9 Year-End Tax Tips for Contractors9 Year-End Tax Tips for Contractors

Company leaders should take time to review the tax implications of their business and operations now, writes a CPA focused on construction.

Construction Dive

October 8, 2024

1 Min Read
Chip Somodevilla via Getty Images

The author, Anita Mahamed, is a CPA, CFP and a partner at Milwaukee-based Wipfli, an accounting and consulting firm that works with construction companies. She leads Wipfli’s construction and real estate practice in southern Wisconsin. Opinions are the author’s own.

April 2025 may feel like a lifetime away. And tax planning? A distant priority compared to the daily issues contractors are facing. But this is the right moment to plan for April’s filing date, while there’s still time to improve your tax position.

Take the time to review the tax implications of your business and operations early, so you can maximize deductions, reduce tax liabilities and maintain compliance. Proactive tax planning around work in progress, equipment purchases and energy credits could save you thousands of dollars.

To help builders get ready for their annual filing, here are some tips that can help the process. Before the end of the year, contractors should:

Review work in progress. For tax purposes, projects are considered complete once 95% of construction costs are incurred. Review current projects so you understand which will meet this criterion by year-end. 

Then, determine how accelerating or deferring completion could affect your taxable income. For example, in years with higher tax rates, it may be advantageous to defer completion and push the income into a year with lower tax rates.  

Assess your accounting method. Cash flow management is critical in a high-interest rate environment. Review the impacts of different accounting methods, then match your approach to your cash flow needs and project timelines.  Some firms want to recognize income throughout a project to avoid a large, lump-sum tax bill, while others prefer to defer income and tax liability.

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About the Author

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