{ "meta": { "tax_year": 2026, "title": "Is It Deductible?", "checked": "2026-10-23T09:30-04:00", "reviewed_by": "Zain Merchant, ACCA", "last_reviewed": "2026-10-21", "format": "Each entry: verdict deductible|partly|depends|not (technical); answer yes|partly|no is the plain-English lead shown to owners (Yes / Partly / Usually not). percent is set only when one clear percentage applies, else null. plain, example, keep and mistake are the owner-facing wording; rule, limits, records and applies_to are the technical detail. source_url is irs.gov or the Code/Regs (law.cornell.edu). 'also' lists further official sources; 'tools' lists related MFA pages.", "disclaimer": "Educational information only, not tax, legal or accounting advice. Tax rules change and depend on your facts. Do your own research using the IRS sources linked, and talk to a qualified tax professional before you file.", "note": "IRS Publication 535 (Business Expenses) has been discontinued; its topics now live in Publication 334 and the Schedule C instructions. Where a 2026 edition isn't published yet, the latest edition is cited with its year.", "order": [ "home", "vehicle", "meals", "tech", "equip", "people", "insurance", "retire", "pro", "marketing", "education", "banking", "startup", "inventory", "taxes", "not" ], "categories": [ { "id": "home", "name": "Home & office", "icon": "home", "count": 6 }, { "id": "vehicle", "name": "Vehicle & travel", "icon": "car", "count": 5 }, { "id": "meals", "name": "Meals & entertainment", "icon": "meal", "count": 4 }, { "id": "tech", "name": "Tech & software", "icon": "laptop", "count": 4 }, { "id": "equip", "name": "Equipment & depreciation", "icon": "tool", "count": 5 }, { "id": "people", "name": "People & contractors", "icon": "people", "count": 5 }, { "id": "insurance", "name": "Insurance & health", "icon": "shield", "count": 3 }, { "id": "retire", "name": "Retirement", "icon": "piggy", "count": 3 }, { "id": "pro", "name": "Professional & legal", "icon": "scale", "count": 3 }, { "id": "marketing", "name": "Marketing & gifts", "icon": "megaphone", "count": 3 }, { "id": "education", "name": "Education", "icon": "cap", "count": 1 }, { "id": "banking", "name": "Banking & interest", "icon": "bank", "count": 3 }, { "id": "startup", "name": "Startup costs", "icon": "rocket", "count": 2 }, { "id": "inventory", "name": "Inventory & shipping", "icon": "box", "count": 2 }, { "id": "taxes", "name": "Taxes & licenses", "icon": "receipt", "count": 3 }, { "id": "not", "name": "Not deductible", "icon": "ban", "count": 7 } ], "url": "https://mfa-advisory.com/tools/is-it-deductible/deductions.json", "page": "https://mfa-advisory.com/tools/is-it-deductible/", "page_modified": "2026-10-23", "license": "© Merchant Financial Advisory LLC. You may quote or reuse this data if you cite it with a link to https://mfa-advisory.com/tools/is-it-deductible/. Educational information only, not tax, legal or accounting advice.", "publisher": "Merchant Financial Advisory LLC" }, "entries": [ { "slug": "home-office", "name": "Home office", "category": "home", "aliases": [ "home office", "office at home", "work from home", "wfh", "form 8829", "simplified method", "home business" ], "verdict": "depends", "percent": null, "rule": "You can deduct part of your home costs if a specific area is used regularly and exclusively for your business and is your principal place of business (or where you meet clients). Use the simplified method ($5 per square foot) or the regular method (your business-use percentage of actual home costs, on Form 8829).", "limits": "Simplified method: $5 per square foot, up to 300 square feet, so $1,500 at most. Either method can't exceed the gross income from the business use of your home minus your other business expenses; under the regular method the excess carries over to the next year, under the simplified method it doesn't.", "records": "Measurements or a floor plan of the office and the whole home, photos showing exclusive use, and the bills, receipts and canceled checks for every home expense you deduct (and your home's basis if you claim depreciation).", "applies_to": "Self-employed people. W-2 employees can't claim a home office deduction.", "source_url": "https://www.irs.gov/publications/p587", "source_title": "IRS Publication 587 (2025), Business Use of Your Home", "also": [ { "title": "IRS: Simplified option for home office deduction", "url": "https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction" } ], "tools": [ "/tools/home-office-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "home", "plain": "If a specific spot in your home is used only and regularly for your business, and it's your main place of work (or where you meet clients), part of your home costs counts. The easy way: $5 per square foot, up to 300 square feet.", "example": "Priya, a bookkeeper, works in a 150-square-foot spare room she uses only for work. With the easy method, that's 150 × $5 = $750.", "keep": [ "Measurements of your office and your whole home", "Photos showing the space is only used for work", "Your home bills and receipts, if you use the regular method" ], "answer": "partly", "mistake": "Calling a corner of the guest room or the kitchen table an office. The space has to be used only for work, and regularly." }, { "slug": "office-rent", "name": "Office rent", "category": "home", "aliases": [ "rent", "office space", "lease", "storefront", "warehouse rent", "studio rent" ], "verdict": "deductible", "percent": 100, "rule": "Rent you pay for office, retail or other business space is deductible in the year it applies to. Rent for vehicles, machinery and equipment is deductible too, for the business share of use.", "limits": "No dollar limit. For rented vehicles, machinery and equipment, only the business share of use counts.", "records": "The signed lease, monthly invoices or statements, and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 CFR § 1.162-1, Business expenses", "url": "https://www.law.cornell.edu/cfr/text/26/1.162-1" } ], "tools": [ "/tools/do-i-need-to-send-a-1099/" ], "checked": "2026-10-21T23:55-04:00", "icon": "building", "plain": "Yes. Rent for an office, shop, studio or storefront you use for your business counts in full.", "example": "Lena rents a salon suite for $900 a month. All $10,800 for the year is a business expense.", "keep": [ "The signed lease", "Monthly invoices or statements", "Proof you paid" ], "answer": "yes", "mistake": "Writing off rent on your own home as office rent. Home costs only count through the home office rules." }, { "slug": "coworking", "name": "Coworking space or shared desk", "category": "home", "aliases": [ "coworking", "co-working", "wework", "shared office", "hot desk", "day pass", "meeting room" ], "verdict": "deductible", "percent": 100, "rule": "A coworking membership, desk rental or meeting-room booking used for your business is rent for business space and is deductible.", "limits": "Only the business share counts if part of the membership is for personal use (for example, a gym or social perks bundled in).", "records": "Membership agreement, monthly invoices and proof of payment. A short note of what the space is used for helps.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 CFR § 1.162-1, Business expenses", "url": "https://www.law.cornell.edu/cfr/text/26/1.162-1" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "desk", "plain": "Yes. A coworking membership, desk rental or meeting room you book for work counts as rent for business space. If the membership bundles in personal perks like a gym, only the business part counts.", "example": "Marcus, a consultant, pays $250 a month for a hot desk. That's $3,000 a year he can write off.", "keep": [ "Your membership agreement", "Monthly invoices and proof you paid", "A quick note of what you use the space for" ], "answer": "yes", "mistake": "Writing off the whole membership when it bundles in personal perks like a gym. Only the business part counts." }, { "slug": "utilities", "name": "Utilities (electric, gas, water)", "category": "home", "aliases": [ "utilities", "electric", "electricity", "gas bill", "water", "heat", "power bill" ], "verdict": "depends", "percent": null, "rule": "Utilities for a business location (an office, shop or studio) are deductible. Utilities for your home are deductible only through a home office deduction, as part of your business-use percentage under the regular method.", "limits": "No dollar limit for a business location. At home, only the business-use share counts, and the home office income limit applies.", "records": "Utility bills and proof of payment; for a home office, your square-footage calculation.