Tax help for general contractors and builders
You bill in draws, pay subs, and carry the risk on every job. Your return should be built the same way, job by job.
Nothing is due today. Personal returns start at $250.
Your return is really a stack of jobs. Each one has its own draws, materials, subs, permits, and retainage, and when that money moves decides what you owe and when. We build the return from the job costs up, so the deposit you took in December and the sub you paid in cash both land where they belong.
What general contractors 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.
Subcontractor payments
Framers, electricians, plumbers, roofers, drywall hangers, painters, and cleanup crews. What you pay them is deductible, and it needs to be tracked by job and by sub so your totals match what you report.
Get a signed Form W-9 before the first check, not in January. If you pay a sub more than the reporting threshold that applies for the year and never file Form 1099-NEC, you are exposed to penalties. A sub who works your hours, with your tools, under your direction may also be an employee rather than a contractor.
Truck, trailer, and mileage
Miles between job sites, the supply house, the permit office, and client walkthroughs. You either track actual truck costs or use the standard mileage rate published for that year, and we run both to see which one comes out better for you.
Driving between home and a job site can be commuting, and commuting is not deductible. Whether a given trip counts turns on things like whether the site is temporary, whether you have another regular place of business, and whether you have a qualifying home office you start from, so tell us the pattern instead of assuming. The method you choose the first year a truck goes into service also limits what you can switch to later, and claiming depreciation on a truck generally takes the standard mileage rate off the table for that truck.
Tools and heavy equipment
Nail guns, saws, compressors, generators, lasers and levels, ladders, scaffolding you own, skid steer, mini excavator, dump trailer. Smaller tools can often be expensed in the year you buy them under a safe harbor election, and larger equipment is depreciated or written off up front.
The election that writes equipment off in full in year one is limited to your business income for the year, and anything above that carries forward to a later year. Other first year depreciation rules work differently, so which one fits depends on your numbers. Either way, the equipment has to be placed in service by year end, not sitting on the dealer lot on December 31.
Materials and job supplies
Lumber, block, concrete, rebar, fasteners, drywall, roofing, paint, trim, and the blades, bits, and blocking that get burned through on a job.
If a customer or a builder reimburses you for materials, that reimbursement is income and the material is the deduction. It nets out, but leaving the income off because it was "just materials" does not work, since the payer reports it.
Job site costs
Dumpsters and dump fees, portable toilets, temporary power and water, fencing and site security, lift and equipment rental, crane time, delivery, haul-off, and final cleanup.
A fine or penalty paid to a government agency, such as a county code fine or an OSHA penalty, is not deductible, even though you had no choice but to pay it. Permit and plan review fees are a different thing and do come off.
Insurance, bonds, and workers comp
General liability, builder's risk, workers compensation, commercial auto on the trucks, inland marine coverage on tools, umbrella, and the premium on your license or surety bond.
On a house you own and are building to sell, insurance and other carrying costs generally get added to the cost of that house and come off when it sells, not in the year you paid them.
Licenses, permits, and CE
State and county license renewals, qualifier fees, business registration, permit and plan review fees, notary and lien filings, and the continuing education hours that keep your license active.
Education that maintains or improves the skills of the trade you are already in is deductible. Schooling and exam fees that qualify you for a new trade or a first license generally are not.
Safety gear and marked clothing
Hard hats, steel toe boots, hi-vis vests, harnesses and fall protection, respirators, gloves, eye and ear protection, fire resistant clothing, first aid kits, safety training, and shirts carrying your company name and logo.
Plain jeans, a plain t-shirt, and boots you could wear anywhere are not deductible, even if you only ever wear them to work. The test is whether the clothing is suitable for everyday wear, not what you actually do with it.
Estimating and job software
Takeoff and estimating tools, job costing and project management, scheduling, plan storage, e-signature, and the phone and data plan your crew runs on.
If the phone is also your personal phone, only the business share counts. Pick a reasonable split, write down how you got there, and stay consistent year to year.
Shop, yard, and home office
Rent on a shop or fenced yard, a storage unit for tools and leftover material, the job trailer, and the room at home where you write bids, run invoices, and keep plans.
A home office has to be used regularly and only for business, and for most contractors it qualifies as the place you do your administrative work when you have no other fixed location for it. The kitchen table where the family eats does not qualify, no matter how many bids you have written there.
Warranty and callback work
Punch list labor, callbacks after closeout, sending a sub back to fix something, material replaced under warranty, and the fuel and hours it takes to get back out there.
