Deductions

Top 5 Tax Deductions For Construction Workers

by
Julie Farless
on
3/28/2023
Top 5 Tax Deductions For Construction Workers

Hard work is the foundation of American success, and no one better embodies the spirit of blood, sweat, and tears than construction workers. The men and women of the construction industry devote long hours to literally building the United States from the ground up.

Due to the nature of their work, however, tax time can be particularly complicated. In some cases, for example, construction workers are only employed for part of the year due to weather. In other situations, they may contract for multiple construction firms over the course of a 12-month period.

Here, we dive into the top five tax deductions all construction workers should be taking if they are eligible.

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Catherine Delahaye / Getty Images News via Getty Images

1. Mileage - The IRS allows workers to deduct mileage driven for specific employment-related situations. In the case of construction workers this could be commuting from one site to another, meetikng with building clients, or traveling to a store to purchase tools and materials for a job.

Make sure you talk to your tax professional about whether the standard mileage deduction or the actual mileage deduction is the right choice for you.

2. Self-Employment - Many construction workers are able to take advantage of the self-employment tax deduction due to their work status. It is not uncommon for workers in this field to be 1099 contractors rather than W-2 employees. As such, these individuals pay their own Social Security and Medicare taxes. Fortunately, these expenses are typically deductible per IRS rules.

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seksan Mongkhonkhamsao / Getty Images News via Getty Images

3. Depreciation Costs - Construction company owners generally have to invest in heavy equipment that depreciates in value over time. This type of equipment includes cement mixers, bulldozers, forklifts, and pick-up trucks for hauling materials.

IRS Publication 946 contains helpful information about how to properly deduction depreciation in order to recover the cost or other basis of certain property over its useful lifetime. This can be a complex topic, so don’t hesitate to have a conversation with your tax professional.

4. Home Office - During the COVID-19 pandemic, it became increasingly common for construction company owners and foremen to conduct administrative business from home. Now, remote work is the norm for many of these people.

If you fall into this category, and you spend much of your time offsite doing the administration side of construction, you are probably eligible for the IRS’s home office deduction.

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wiratgasem / Getty Images News via Getty Images

5. Fees - Construction workers can often deduct the fees associated with continuing education and various industry-specific subscriptions. For example, trade school tuition, subscriptions to trade journals, dues for membership in construction organizations or unions, and license renewal costs can all be tax-deductible.

Remember, if you have any questions about your specific tax situation, schedule an appointment with your tax professiona. If you don’t currently have a local tax preparer, look for one who specializes in the construction industry.

Do you have a construction tax expert who helps you?

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Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

Deborah Martinez & Earl Shanken
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Arizona

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