If your brokerage puts you on a W-2, this article is not for you. Most agents are independent contractors; some are not. Check which you are before applying any of it.

The short answer

A 1099-NEC from a brokerage often reports more than you took home, because what you paid back to the brokerage does not reduce what it paid out to you.
Gross commission on the deal the headline number
Less co-op split to the other side usually never yours
Less brokerage split, desk fee, franchise cut, transaction fee often still inside the 1099
Your deposit what people mistake for their income

The gap is not an error. Those payments are business expenses, and they belong on your return as expenses — not as a quiet deduction from the income figure you report.

Report the income, deduct the costs, and the return explains itself. Report only the net and it does not.

Why two agents get different-looking forms

There is no single convention here, which is the root of the confusion.

Some brokerages disburse the full commission to the agent and invoice the fees back. Others retain their share before disbursing. The work is identical, the take-home can be identical, and the 1099s carry different numbers.

So the useful question is not "is my 1099 right?" — it is "which convention does my brokerage use?" Ask once, write the answer in your records, and the January reconciliation stops being a surprise every year.

One check that settles itTake a single closed deal. Trace gross commission → what the brokerage disbursed → what you banked → what you paid back. Whichever of those figures the year-end 1099 matches is your brokerage's convention.

The year a commission belongs to

The second thing that puts an agent's return out of step with their own sense of the year: closing date is not the test.

Under the cash method, Publication 538 states income is constructively received "when an amount is credited to your account or made available to you without restriction."

So a deal that closes on 29 December and disburses on 6 January is generally January income — next year's — even though the closing, the celebration and the commission statement all say December.

And the reverse, which is where it costs money: a December disbursement is December income even if you do not bank it. The publication closes that door explicitly:

"You cannot hold checks or postpone taking possession of similar property from one tax year to another to postpone paying tax on the income. You must report the income in the year the property is received or made available to you without restriction."

Asking title to sit on a cheque until January is exactly the arrangement that sentence names.

A worked reconciliation

One deal, to show where each number goes.

Step Amount
Gross commission to your side $9,000
Brokerage split (70/30) −$2,700
Desk fee for the month −$400
Franchise fee −$180
Deposited to you $5,720

If the brokerage's 1099 reports $9,000, your return shows $9,000 of income and $3,280 of expenses across split, desk and franchise fees. If it reports $5,720, those amounts were never paid to you and should not be deducted again.

Same deal, same take-home, two completely different sets of entries. That is why knowing the convention is worth more than any single deduction.

What to keep, per deal

  1. The closing statement — gross commission and co-op split.
  2. The brokerage disbursement statement — what was paid to you and what was retained. This document is the one that explains the 1099.
  3. The date the money was made available, not the date you banked it.
  4. Fees paid back, itemised — desk, franchise, transaction, E&O, technology.
  5. Mileage with dates. Showings, inspections, closings and office runs add up, and the IRS lists two business standard mileage rates for 2026: 72.5 cents per mile from January 1 through June 30, and 76 cents from July 1 through December 31. Without the trip date, the right rate cannot be applied.

And if no 1099 arrives

For tax years beginning after 2025, the 1099-NEC threshold is $2,000. An agent with a thin year, or one who changed brokerages mid-year and left two partial relationships behind, may receive nothing from either.

That changes the paperwork and not the liability. Your closing statements are the record, and they were always the better record anyway.

Track it now. Thank yourself in April.

Common questions

Why is my 1099 higher than the commission I received?
Usually because it reports what the brokerage paid out on your production before amounts you paid back — desk fees, a franchise cut, marketing charges — were deducted. Those are expenses of your business, not a reason the form is wrong.
Should I report the 1099 amount or what I actually banked?
Report the income from your own records, then deduct the business expenses that created the gap. Reporting only your net deposit leaves your return disagreeing with a form the IRS also has, without showing why.
Which year does a commission belong to?
Under the cash method, the year you actually or constructively received it. Publication 538 states income is constructively received "when an amount is credited to your account or made available to you without restriction" — so a December closing paid in January is generally January income, and a December disbursement is December income.
Can I ask the title company to hold the cheque until January?
Doing it for tax reasons does not work. The publication says plainly: "You cannot hold checks or postpone taking possession of similar property from one tax year to another to postpone paying tax on the income."
Are desk fees and franchise fees deductible?
They are ordinary costs of running your practice and belong in your expense records. Keep the brokerage statement that shows them, because it is what explains the gap between the 1099 and your deposits.
My brokerage's 1099 shows my net. Is that wrong?
Not necessarily — it depends on what the brokerage actually paid you versus what it collected and retained. The point is to know which convention yours uses, because it changes whether those fees are already accounted for or still need deducting.
I closed very little this year and got no 1099. Do I still report?
Yes. For tax years beginning after 2025 the 1099-NEC threshold is $2,000, so lower production may produce no form. The income is reportable regardless.

This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.

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