Taxes for the person whose stamp is on the drawings
You bill by the phase and pay for the software by the year. We prepare returns for licensed engineers and architects who work for themselves.
Nothing is due today. Personal returns start at $250.
You carry real costs long before a fee arrives. The software renews whether or not the project got funded, the license renews in every state you are registered in, and the code books turn over with the cycle. Then payment comes in phases tied to approvals you do not control, so your income and your expenses do not always land in the same calendar year.
What engineers and architects can usually deduct
Ordinary and necessary costs of your work. Rules and dollar limits change year to year, so we confirm every one of these against the current year when we prepare your return.
Professional liability insurance
Your errors and omissions premium is deductible, and so is the general liability coverage an owner makes you carry to get on the project. Tail coverage you buy when you wind down a practice or leave a firm counts too.
On the cash method, a policy covering twelve months or less is generally deducted when you pay it. A premium that buys coverage stretching well past that may have to be spread across the years it covers, so the month you renew matters.
License renewals and state registrations
Renewing your PE, SE, registered architect or landscape architect license is deductible, along with your NCEES or NCARB record fee and every comity registration you keep active in another state. Firm registrations and certificates of authorization count as well.
Renewing a license you already hold is deductible. Becoming licensed the first time, including exam fees and the review course, generally is not, because it qualifies you for a new profession. Ask before you claim it.
Design and analysis software
Revit, AutoCAD, Civil 3D, ArchiCAD, Rhino, SketchUp, Bluebeam, your analysis package such as RISA, RAM, ETABS or SAP2000, your rendering engine and your Adobe plan are all deductible. Cloud collaboration seats for the project team are too.
Watch the renewal dates. On the cash method a seat you renew in late December belongs to that year, and a prepayment that buys coverage stretching well beyond twelve months may have to be spread out instead of deducted all at once.
Workstation, monitors and plotter
The machine with the graphics card that can actually load the model, the second and third monitors, the wide format plotter, the large format scanner and the tablet you redline on are all business equipment.
Equipment can often be written off in full, but the date it is placed in service controls the deduction, not the date you bought it. Deduct only the business share of anything the household also uses.
Code books, standards and spec services
The current IBC and your state amendments, ASCE 7, ACI 318, the AISC manual, the NEC, ASHRAE handbooks, accessibility standards, individual ASTM standards and a specification service subscription are ordinary costs of doing this work.
A code book or standard bought for the practice is generally deducted in the year you buy it rather than written off over years. If you buy a whole reference library at once, tell us before you file so we treat it correctly.
Continuing education and conferences
Courses you take for PDH hours or AIA learning units are deductible, including registration, travel and lodging for a conference you attend to earn those credits.
Education that maintains or improves the skills of the practice you already run is deductible. Education that qualifies you for a new profession is not, no matter who required it. Travel and lodging follow only when the trip is primarily for business, so keep the agenda with the receipt.
Professional association dues
NSPE, ASCE, AIA national plus your state and local chapter, your structural engineers association, ASHRAE, IES, USGBC and specialty society dues are deductible.
The share of your dues the association spends on lobbying is not deductible. Ask the association for that portion, or look for it on the invoice, before you deduct the full amount.
Driving to project sites
Miles to construction administration visits, punch walks, existing conditions surveys, the building department, the owner's office and a sub-consultant's office are business miles. Track them by project and use either the IRS standard mileage rate for that year or your actual vehicle costs.
Driving from home to an office you keep is commuting and is not deductible. If your home studio is your principal place of business, the trip from there to a job site is business mileage. There are rules about switching between the mileage rate and actual costs later, so tell us which method you started with.
Site safety gear
Hard hat, high visibility vest, steel toe boots, safety glasses, gloves, hearing protection and the fall protection you need to walk a deck are deductible, because none of it is usable off the site.
Clothing suitable for everyday wear is not deductible even if you only wear it for work. The blazer for the design review does not count, and adding a firm logo to a polo does not by itself make it deductible.
Field instruments and the model shop
Laser distance meters, levels, moisture meters, rebar scanners, infrared cameras for envelope work, a drone for progress photos, and the chipboard, basswood, acrylic and printer filament in your model shop are all deductible.
Equipment you rent, such as a laser scanner for a weekend of scan to BIM work, is simply rent in the year you rent it. Instruments you buy and keep follow the equipment rules instead.
Sub-consultants and freelance help
What you pay a structural, MEP, civil or geotechnical consultant, a code consultant, a freelance drafter, a renderer or a model maker is deductible when the contract to pay them is yours.
You generally must issue Form 1099-NEC to unincorporated contractors in the United States you paid more than the IRS threshold for that year for services, and you need their Form W-9 before you pay them. A renderer working from outside the country on work performed there is not on a 1099-NEC, but keep the appropriate Form W-8 in the file.
Your home studio
If the practice runs out of your house, a share of rent or mortgage interest, property tax, insurance and utilities follows the square footage of the space you work in. Internet and phone are deducted separately, based on how much of the use is for the practice.
