Because many construction workers are classified as independent contractors, they are seen as self-employed professionals by the IRS, leaving them with more of a tax burden and a potential benefit from working with a tax professional.
Construction contractors are naturally quite busy on their projects and often don’t have the time or expertise to devote to tax preparation and planning. As a trusted advisor, a tax professional can advise them on some easy-to-digest tax tips and help them save vital tax dollars.
The following deductions are claimed on Schedule C (Form 1040) and can help these contractors lower their tax burden and keep more money:
Transportation expenses. When you’re deducting transportation costs, you can’t deduct the commute between your home and the jobsite. You can, however, deduct trips between multiple jobsites, as well as those made for business-related trips throughout the day, such as traveling to get supplies or attending meetings offsite.
You can claim the actual expense incurred or use the standard mileage rate prescribed by the IRS, which is 54 cents for 2016 and 53.5 cents for 2017. Air, bus, or train fare related to work can be written off, as well.
Advertising. You can deduct any materials you use to market your business, including flyers, branded promotional items, and the cost of hiring someone to design and make them for you. Advertising doesn’t apply to items such as business gifts, holiday party fare, or anything that isn’t branded.
Business insurance. The cost of insurance premiums related to running your business is entirely deductible, such as general liability insurance and property insurance.
About Mike D'Avolio, CPA
Mike D'Avolio is senior tax analyst with the Intuit Professional Tax Group, he has been a small business tax expert for more than 20 years and serves as the primary liaison with the IRS for tax law interpretation matters, manages all technical tax information, and supports tax development and other groups by providing them with current tax law developments, analysis of tax legislation, and in-depth product testing.