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Publication 587 (2025), Business Use of Your Home", "url": "https://www.irs.gov/publications/p587" } ], "tools": [ "/tools/home-office-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "bolt", "plain": "For a shop, office or studio, yes. For your home, only through the home office deduction: the work-space share of the bills counts if you use the regular method.", "example": "Sofia's bakery has its own electric bill, so all of it counts. Her home electric bill counts only for the share of her home that's a qualifying office.", "keep": [ "Utility bills and proof you paid", "Your square-footage math, if it's for a home office" ], "answer": "partly", "mistake": "Writing off the whole home electric or gas bill. At home, only the office's share counts, and only with the regular home office method." }, { "slug": "office-supplies", "name": "Office supplies and postage", "category": "home", "aliases": [ "office supplies", "supplies", "paper", "printer ink", "toner", "stationery", "pens", "stamps" ], "verdict": "deductible", "percent": 100, "rule": "Office supplies and postage used in your business are deductible. Materials and supplies are generally deducted as you use them, and items you normally use up within a year can be deducted when bought.", "limits": "Items that last substantially longer than a year are generally depreciated instead (or deducted right away under the $2,500 small-purchase rule or Section 179).", "records": "Receipts or invoices showing what you bought and when.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "pencil", "plain": "Yes. Paper, ink, pens, stamps and other supplies you use up in your business count. Things that last well over a year are treated as equipment instead.", "example": "Jay, an Etsy seller, spends $40 a month on printer ink and paper. That's $480 a year in write-offs.", "keep": [ "Receipts showing what you bought and when" ], "answer": "yes", "mistake": "Lumping a printer or a desk in with supplies. Things that last well over a year are equipment, with their own rules." }, { "slug": "uniforms", "name": "Work clothes and uniforms", "category": "home", "aliases": [ "clothing", "clothes", "uniform", "work clothes", "wardrobe", "protective gear", "safety boots", "scrubs", "costume", "suit", "shoes", "outfit", "work boots" ], "verdict": "depends", "percent": null, "rule": "Clothing is deductible only if your work requires it and it isn't suitable for ordinary street wear, such as protective gear or a uniform you wouldn't wear outside work. Everyday clothes are personal, even if you only wear them for work.", "limits": "No dollar limit. The test is objective: if the item could be worn as ordinary street clothing, it doesn't qualify, however you actually use it.", "records": "Receipts, plus a note of why the item is required for your work and not suitable for everyday wear (photos help).", "applies_to": "Self-employed people.", "source_url": "https://www.irs.gov/pub/irs-tege/FSLG_Directive_Tax_Treatment_of_Uniforms.pdf", "source_title": "IRS Federal, State and Local Governments directive: Tax treatment of uniforms (2015)", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" }, { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "shirt", "plain": "Only if your work requires it and it isn't something you could wear as everyday clothing, like protective gear, scrubs or a uniform you wouldn't wear outside work. Regular clothes don't count, even if you only wear them for work.", "example": "An electrician's safety boots and protective gloves count. A stylist's black outfits for the salon don't, because they could be worn anywhere.", "keep": [ "Receipts", "A note of why your work requires it (photos help)" ], "answer": "no", "mistake": "Writing off clothes you could wear outside work, like a suit or black pants, even if you only wear them for work." }, { "slug": "mileage", "name": "Car mileage (standard rate)", "category": "vehicle", "aliases": [ "car", "mileage", "miles", "driving", "auto", "vehicle", "uber driver", "standard mileage rate", "truck" ], "verdict": "partly", "percent": null, "rule": "Deduct your business miles times the IRS standard mileage rate instead of tracking actual car costs. Business miles are trips to clients, between work locations and for business errands, never the commute.", "limits": "2026 business rate: 72.5 cents a mile for Jan. 1 to June 30 and 76 cents a mile for July 1 to Dec. 31 (2025: 70 cents). You must choose the standard rate in the first year you use a car you own for business; with five or more cars used at the same time you can't use it. Business parking and tolls are deductible on top.", "records": "A mileage log