The space has to be used regularly and only for the practice. A drafting table in the corner of the living room does not qualify, and neither does the guest room that is still a guest room. The deduction also cannot push the business into a loss, so any excess carries forward instead.
A sole owner with no separate entity reports on Schedule C, and that works for a long time. It is worth revisiting when profit is consistently well above what you pay yourself to live on, when you bring on staff, or when a state requires a professional entity such as a PLLC or PC to hold the firm registration. Payroll and a second tax return cost real money, and a reasonable salary is required either way, so an S corporation election only makes sense once the savings clearly exceed that cost.
What to bring us
You do not need all of it to start. Send what you have and your checklist shows what is still open.
- Every Form 1099-NEC from the firms and owners who paid you, plus any Form 1099-K from a payment platform
- Your invoice log for the year, showing retainers received and any invoices still unpaid at December 31
- License renewal receipts, your NCEES or NCARB record fee, and every state registration or certificate of authorization you paid
- Software renewal receipts for your CAD, BIM, analysis, rendering, markup and Adobe subscriptions
- Continuing education receipts with the PDH or learning unit counts attached
- Your mileage log or app export, with site visits identified by project
- Declarations pages and premium notices for professional liability and general liability
- Receipts for equipment you bought, with the date each item was placed in service
- Sub-consultant and freelancer payment records, with a Form W-9 on file for each, or the appropriate Form W-8 for anyone outside the United States
- Home studio square footage and total home square footage, plus the year's rent or mortgage interest, property tax, insurance and utilities
What trips people up
Leaving reimbursables off the return because the money was never really yours. The printing, permit fees, courier runs and consultant costs you rebilled are inside the gross figure your client reports.
Report the full gross, then deduct the costs you passed through. The bottom line generally lands in the same place, and the income on your return matches what was reported to the IRS.
Trying to write off the final invoice the developer never paid as a bad debt.
On the cash method there is nothing to deduct, because that fee was never reported as income. What you lost is the time. Tell us early anyway, because it is worth checking whether your accounting method still fits the practice.
Leaving a firm to go out on your own and sending nothing to the IRS during the year.
Nobody is withholding for you now, and self employment tax on Schedule SE sits on top of income tax. Set money aside from every deposit and pay quarterly estimates.
Deducting the golf round or the game with the developer because the project came up.
Entertainment is not deductible. A business meal is only partly deductible, so keep the two apart in your books and note who was there and what was discussed.
Filing in your home state only, when you are registered and delivering work in several.
Fees for work performed in another state can create a filing obligation there. Send us the list of states you hold registration in and where the projects actually sit, and we will tell you which ones need a return.
What it costs
Our published list, the same one everyone sees. Prices marked "from" are starting points, and your exact number is confirmed in writing before any work begins.
$0 is due today. You pay when you sign, or you can have your fee come out of your refund, so it can be $0 out of pocket.
Questions we get from your trade
I keep hearing that service businesses lose the qualified business income deduction. Does that apply to me?+
Engineering and architecture are written out of the list of service fields that get phased out of that deduction, so the phase out that reaches lawyers, accountants and consultants at higher income does not reach you for that reason. Above the income thresholds your deduction is still measured against the wages you pay and the cost of certain business property you hold, so it has to be computed rather than assumed. How the practice is organized can affect the answer as well, so bring us the whole picture.
I work at a firm and take side work under my own stamp. How is that reported?+
The W-2 from the firm goes on your return as wages. The side work is a business of its own, reported on Schedule C with self employment tax on Schedule SE. Only the costs of your own practice are deductible there. Under current federal law, what you spend out of pocket as somebody else's employee is not deductible on your federal return, though a few states still allow it.
Can I deduct what I spent on the ARE or the PE exam?+
Renewals and continuing education for a license you already hold are deductible. The cost of becoming licensed the first time generally is not, because education and credentials that qualify you for a new profession fall outside the deduction even when someone required them. Exam fees, the review course and the application usually sit in that category. Send us the receipts and we will apply the rules to your facts, and we will tell you plainly if the answer is no.
Do I have to send 1099s to the drafter and the renderer I use?+
If they are in the United States, are not a corporation, and you paid them more than the IRS threshold for that year for services, yes, on Form 1099-NEC. Collect a Form W-9 before the first payment, not in January when they stop answering. Someone working from outside the country on work performed there does not get a 1099-NEC, but keep the appropriate signed Form W-8 on file.
An owner sent a retainer in December for a project that starts in February. Is that this year's income?+
On the cash method, yes. You received it, so it counts in the year it hit the account even though no drawings exist yet. That is worth planning before the end of December rather than discovering it in April, and it cuts both ways, since paying a renewal or a sub-consultant in December moves that deduction forward too.
Do I have to spread the cost of the new workstation and the plotter over several years?+
Often not. Equipment can frequently be deducted in full in the year you place it in service, and an annual software subscription is generally an expense of the year it covers. What controls the answer is the date the item went into use and how much of that use is business. Tell us what you bought and when you started using it, and we will apply the treatment that fits your year.
Let us take the tax part off your plate.
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