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What can plumbers deduct on their taxes?

If you spend money to run your plumbing business, it’s probably deductible. The challenge most plumbers face isn’t a lack of deductions but a lack of documentation. Here’s what you should be tracking.

Vehicle expenses are typically one of your largest deductions. Your service van, the gas, oil changes, tires, repairs, insurance, and registration are all deductible. You can either deduct actual expenses or use the standard mileage rate. For most plumbers running a loaded work van, actual expenses tend to produce a bigger deduction. Either way, you need a mileage log. The IRS will deny your vehicle deduction entirely if you can’t back it up.

Tools and equipment are fully deductible. Pipe wrenches, threading machines, drain cameras, press tools, hand tools, cordless drills, soldering equipment. Smaller tools can be expensed in the year you buy them. Bigger purchases like a sewer camera or a jetter machine can be deducted immediately using Section 179 or depreciated over time. Keep receipts for everything, even the $30 wrench from the supply house.

Parts and materials you buy for jobs are deductible as cost of goods sold. Copper pipe, PEX, fittings, valves, water heaters, garbage disposals. If you keep inventory on your van, those parts are deductible when they’re used on a job. This is an area where a lot of plumbers lose track because they’re buying parts multiple times a day at different suppliers and not every receipt makes it home.

Insurance premiums are deductible. General liability, commercial auto, workers’ comp, bond premiums, and professional liability. If you’re a sole proprietor, your health insurance premiums are deductible too, though that gets handled on the personal side of your return.

Licensing and continuing education costs are deductible. Your California contractor’s license renewal, journeyman or master plumber certification fees, trade school courses, code update classes, and any required continuing education. These are ordinary and necessary costs of maintaining your ability to work.

Work clothing and safety gear count if they’re not suitable for everyday wear. Steel-toe boots, hard hats, safety glasses, gloves, and uniforms with your company name on them are all deductible. Regular clothes you happen to wear on the job are not.

Marketing and advertising expenses are deductible. Your website, Google ads, truck wraps, business cards, Yelp ads, yard signs, and sponsoring the local Little League team in Long Beach. Anything you spend to get the phone ringing counts.

Your phone bill is partially deductible based on business use. Same with your internet if you use it for scheduling, invoicing, or running your business. Software subscriptions like ServiceTitan, Housecall Pro, or QuickBooks are fully deductible.

Subcontractor payments are deductible, but you need to issue 1099s to anyone you pay $600 or more during the year. Missing this creates problems with the IRS and can cost you the deduction.

Office expenses, even a home office, can be deductible if you use part of your home exclusively for business. This includes a proportional share of rent or mortgage interest, utilities, and internet. Many skilled trades business owners overlook this one.

The deductions exist whether you track them or not. The difference is that untracked deductions don’t end up on your tax return. A shoebox of receipts dumped on someone’s desk in March means things get missed. Proper bookkeeping and tax services for contractors throughout the year means every legitimate deduction gets captured, categorized, and ready when it’s time to file. That’s where the real tax savings come from.

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More Questions

How do I report subcontractor payments to the IRS?

You report subcontractor payments using Form 1099-NEC for anyone you paid $600 or more during the year. The form is due to both the IRS and the subcontractor by January 31. Collect a W-9 from every sub before you pay them.

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What tax forms does an S-corp need to file?

Every S-corp files Form 1120-S with the IRS and a K-1 for each shareholder. Beyond that, you'll have payroll tax forms, state returns, 1099s for subcontractors, and your personal return where the business income actually gets taxed.

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How do I separate personal and business expenses?

Open a dedicated business bank account and credit card, then run every business transaction through those accounts. Stop using personal accounts for business purchases and use owner's draws when you need to pay yourself.

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How do pest control companies track recurring service revenue?

Set up recurring invoices in your accounting software for each service plan, separate recurring revenue from one-time jobs using distinct service items or classes, and review accounts receivable weekly to catch missed payments before they pile up.

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Can I deduct a truck payment as a business expense?

Not exactly. The loan payment itself isn't deductible, but the cost of the truck (through depreciation) and the interest on the loan are. The distinction matters for both your books and your tax return.

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What should I do if I get audited?

Read the notice carefully, don't contact the IRS yourself, and get a CPA or enrolled agent to represent you immediately. Gather only the specific documents requested and respond before the deadline.

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Long Beach CPA firm specializing in contractors, trades, and service businesses. Bookkeeping, tax preparation, IRS representation, and advisory services for businesses across the South Bay and Greater LA. Owned and operated by a CPA with over a decade of hands-on experience.

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