Tax Deductions for Carpenters
If you work as a carpenter to earn a living, then you are no stranger to using accurate measures and precise methods to create a product for others. You'll need to translate this skill when filing your tax return, as there are certain things you should pay close attention to if you want to get the most out of your return.
If you are an employee of a company, you will receive a Form W-2, Wage and Tax Statement, from your employer at tax time. If you do odd jobs or provide carpentry skills outside of your regular company, or that is primarily how you make your income, then you are considered to be self-employed. Self-employment income has to be reported on a Schedule C, Profit or Loss from Business. Examples of self-employed carpenters are those who take custom orders or sell their furniture at yard sales. You'll be required to report that income either on your own or through a Form 1099-MISC, supplied by those you contracted for.
Any earnings of self-employment income over $400 is subject to self-employment tax, and you may have to make quarterly estimated tax payments to cover the amount reported on a Schedule C.
You may lessen your tax liability by claiming deductions for job related expenses that aren't reimbursed by your employer or another party. Employees deduct expenses on a Schedule A, while self-employed carpenters can use a Schedule C. Receipts for all expenses should be kept.
Typical deductions for carpenters include:
- Subscription costs for trade publications
- Union dues
- Liability insurance premiums
- Equipment or tools replaceable within one year
- Safety equipment, such as steel toed boots
- Uniforms that you are required to wear, provided they are not suitable for everyday use
- State and other local government regulatory fees, flat rate occupational tax, or licenses, as long as they are not paid for initial certification.
If you were previously a carpenter and have begun to seek employment again in the same field, you may be entitled to deduct job search expenses. You have to seek a job as a carpenter though, since that's the same job you held before. However, holding odd jobs during your unemployment does not affect your deductions.
Certain education expenses are deductible if they relate to the field of employment. Refresher courses, vocational classes, and training on new developments generally qualify for deduction. Education courses cannot be used to help you meet the minimum requirements of your field, or qualify you for a job in a different field.
Self-employed contractors have additional deductions that can be taken on a Schedule C as follows:
- Business bad debts
- Car and truck expenses when traveling between work sites.
- Employee compensation, bonuses, and commissions
- Legal and professional fees
- Business use rental fees for property
- Advertising costs
- Tool repair and upkeep
- Supplies and incidentals
- Excise taxes and personal property tax
- Travel expenses when required to work away from your normal work home for more than a typical day: including tolls, parking, lodging, and meals; restrictions apply