kept as you go: date, destination, business purpose and miles for each trip, plus total miles for the year and odometer readings.", "applies_to": "Self-employed people who own or lease the car. W-2 employees generally can't deduct unreimbursed car costs.", "source_url": "https://www.irs.gov/tax-professionals/standard-mileage-rates", "source_title": "IRS: Standard mileage rates", "also": [ { "title": "IRS Topic no. 510, Business use of car", "url": "https://www.irs.gov/taxtopics/tc510" }, { "title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "url": "https://www.irs.gov/publications/p463" } ], "tools": [ "/tools/mileage-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "car", "plain": "Yes for business driving, never for your commute. The easy way: multiply your business miles by the IRS rate, 72.5 cents a mile for January to June 2026 and 76 cents from July to December. Business parking and tolls count on top.", "example": "Tom, a handyman, drives 4,000 business miles to clients and supply stores between January and June. That's 4,000 × $0.725 = $2,900.", "keep": [ "A mileage log kept as you go: date, where, why and how many miles", "Your odometer reading at the start and end of the year" ], "answer": "partly", "mistake": "Counting the drive from home to your regular shop or office. That's commuting, and it never counts." }, { "slug": "vehicle-actual-expenses", "name": "Car expenses (actual costs)", "category": "vehicle", "aliases": [ "car", "gas", "fuel", "car insurance", "car repairs", "oil change", "tires", "car lease", "car payment", "depreciation car", "registration", "gas for car", "car wash" ], "verdict": "partly", "percent": null, "rule": "Instead of the standard rate, you can deduct the business share of what the car actually costs: gas, oil, repairs, tires, insurance, registration, licenses and depreciation or lease payments. If you also drive it personally, only the business-use percentage counts.", "limits": "Business-use percentage = business miles divided by total miles. Depreciation is subject to the yearly limits for passenger cars; a heavy SUV's Section 179 deduction is capped at $32,000 for tax years beginning in 2026 ($31,300 in 2025).", "records": "Every receipt for car costs, the purchase or lease papers, and a mileage log showing business and total miles.", "applies_to": "Self-employed people. W-2 employees generally can't deduct unreimbursed car costs.", "source_url": "https://www.irs.gov/taxtopics/tc510", "source_title": "IRS Topic no. 510, Business use of car", "also": [ { "title": "IRS Publication 946 (2025), How To Depreciate Property", "url": "https://www.irs.gov/publications/p946" }, { "title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "url": "https://www.irs.gov/publications/p463" } ], "tools": [ "/tools/mileage-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "fuel", "plain": "Instead of the mileage rate, you can write off the work share of what your car really costs: gas, repairs, tires, insurance, registration, and depreciation or lease payments. If 70% of your miles are for work, 70% of those costs count.", "example": "Ana drove 10,000 miles this year, 7,000 of them for her cleaning business. With $6,000 in car costs, 70% counts: $4,200.", "keep": [ "Every car receipt: gas, repairs, insurance", "Your purchase or lease papers", "A mileage log with work miles and total miles" ], "answer": "partly", "mistake": "Writing off 100% of a car you also drive personally, with no mileage log to back up your work percentage." }, { "slug": "parking-tolls", "name": "Parking and tolls", "category": "vehicle", "aliases": [ "parking", "tolls", "ez pass", "e-zpass", "parking meter", "garage" ], "verdict": "deductible", "percent": 100, "rule": "Parking fees and tolls for business trips are deductible on top of either the standard mileage rate or actual expenses.", "limits": "Parking at your own regular place of business is a commuting cost and isn't deductible.", "records": "Receipts or toll statements, matched to trips in your mileage log.", "applies_to": "Self-employed people; employees only in limited cases.", "source_url": "https://www.irs.gov/taxtopics/tc510", "source_title": "IRS Topic no. 510, Business use of car", "also": [ { "title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "url": "https://www.irs.gov/publications/p463" } ], "tools": [ "/tools/mileage-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "parking", "plain": "Yes. Parking and