Tax Deductions for Engineers, Architects & Construction Professionals

Engineer Architect Construction Tax Tips

Careers in engineering, architecture and construction all have the potential to be extremely rewarding. Though these professions may emphasize different skill sets, they are similar in one very important dimension: all of these fields involve building new things from scratch. There is a creative process inherent to these fields which attracts workers who are not merely bright but also driven to see theoretical projects transmitted into physical reality. Professionals in engineering, architecture and construction play a vital role in our society as they develop and maintain the infrastructure which allows our economy to function successfully. Given their important role in our society, it is not surprising that there are a variety of tax deductions available to professionals in these fields. In this article we will cover two of these deductions.

Engineers, architects and construction professionals may take advantage of the so-called “meals and entertainment” deduction. This deduction is designed to stimulate business activity and also promote productivity while on the job. With this perk, professionals from these fields may deduct 50% of their meals and entertainment costs on their tax return. However, there is one exception to this rule: if an employer provides a meal to his employees as a matter of convenience, then the cost is 100% deductible. This exception may come up if there are no eating establishments nearby a job site and the boss does not wish to risk his employees returning late from a meal break.

This deduction may be utilized when professionals engage in business discussions during the course of a meal. However, people who wish to use the deduction in this manner must be able to provide specific information regarding the occasion (i.e. who was entertained, where and when did the meal occur, why did the meal occur, what was the cost, and so forth).

Another perk available to professionals in these fields is the Domestic Production Activities Deduction (or the Section 199 Deduction). The DPAD is a very significant tax break which incentivizes professionals to operate on projects within the United States. With this perk, entities may take a 9% (as of the current year) deduction on net profit derived from engineering, architectural and construction services performed within the U.S. However, the amount of this deduction may not exceed 50% of W-2 wages, and this includes wages paid to the owner.

These are just two of the deductions currently available to engineering, architecture and construction professionals. To learn more about these and other deductions for professionals in these fields, be sure to read the transcript of the webcast by our CPA Jessica Chisholm.

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About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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