Career

Common Tax Deductions for Engineers

March 12, 2014

If you haven’t filed your taxes yet, here are a few tax deductions almost all engineers can claim. (If you’ve been efficient, then remember these for next year!)

Don’t Miss Any Work-Related Tax Deductions

Almost any costs you incur as part of your profession are tax-deductible. This isn’t limited to tools or equipment you use as part of your job. CPA Arthur Moye of MBS Accountancy Corporation in Fresno, CA, advises that there are many professional tax deductions out there for engineers, such as licenses paid to state or local governments, required training or certifications, dues to trade organizations  and professional bodies, or even liability insurance.

Are you changing jobs?

Common Tax Deductions for Engineers

Credit: 401(K) 2013

If you’re looking for work, whether you get a new job or not, you can also deduct any expenses incurred in your job search. This could include fees paid to headhunters or agencies, transportation costs – even the costs of having a resume professionally printed.

If you have to relocate for your new job, you may be able to claim costs associated with moving. Even if your employer won’t help with your moving costs, this can be a big item.  Moye points out that there are three criteria you must meet in order to qualify.  “First, your new job must be more than 50 miles from your previous home. Second, your moving costs must be incurred within 12 months of starting the new job. And third, you must accrue 39 weeks of full-time employment within the next 12 months.”

If you’re moving frequently for short-term contracts, or just moving to reduce your commute, you can’t claim this deduction.

Do you work from home?

If you work from home, then your entire taxation regime will depend on whether you’re a W-2 employee or a 1099 contractor.

If you’re receiving 1099s, you need to treat your tax return as though you’re running a small business – even if you don’t actually have a company. You may be eligible for a wide range of other deductions, such as the home office deduction. These can add up to quite a substantial amount, especially when combined with the deductions listed above. (You’ll need to pay your own taxes throughout the year, reclaiming any overpayment when you file.)

Whichever way you’re paid, there are plenty of things engineers can deduct when filing taxes. Moye lists some of the most common tax deductions (emphasis ours):

  • Common Tax Deductions for Engineers

    Credit: 401(K) 2013

    Advertising

  • Bad debts from sales or service

  • Bank fees on business accounts

  • Car and truck expenses

  • Commissions and fees

  • Cost of goods sold

  • Membership dues

  • Employee benefits

  • Common Tax Deductions for Engineers

    Credit: John Morgan

    Gifts to customers

  • Insurance (casualty and liability)

  • Interest

  • Legal and professional services

  • Meals and entertainment

  • Home office expenses

  • Pension and profit-sharing plans

  • Publications

  • Common Tax Deductions for Engineers

    Credit: 401(K) 2013

    Rent or lease expense

  • Repairs and maintenance

  • Services performed by independent contractors

  • Supplies and materials

  • Tickets to public events

  • Travel expenses and utilities


Remember to keep thorough records of all your finances. Electronic records of receipts, bills, and statements will usually be sufficient; you don’t necessarily need to store stacks of paper.

Could You Use Professional Tax Advice?

Common Tax Deductions for Engineers

Credit: TaxCredits.net

It can be complex making sure you’ve claimed everything you’re entitled to: it’s easy to overlook expenditures you’ve made throughout the year. Tax rules change and you can’t necessarily reply on everything being the same as it was in previous years. If you’re self-employed, or running your own business, there can be a lot of i’s to be dotted and t’s to be crossed to comply with federal and state legislation.

Unless your tax return is really simple, consulting a CPA is usually prudent and cost-effective. They’ll ensure you’re complying with all your tax obligations, will advise you on tax planning, and will often be able to reduce your tax bill significantly.

We’re in this together:  Share tax tips with your fellow engineers on our Facebook page, or tweet them @EngineerJobs.

Featured Image Credit: 401(K) 2013