Networking events and association meetings
• Parking fees and tolls for business trips

Home Office Deductions

• Dedicated home office space (must be exclusive and regular use)
• Percentage of rent or mortgage interest
• Percentage of utilities (electric, gas, internet)
• Percentage of homeowners/renters insurance
• Percentage of repairs and maintenance
• Home office furniture and equipment

Licensing & NMLS Fee Deductions

• NMLS registration and renewal fees
• State licensing fees
• License renewal fees
• Background check and credit report fees
• Fingerprinting fees
• State-specific license application fees
• Multi-state licensing fees

Education & Training Deductions

• NMLS-approved pre-licensing courses
• Continuing education (CE) courses
• State-specific education requirements
• SAFE Act exam prep materials
• Industry certifications
• Professional designation courses
• Webinars and online training programs
• Industry books and publications
• Mortgage Bankers Association training

Technology & Software Deductions

• Loan origination system (LOS) subscriptions
• CRM software subscriptions
• Point-of-sale (POS) platform fees
• E-signature software (DocuSign, etc.)
• Pricing engine subscriptions
• Lead management software
• Document management systems
• Video conferencing tools (Zoom, etc.)
• Mortgage calculator apps and tools

Marketing & Advertising Deductions

• Website hosting and domain fees
• Business cards and printed materials
• Online advertising (Google, Facebook, Zillow)
• Lead generation services
• Social media marketing costs
• Email marketing platforms
• Professional photography and headshots
• Video production for marketing
• Promotional materials and branded merchandise
• Real estate partnership co-marketing

Office Supplies & Equipment Deductions

• Computers and laptops
• Tablets and smartphones (business-use portion)
• Printers, scanners, and copiers
• Office furniture (desk, chair, filing cabinets)
• Paper, ink, envelopes, folders
• Postage and shipping costs
• Business phone line or cell phone (business-use portion)
• Internet service (business-use portion)
• Secure document shredding

Insurance Premium Deductions

• Errors & Omissions (E&O) insurance
• Professional liability insurance
• Business liability insurance
• Health insurance premiums (self-employed MLOs)
• Dental and vision insurance premiums
• Long-term care insurance (within limits)

Professional Services Deductions

• Accounting and bookkeeping fees
• Tax preparation fees (business portion)
• Legal fees for business matters
• Consulting fees
• Virtual assistant services
• Compliance consulting

Professional Membership Deductions

• Mortgage Bankers Association (MBA) dues
• National Association of Mortgage Brokers (NAMB) dues
• State mortgage association memberships
• Local real estate board affiliate memberships
• Chamber of commerce membership
• BNI or other networking group fees

Travel Deductions

• Airfare for business trips
• Hotel accommodations
• Ground transportation (rental car, rideshare, taxi)
• Conference registration fees
• Meals during overnight business travel
• Baggage fees
• Business-related tips

Business Meal Deductions

• Client meals (when business is discussed)
• Real estate agent relationship-building meals
• Referral partner lunches
• Builder and developer meetings
• Team meetings at restaurants
• Note: Keep records of attendees, business purpose, and amount

Retirement Contribution Deductions

• SEP-IRA contributions
• Solo 401(k) contributions
• SIMPLE IRA contributions
• Traditional IRA contributions

Other Deductible Expenses

• Half of self-employment tax paid
• Business bank account fees
• Credit card processing fees
• Business credit card interest
• Client gifts (up to $25 per person per year)
• Closing gifts for clients
• Thank-you cards and client appreciation items
• Bad debts from uncollected fees
• Business startup costs (first year)

What's NOT Deductible

• Personal clothing (even if worn to closings)
• Personal grooming expenses
• Commuting to a regular office
• Personal portion of mixed-use items
• Entertainment without direct business purpose
• Political contributions
• Referral fees paid to non-licensed individuals (RESPA violation)
• Gym memberships (unless medically prescribed)

Record-Keeping Checklist

• Save all receipts and invoices
• Maintain mileage log (date, destination, purpose, miles)
• Keep bank and credit card statements
• Document business meal details (who, what, why)
• Store home office measurements and calculations
• Track business-use percentages for mixed-use items
• Keep NMLS records and license documentation
• Keep records for at least 3 years (7 years recommended)

Source: IRS Self-Employed Individuals Tax CenterSmall Businesses Self Employed Self Employed Individuals Tax Center Businesses