tolls on business trips count, on top of mileage or actual car costs. Parking at your own regular workplace doesn't, because that's commuting.", "example": "Visiting a client downtown, Raj pays $18 to park and $6 in tolls. Both count.", "keep": [ "Receipts or toll statements", "A matching note in your mileage log" ], "answer": "yes", "mistake": "Writing off the monthly spot at your own office or shop. That's part of your commute." }, { "slug": "business-travel", "name": "Business travel (flights, hotels)", "category": "vehicle", "aliases": [ "travel", "flight", "airfare", "hotel", "lodging", "airbnb", "train", "trip", "conference travel", "rental car", "uber", "taxi", "lyft", "vacation work trip" ], "verdict": "deductible", "percent": null, "rule": "The normal, needed costs of traveling away from your tax home overnight for business are deductible: transportation, lodging, taxis or rideshare at the destination, baggage, laundry and business calls. Meals on the trip are 50% deductible.", "limits": "The trip has to take you away from your tax home (the general area of your main place of business) longer than a normal workday, needing sleep or rest. A trip that is mainly personal is a personal expense.", "records": "Receipts for lodging and anything $75 or more, plus the dates, destination and business purpose of the trip.", "applies_to": "Self-employed people. W-2 employees generally can't deduct unreimbursed travel.", "source_url": "https://www.irs.gov/taxtopics/tc511", "source_title": "IRS Topic no. 511, Business travel expenses", "also": [ { "title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "url": "https://www.irs.gov/publications/p463" }, { "title": "26 CFR § 1.274-5, Substantiation requirements", "url": "https://www.law.cornell.edu/cfr/text/26/1.274-5" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "plane", "plain": "Yes, when work takes you away from home overnight: flights, hotels, rides and taxis there, baggage and laundry. Meals on the trip count at half. A trip that's mainly a vacation doesn't count.", "example": "A photographer flies to Chicago for a three-day wedding shoot. Her flight, hotel and rides count, and her meals count at half.", "keep": [ "Hotel receipts and any receipt of $75 or more", "The dates, where you went and the business reason" ], "answer": "yes", "mistake": "Writing off a family vacation because you took a few work calls. The trip has to be mainly for business." }, { "slug": "travel-meals", "name": "Meals while traveling", "category": "vehicle", "aliases": [ "travel meals", "per diem", "meals on trip", "food on business trip", "standard meal allowance" ], "verdict": "partly", "percent": 50, "rule": "Meals while you're traveling away from home on business are generally 50% deductible. You can deduct actual costs or use the standard meal allowance for the area instead of keeping meal receipts.", "limits": "50% of the cost (80% for workers subject to Department of Transportation hours-of-service limits, such as long-haul truck drivers).", "records": "Receipts if you deduct actual costs; with the standard meal allowance, records of the time, place and business purpose of the trip.", "applies_to": "Self-employed people traveling overnight for business.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" }, { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "meal", "plain": "Half. Meals while you're away overnight on business count at 50%. Keep your receipts, or use the IRS daily meal allowance for the area instead.", "example": "On a two-day trip to a trade show, Kim spends $120 on meals. She can write off $60.", "keep": [ "Meal receipts, or with the daily allowance, the dates, place and reason for the trip" ], "answer": "partly", "mistake": "Writing off 100% of meals on the road. They count at half." }, { "slug": "meals", "name": "Business meals", "category": "meals", "aliases": [ "meals", "meal", "lunch", "dinner", "coffee", "client lunch", "restaurant", "food", "business lunch", "takeout" ], "verdict": "partly", "percent": 50, "rule": "A meal with a client, customer or business contact is generally 50% deductible if it isn't lavish, you (or an employee) are there, and it has a business purpose.", "limits": "50% of the cost, including tax and tip. Food and drinks at an entertainment event count only if bought separately or listed separately on the bill.", "records": "Receipt (required for $75 or more), plus a note of the date, place, who attended, their business relationship to you and what you discussed. Write it down at or near the time.