# Homeowner want material cost breakdown for a 'tax deduction'



## robert c1 (Mar 11, 2007)

Hi all,

I did a small bathroom remodel for a client this summer. Simple job, Absolute PITA customer: Fair enough no mistakes/ no worries jobs done and off i go. 

fast forward 8 months just got a message from the guy stating that he needed a breakdown of my material costs for his income tax. The job was bid and delivered on a lump sum fixed price. Now, this is an absolute ploy from the guy. He's just a bit of a sour apple: always thinks people are trying to get one over on him. I recall him rushing to the window whenever someone would head to the truck. I believe it was to make sure we hadn't stolen something:thumbsup: 

I remember reading a thread on this same thing a few years back but failed to find it on the search mechanism. I have no intention of releasing anything to the guy other than the original invoice, and I'm pretty damn sure I have no legal obligation to do so. Anyone have any good ammunition for me?


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## rselectric1 (Sep 20, 2009)

Wow. I'd end it with requesting that his CPA/preparer email you this request directly so you can pass it on to your CPA along with the reason for the request.


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## Calidecks (Nov 19, 2011)

robert c1 said:


> Hi all, I did a small bathroom remodel for a client this summer. Simple job, Absolute PITA customer: Fair enough no mistakes/ no worries jobs done and off i go. fast forward 8 months just got a message from the guy stating that he needed a breakdown of my material costs for his income tax. The job was bid and delivered on a lump sum fixed price. Now, this is an absolute ploy from the guy. He's just a bit of a sour apple: always thinks people are trying to get one over on him. I recall him rushing to the window whenever someone would head to the truck. I believe it was to make sure we hadn't stolen something:thumbsup: I remember reading a thread on this same thing a few years back but failed to find it on the search mechanism. I have no intention of releasing anything to the guy other than the original invoice, and I'm pretty damn sure I have no legal obligation to do so. Anyone have any good ammunition for me?


This is a question that chaps my ass, they only ask that because they are trying to figure out how much you made. Tell him what I tell people, it's proprietary information.


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## Bummie (May 11, 2007)

X = materials
Y = labor

(Total Invoice - Tax) - Y = X

If he wants more than that he must pay you for your time!!! Explain you gave him a bid for the completed job, which he accepted.


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## Calidecks (Nov 19, 2011)

My material prices is a lot different then the common folks prices. I don't need my competitors to see this or my customers. Ask him when he goes in to buy a Big Mac does he first ask the manager what do they pay for lettuce? And what do you think the manager would say?


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## CarpenterSFO (Dec 12, 2012)

Jim:

I got your request for my materials costs on your project. I've been doing this for a while and I am certain that the only number that you need for your tax purposes is the total invoiced price, which included all materials, labor, profit, etc. But if you remain sure that you need the information, please send me a reference to the tax form and line where you believe that it would be relevant, and I'll ask my accountant about it.

Without a reason that is persuasive to my accountant, I can not release this sort of proprietary information.

Best regards,

Robert


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## CarpenterSFO (Dec 12, 2012)

Or maybe he's try to claim the sales tax deduction, with [excerpted by me] random Federal tax stuff here:

"General Sales Tax You Paid on Specified Additional Items

[blah, blah, blah about cars, etc.]

You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. [not true in your case, obviously]

[or]

Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly."

Edit: If you google "sales tax deduction" you'll find more about it. Maybe the guy's thinking along these lines. I've never heard of it, and it doesn't apply to me, but maybe you're in such a state and maybe your contract says those things...


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## KennMacMoragh (Sep 16, 2008)

Is he asking before or after the job completion? If it's afterwards then I don't see any harm in giving him the material costs, just charge him for the time spent putting that information together.


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## pappagor (Jan 29, 2008)

JUST TELL THEM TO GET IN LINE :thumbup:


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## MarkNoV (Apr 29, 2006)

So give it to him.

He is not asking what the materials cost YOU, he wants to know what the materials cost HIM.

When he asks to see your materials invoices, then you call tell him to <<inserts your favourite saying here>>

Mark


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## SLSTech (Sep 13, 2008)

I would just state that is a very odd request & ask why - I do know there is a tax credit for certain Energy Efficient upgrades if the haven't claimed it before which is limited to $500 (old list & specs). If that is what he wants then he does need a "this is how much I paid for these specific materials" and you should oblige for those numbers & those numbers only (i.e. what you charged him for the materials not what you paid)


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## brunothedog (Sep 8, 2013)

Tell him, a dollar for materiale, and the rest for your expertise


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## TAHomeRepairs (Jun 18, 2012)

Why do you feel it's such a top secret thing to tell what they spent in materials? If they were more than he would have spent at HD, explain the difference in quality. Most of my jobs are T&M and I am very upfront about their material cost. It is what it is. IMO if you are unwilling to tell them what they spent on it, you are trying to hide something. 

I understand some cases are different, especially like the decking or HVAC, and you get über discounts for buying bulk. This wouldn't apply in all cases , but a bath reno is pretty straight forward. Just my .02.


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## SamM (Dec 13, 2009)

You know, I was just on Michael stone'a site yesterday (author of Markup & Profit) and he covered this situation. 

He says never give an itemized estimate, because all the customer is going to do is start comparing your material prices to the prices in the store. Next thin you know it's all "you cheated me you coulda bought this cheaper here blah blah blah"

Sounds to me like this guy might be the kind to pull this sort of nonsense. 

Without a really good reason (like the sales tax example above) I'd say no. 

Actually I'd say offer to do it and send it straight to his CPA, but warn him that it's gonna 75$/hour to prepare it and it'll take you at least three or four hours to prepare. (Mikes advice again)


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## Stephen H (Feb 18, 2011)

I handle questions like this with one sentence.

