CONSTRUCTION CONTRACTORS: TAX MISTAKES TO AVOID
Taxes are tricky, aren’t they? Most of us understand the basics of our personal income tax returns, but business taxes add more complexity to an already stressful activity. When people make mistakes, it is often in the direction of being too conservative in taking tax credits and deductions. Other times, the error is in how a company or employee is classified. Here are seven tax mistakes construction contractors make that could be costing them a significant amount of money. FAILING TO DEPRECIATE NEW EQUIPMENT CORRECTLY Equipment depreciation is a key aspect in calculating business taxes. The Protecting Americans from Tax Hikes (PATH) Act was recently made permanent and retroactive to January 1, 2015. Two sections apply directly to construction. Section 179 allows an immediate tax depreciation deduction of the entire cost of equipment and machinery in the year it is placed into service. All construction machinery purchases are allowed but the total property, plant, and equipment purchas...