Most Overlooked Deduction for Clients in the Construction Industry

I want make you aware of a substantial deduction that many people in the construction industry qualify for but is often overlooked by tax preparers.  Specifically, I am speaking about the “Domestic Production Activities Deduction”.

 

This deduction is available to all home builders and contractors regardless of what tax forms they file.   If you are a sole proprietor, S-corporation, LLC or Partnership, you can tell if you have taken the deduction by looking at line 35 of your Form 1040.  I find that nearly all of the builder’s and sub contractor’s tax returns I have reviewed have not claimed this deduction…and it can be substantial. 

Personally, I think there are a couple of reasons this deduction is not being taken advantage of:

·         Some tax preparers may not be up to speed on all changing tax laws as it relates to the construction industry 

·         The tax law covering this deduction can be somewhat complicated 

·         Some home builders don’t have their accounting system setup correctly to capture the data needed to do the calculations

 

The good news is if you haven’t been taking this deduction you can amend up to the prior three year’s tax returns and receive a refund.  If you need some tax assistance or have questions about if you qualify for this deduction, please give me a call at Kinzey & Arndt, CPA; my firm offers a free 1 hour consultation.  We have many clients in the construction industry and understand the unique challenges that home builders and their contractors face.  

I would love a chance to talk with you about how we can help your business run more efficiently and profitably.  We are located in the Claremont Commons building on East Battlefield (right next door to Metropolitan Grill).  Feel free to stop by or schedule an appointment, I would love to hear from you!

 

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