" I am sorry Mr. Jones, but it is not our company policy to provide that information"

to the OP I would say-look at it this way. 8 months ago you entered into a deal with the customer and agreed to perform a project for X amount. you completed the project, the customer was happy and you got paid.

NOW, 8 months after the fact the customer is trying to re-negotiate the project to include this service. If the customer wanted this service-the time to negotiate it into the project was over 8 months ago- he can't uni-laterally add it after the fact. 8 months ago- if the customer had insisted on this as part of the project- you could have turned the project down----------- the customer just can't add it after the fact.

If you don't want to do it- just give the customer the one sentence answer I provided above. don't engage in a discussion, to attempt to rationalize your position, don't give any funny,folksy reasoning- just simply and directly say "NO"

Best wishes,
stephen


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## 480sparky (Feb 1, 2009)

Dear Mr. Jones:

I recently received your request for a breakdown of time and material on the job we performed for you.

This is information that we, in the routine course of operating our business over the past 21 years, do not generate as it has no value to us. 

As such, in order for us to provide this type of breakdown, we estimate it will require approximately 4 hours to complete. At our standard rate of $75 per hour, it will be necessary to charge you $300 for this information.

Enclosed is an agreement addressing your request. Please sign it and return it along with your payment and we will initiate our investigation. 

Thank you,
Joe Smith


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## greg24k (May 19, 2007)

Dear so and so,

Since the last incident, when a previous customer got depressed and shot himself after receiving our price breakdown, it has been our company policy not to break down the cost simply for your protection.

I do hope you enjoy your kitchen and if you have any upcoming projects, please don't hesitate and feel free to contact me at any time.

Sincerely,

You


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## Inner10 (Mar 12, 2009)

I'd tell him the truth, I bulk price and I have no idea how much material I used.


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## Roofcheck (Dec 27, 2011)

CarpenterSFO said:


> Jim:
> 
> I got your request for my materials costs on your project. I've been doing this for a while and I am certain that the only number that you need for your tax purposes is the total invoiced price, which included all materials, labor, profit, etc. But if you remain sure that you need the information, please send me a reference to the tax form and line where you believe that it would be relevant, and I'll ask my accountant about it.
> 
> ...


You Mr Carpenter SFO are a value to this community. :thumbup:


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## SSC (Feb 8, 2011)

We've all had clients like this and Im pretty confident this guys trying to figure out what you make. He probably talked with a neighbor or friend who had similar work done and it was cheaper then you. 

Like said above Id offer to provide the info for an hourly fee. 
8 months later it will take a while to find the paperwork


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## GCTony (Oct 26, 2012)

TNTSERVICES said:


> Why would you let them know your material costs? None of there business. And if you see zero risk you need glasses.


Maybe I'm not see the forest through the trees...Why not let a past client know rough material costs after the fact? (He's already been paid)

Since I need glasses; please explain the risks of letting the client know your material costs. AFTER THE JOB IS DONE AND PAID FOR.


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## TNTRenovate (Aug 19, 2010)

GCTony said:


> Maybe I'm not see the forest through the trees...Why not let a past client know rough material costs after the fact? (He's already been paid)
> 
> Since I need glasses; please explain the risks of letting the client know your material costs. AFTER THE JOB IS DONE AND PAID FOR.


None of their business what discount I get or how much profit I made. Nothing good can come from it. In the day and age of computers and online reviews, no reason to let that information public.


They have no idea the process I use to come up with a total price. Giving them only part of the equation and none of the process will only lead to questions and possibly the feeling that they were over charged.

If I am going to hand that over I might as well hand then my overhead break down list and profit calculations.


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## gastek (Mar 29, 2011)

If you don't tell them before the job, why would you after the job? Makes no sense. It just opens the door to other discussions from the HO.

Just had a customer want me to break down the costs for a job. Guessing he wanted to see what my labor charge was and I repeated my original numbers back to him and then told him to get other bids from LICENSED contractors to compare costs.

Consumers that ask for breakdowns are only going to beat you up on your prices. My philosophy is take it or leave it. Yes it would be nice to get more work but I don't need the HO that is going to pick apart a quote. If this is the case, then they have money issues and shouldn't probably be having the work done.


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## MTN REMODEL LLC (Sep 3, 2010)

Yes..... I do think/agree that delinateing your pricing structure can create problems with the customers perception.

Even an honest customer is likely to find labor/mark-up seemingly excessive......

A customer does not really understand your overhead/WC/insurance/ transportation expenses.... nor do they comprehend your expertise... whom to sub to/ where to locate materials/ knowledge of what materials/ pickup of materials/ knowledge of coordinating the job etc etc.....

As a customer, if you see a materials cost and a labor charge, and compare that only with hours on location, labor, and or profit, may seem excessive to them.

When you go buy a $5 plastic packaged replacement valve at HD, how would you feel to know that the part itself only cost 50 cents. You forget that packaging, delivery, stocking, inventory losses, shelving costs and some profit are the real expenses involved.


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## littlefred811 (Dec 16, 2012)

Sorry about the resurrection, all, but I got one of these from a referral of a friend. 
Of course, the person is another "internet expert." We are currently dealing with out of these and it's gotten out of hand, but that's a story for another day.

I politely gave him a breakdown of labor prices only. They "show" me gettingthe material for about 30% less than he "Can get it from this website..." The fun part is it actually has me charging 200% of my normal labor rates for installation, sand and finish.
I ended it with:
Warranty: When customers provide the materials for installation, we offer no warranty of any kind, as we don't have local representative support from the manufacturers like we do with our dedicated product suppliers.
I am actually looking forward to his reply! (a first for an "Internet Expert: customer)


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