The Errors That Cost
Defense Contractors
Real Money Every Year
Defense Contractor Tax Preparation in Virginia requires a different level of preparation. Defense contractor returns look familiar on the surface - a W-2, some income, a standard return. That familiarity is exactly what gets the return done wrong. The specific situations that arise in defense contracting - multi-state obligations, 1099 and W-2 combination income, Guard/Reserve activation on top of contractor income - require knowledge that general software doesn't prompt the preparer to ask about.
Security clearance expenses claimed incorrectly
Costs associated with maintaining or obtaining a security clearance - polygraph fees, legal costs, psychological evaluations - are generally not deductible as employee business expenses under current law. However, the distinction between employer-reimbursed and out-of-pocket costs matters significantly. Getting this wrong creates IRS exposure.
Multi-state filing obligations missed entirely
Defense contractors who work on-site at installations in multiple states - or who are assigned to projects in Virginia, Maryland, and DC in the same year - may have filing obligations in each state. Virginia, Maryland, and DC have specific reciprocity rules that most general preparers misapply, resulting in either double taxation or unfiled returns.
1099 and W-2 income mixed without proper treatment
Many defense contractors receive both W-2 income from a primary employer and 1099 income from consulting or subcontracting work. These income streams have different self-employment tax implications, different deduction structures, and different quarterly payment requirements. Treating them identically is one of the most common and expensive errors in contractor returns.
Home office deduction applied to W-2 employees
The home office deduction for employees was suspended by the 2017 Tax Cuts and Jobs Act and has not been restored. Defense contractors who are W-2 employees - even those who work from home regularly - cannot claim this deduction. The deduction remains available only for self-employed contractors. Misapplication creates audit risk.
Per diem and travel reimbursements treated as income
Government per diem rates and accountable plan reimbursements are not taxable income when properly documented. However, when a contractor receives a flat travel allowance that exceeds IRS per diem rates, the excess is taxable. The distinction requires knowing the specific contract structure - something a general preparer rarely asks about.
Transition from W-2 to 1099 status handled incorrectly
Defense contractors who move from employee status to independent contractor status mid-year face a return that combines both income types with different tax treatments. Quarterly estimated payments, self-employment tax, business deductions, and retirement contribution windows all change simultaneously. The first year of this transition is almost always the most complex return a contractor will file.
💡 None of this is obscure. It's just specific - and specificity requires preparation.
Every item above is a known situation with a known correct treatment. The gap isn't in the law. It's in whether your preparer has seen enough defense contractor returns to know what questions to ask before the return is filed. At Griffin & Johnson, these are not edge cases we research when they come up. They are the standard questions we ask on every Defense Contractor Tax Preparation in Virginia return - every client, every year, without prompting.
Every Defense Contractor
Situation, Handled with Depth
Our Defense Contractor Tax Preparation in Virginia services don't fit a single template - because no two defense contractor situations are alike. HII employees look different from independent 1099 contractors. DOD civilians have their own federal employment nuances. Guard members who also work in the defense industry carry both civilian and military complexity on the same return. We handle all of them with the same depth of preparation.
What Makes Us Different
for Defense Contractors
We've done this before. We'll get yours right.
HII and Newport News Shipbuilding employees represent one of the most concentrated groups of defense-adjacent taxpayers in Virginia. We handle W-2, 1099, union benefits, and multi-state filings for shipyard workers and defense professionals as a core part of what we do - not an occasional situation.
Our Williamsburg office serves the broader Hampton Roads defense community - JBLE Fort Eustis, Naval Station Norfolk, Naval Air Station Oceana, and the defense contractor ecosystem that surrounds them. We know the specific tax situations these employers create.
Multi-state filing is one of the most common and expensive errors in defense contractor returns. We know the reciprocity rules cold - who owes what, to which state - and we apply them correctly the first time.
Many defense contractors also serve in the Guard or Reserve. That combination requires someone who understands both civilian contractor income and military tax rules. We handle both sides of the return with equal depth.
The Questions We Hear Most
from Hampton Roads Contractors
Specific answers to the specific questions that come from Defense Contractor Tax Preparation in Virginia life - not generic tax advice.
Your Return Deserves
Precision.
Submit your intake form and we'll reach out within one business day. No generic tax advice applied to a Defense Contractor Tax Preparation in Virginia situation. No civilian rules used where contractor exceptions apply. Every nuance that affects your return - applied correctly, the first time.