Cbrenn0823:
At the moment through the USB, but I'm going to use an external power supply.
The output from the arduino will go through a logic level shifter to drop from the 5v to 3.3v.
I wouldn't bother with a logic level shifter. Just use a voltage divider 2K / (1K + 2K)
The logic level only needs to be dropped for voltages into the ESP-12E. The Arduino can handle the voltages from the ESP-12E just fine.