As with many careers, construction workers have specific sets of skills and tools they need to perform their jobs well. Fortunately, the IRS recognizes that these skills and tools aren’t cheap to acquire, which is why many of them are tax deductible. If you work in construction, here are some important and worthwhile tax deductions for construction workers you can claim on your income tax.
Tax Deductions for Construction Workers Who are Employees
Due to changes in tax law brought about by the Tax Cuts and Jobs Act, if you work construction as an employee for someone else, you can no longer claim deductions for the items you use that you paid for yourself. You may want to ask your employer for any kind of reimbursement, though, to help with the costs.
Tax Deductions for Construction Workers Who are Independent Contractors
If you’re an independent contractor, you qualify as a self-employed person. In this case, there are a number of deductions you can claim on your Schedule C, including:
- Business insurance
- Business licenses
- Employee wages, related taxes
- Health insurance, if you meet the following requirements:
1) Your business is claiming a profit
2) You aren’t eligible for an employer health plan or your spouse’s plan
3) You can only claim for the months you were not eligible for your employer’s health plan
- Legal and professional services such as tax preparers, accountants, and attorneys
- Meals — up to 50 percent of the total cost for business-related meals
- Subcontracted labor — hiring someone else as an independent contractor to do a specific part of the work
- Tools — generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase; you can depreciate the cost of tools that have a useful life substantially beyond the tax year
- Protective clothing — you can deduct the cost of protective clothing required in your work such as safety shoes or boots, safety glasses, hard hats, and work gloves
- Portion of phone, pager, or cell phone costs related to business use
- Stationary, pencils, etc.
- Union fees
- Technical and professional publication subscriptions
- Travel costs between job sites or from a job site to a store for a work-related errand (but not between your house and the job site), including parking fees, tolls, and public transportation costs; if you use your own vehicle, a free mileage calculator is an effective tool to keep track of these travel costs
Credits and deductions are available for self-education that applies to construction workers. If you’re enrolled in an accredited program (such as a community college or university), you may qualify for a tax credit, which can reduce the tax you owe. The education credits available are either the American Opportunity Credit (worth up to $2500) or the Lifetime Learning Credit (worth up to $2000).
The Tuition and Fees deduction, which was renewed for tax year 2017 and may be renewed for more years beyond that, is potentially available for higher education. If renewed, you would be able deduct up to $4000 from your income for qualifying tuition and fees at an accredited program. However, keep in mind that you could not use the Tuition and Fees deduction together with either of the education tax credits. You could, however, choose the deduction or individual education tax credit that saves you the most in taxes.
Continuing Education/Certificate Programs
If you’re self-employed, you can deduct costs related to continuing education for your job other than higher education. You can claim this deduction on Schedule C or Schedule C-EZ. You cannot use this business-related education deduction if the class or program teaches you a new career. However, remember that you can possibly claim this type of expense as a Tuition and Fees deduction instead.
As a self-employed construction worker, there are a lot of costs related to your job that you can claim as a deduction on your tax return. By keeping track of your expenses during the year, you’ll have the opportunity to lower your tax burden and save yourself more of your hard-earned money.
For more helpful tax information, contact Liberty Tax® directly at 1-877-at-Liberty, or visit a conveniently located Liberty Tax® office near you. For real-time updates, follow Liberty Tax® on Facebook and Twitter.