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" }, { "title": "26 CFR § 1.274-5, Substantiation requirements", "url": "https://www.law.cornell.edu/cfr/text/26/1.274-5" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "meal", "plain": "Half. A meal with a client, customer or business contact counts at 50%, tax and tip included, as long as you're there, it isn't over the top, and there's a real business reason.", "example": "Lisa, a realtor, takes a client to lunch for $60 with tip. She can write off $30.", "keep": [ "The receipt (a must for $75 or more)", "Who you ate with, how you know them and what you talked about", "Jot it down the same day" ], "answer": "partly", "mistake": "Keeping the receipt but not noting who you ate with and why. The receipt alone doesn't show the business reason." }, { "slug": "entertainment", "name": "Entertainment (tickets, golf, shows)", "category": "meals", "aliases": [ "entertainment", "tickets", "sports tickets", "concert", "golf", "game", "show", "client entertainment", "box seats" ], "verdict": "not", "percent": 0, "rule": "Entertainment is not deductible, even with a clear business purpose. That covers tickets to games and shows, golf, and similar outings with clients or prospects.", "limits": "0%. Food and drinks bought separately at an entertainment event, or listed separately on the bill, can still be a 50% business meal.", "records": "Keep records anyway if a separately billed meal was involved.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "ticket", "plain": "No. Game tickets, golf, concerts and shows don't count, even with a client and a real business reason. Food bought separately at the event can still count as a half-off business meal.", "example": "Taking a client to a ball game: the $200 tickets don't count. The $40 of food bought separately counts at half, so $20.", "keep": [ "Receipts for any food bought separately" ], "answer": "no", "mistake": "Writing off game tickets or a round of golf because a client came along. Entertainment doesn't count, even with a real business reason." }, { "slug": "employee-parties", "name": "Staff parties and team events", "category": "meals", "aliases": [ "holiday party", "office party", "team outing", "company picnic", "staff party", "team building", "christmas party" ], "verdict": "deductible", "percent": 100, "rule": "Recreational and social events mainly for your employees, such as a holiday party or summer picnic, are an exception to the entertainment and 50% meal limits.", "limits": "100%, as long as the event is mainly for employees in general rather than for highly compensated employees only.", "records": "Invoices and receipts, the date, and a guest list showing it was for staff.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "party", "plain": "Yes, in full. A holiday party or summer picnic mainly for your team counts 100%, not just half, as long as it's for your staff in general and not only your top earners.", "example": "A salon owner throws a $1,200 holiday dinner for her eight stylists. All of it counts.", "keep": [ "Invoices and receipts", "The date and a guest list showing it was for staff" ], "answer": "yes", "mistake": "Counting it at half like a client meal, or inviting only your top earners. A party for your staff in general counts in full." }, { "slug": "employee-meals", "name": "Snacks and meals for employees at work", "category": "meals", "aliases": [ "office snacks", "employee meals", "cafeteria", "break room", "staff lunch", "catered lunch", "coffee for office" ], "verdict": "not", "percent": 0, "rule": "Starting in 2026, an employer can no longer deduct the cost of food and drinks provided to employees through an on-site eating facility, as small (de minimis) perks, or for the employer's convenience. There are narrow exceptions in the law.", "limits": "0% for amounts paid or incurred after Dec. 31, 2025. Staff parties and other recreational events mainly for employees follow a different rule.", "records": "Invoices, plus what the food was for, so the right rule can be applied.