This comes off in the year the cost is actually incurred and paid. You cannot deduct a reserve set aside this year for warranty work you expect to do next year.
Crew meals and out of town jobs
Lodging and meals when a job keeps you away from home overnight, plus food you buy for the crew on a long pour or a weekend push to hit a deadline.
Business meals are only partly deductible, and lunch by yourself between two of your own job sites is not a business meal at all. If a job away from home is expected to last more than a year, it stops being treated as temporary and the travel deduction goes away.
Schedule C holds up fine while you are running your own crew on modest profit, but once profit is steady and large enough that a reasonable salary would still leave real money on top, an S corp election is worth pricing out against the payroll cost, the extra return, and the fact that your license, bond, and insurance may all have to be reissued in the new entity's name.
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, 1099-MISC, and 1099-K you received, plus a list of jobs you were paid for with no form at all
- All twelve months of business bank and credit card statements, including your supply house and lumber yard accounts
- Your subcontractor list with a signed Form W-9 for each one and the total you paid each of them
- A job list for the year: contract amount, draws collected, costs by job, and which jobs are still open
- Retainage being held on you at year end, and any contract that started in one year and finishes in the next
- Equipment and vehicles bought, sold, or traded during the year, with invoices and the date each one was placed in service
- Truck details: year, make, model, weight rating, total miles, business miles, and the loan or lease statement
- Insurance and bond premium totals for general liability, workers comp, commercial auto, and builder's risk
- Home office numbers: the room's square footage, the home's total square footage, and the year's rent or mortgage interest, property taxes, insurance, and utilities
- Payroll reports if you carry W-2 employees, and any estimated tax payments you made with the dates
What trips people up
Paying subs in cash with no W-9 and no 1099.
Collect a signed Form W-9 before the first payment, pay by check, card, or transfer so there is a record, and file Form 1099-NEC for anyone over the reporting threshold. Cash itself is not the problem. No record is.
One account for the truck payment, the lumber, and the groceries.
Open a business checking account and one card that only touches jobs. It takes very little to set up, and it is what holds up if anyone ever asks to see the trail.
Deducting the whole equipment loan payment.
The principal part of the payment is not a deduction. The interest is, and the equipment itself comes off through depreciation. Bring the purchase invoice and the loan statement and we handle both sides.
Spending a progress draw and having nothing left when tax is due.
A progress draw from a customer is income when you receive it, even though the work is not finished. Move a set share of every draw into a separate account and pay quarterly estimates so April is not a surprise.
Trying to write off a customer who never paid.
If you never reported that invoice as income, there is nothing to deduct. Your actual loss is the labor and material you already paid for, and those are already on the 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
A builder sent me a 1099-NEC that includes the materials I bought. Do I owe tax on all of it?+
You report the full amount as income and deduct the materials as a cost, so tax lands on what you actually kept. Do not quietly report a smaller number, because the IRS matches what the payer filed against what you report.
I get paid on a 1099 by one builder and I am on his schedule every day. Am I really self employed?+
The form does not decide it, control does: who sets the hours, who supplies the tools, who can hire and fire, who carries the risk on the work. If it looks more like employment, there is a process for asking the IRS to rule on your status, and we will tell you straight rather than just filing a Schedule C and moving on.
Can I write off my work truck this year?+
Sometimes a large part of it, since heavy work trucks are not limited the way passenger cars are. It depends on the weight rating, how much of the use is business, and the truck being placed in service before year end. If business use later drops to half or less, part of that write-off can come back as income.
A job started in October and finishes in March. Which year is it taxed in?+
That depends on your accounting method and whether the job falls under the long-term contract rules, which have exceptions for smaller contractors and for home construction contracts. It is why we ask for contract dates and draw schedules instead of just the bank total.
I built in another state this year. Does that change anything?+
It can. Working in another state can create a filing requirement there and a credit on your home state return, and states have their own licensing rules and their own sales or use tax treatment of materials. Tell us where the jobs were and we will sort out which returns are actually needed.
Some homeowners pay me in cash. Does that have to be reported?+
Yes. Income is income no matter how it arrives. Cash also makes it easy to lose the record of what you spent on that job, so you can end up losing the deductions along with it. Run the money through the business account and you keep both sides of the ledger.
Let us take the tax part off your plate.
Tell us what you need and see your price. A real person on your team replies within one business day.