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/publications/p15b", "source_title": "IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "coffee", "plain": "No, starting in 2026. Snacks, coffee and meals you provide to employees at work are no longer deductible, apart from a few narrow exceptions. Staff parties follow a different rule.", "example": "The break-room coffee and snacks for your team don't count from 2026 on.", "keep": [ "Invoices, plus what the food was for, so the right rule is used" ], "answer": "no", "mistake": "Still writing off office snacks and catered team lunches out of habit. That stopped counting in 2026." }, { "slug": "cell-phone", "name": "Cell phone and phone service", "category": "tech", "aliases": [ "phone", "cell phone", "mobile", "iphone", "phone bill", "landline", "smartphone", "verizon", "t-mobile", "at&t", "cell", "phone case" ], "verdict": "partly", "percent": null, "rule": "The business share of your cell phone plan is deductible. For a home landline, the basic charge for the first line into your home is personal, but business long-distance calls and a second line used only for business are deductible.", "limits": "Only the business-use percentage of a mixed-use phone. The phone itself is equipment: deduct it under the $2,500 small-purchase rule (de minimis safe harbor), Section 179 or depreciation.", "records": "Phone bills, plus a reasonable basis for your business-use percentage (for example, a sample month of itemized usage).", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p587", "source_title": "IRS Publication 587 (2025), Business Use of Your Home", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "phone", "plain": "Partly. The work share of your phone bill counts. If you use your phone 60% for work, you can write off 60% of the bill. The phone itself is equipment and is written off separately.", "example": "Mia's phone bill is $80 a month and about 60% of her use is for her design clients. That's $48 a month, or $576 a year.", "keep": [ "Your phone bills", "A sample month showing how much is work, to back up your percentage" ], "answer": "partly", "mistake": "Writing off 100% of a phone you also use for personal calls and apps." }, { "slug": "internet", "name": "Internet service", "category": "tech", "aliases": [ "internet", "wifi", "wi-fi", "broadband", "isp", "comcast", "fios", "hotspot" ], "verdict": "partly", "percent": null, "rule": "Internet service for a business location is deductible. At home, only the business share counts, either as part of your home office expenses or based on your business use.", "limits": "Only the business-use percentage when you also use it personally.", "records": "Monthly bills and how you worked out the business percentage.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Publication 587 (2025), Business Use of Your Home", "url": "https://www.irs.gov/publications/p587" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "wifi", "plain": "Partly. At a business location, all of it counts. At home, only the work share does.", "example": "Omar pays $70 a month for home internet and uses about half of it for his bookkeeping business, so about $35 a month counts.", "keep": [ "Monthly bills", "How you worked out your work percentage" ], "answer": "partly", "mistake": "Writing off the whole home internet bill when the whole family uses it too." }, { "slug": "software-subscriptions", "name": "Software and subscriptions", "category": "tech", "aliases": [ "software", "subscription", "saas", "quickbooks", "adobe", "microsoft 365", "google workspace", "zoom", "canva", "apps", "cloud storage", "chatgpt", "app", "subscription app", "website hosting", "domain" ], "verdict": "deductible", "percent": null, "rule": "Monthly or annual subscriptions to software and online services you use for your business are ordinary business expenses. Software you buy outright and use for more than a year is generally depreciated, though off-the-shelf software can qualify for Section 179 expensing.", "limits": "Only the business share if you also use the subscription personally.", "records": "Invoices or receipts, and the account showing it's used for the business.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 U.S.C. § 179, Election to expense certain depreciable business assets", "url": "https://www.law.cornell.edu/uscode/text/26/179" }, { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "app", "plain": "Yes. Monthly or yearly subscriptions you use for your business, like QuickBooks, Canva, Zoom or Adobe, count. If you also use one personally, only the business share counts.", "example": "Jen pays $15 a month for a design app she uses for her Etsy shop. That's $180 a year in write-offs.", "keep": [ "Invoices or receipts", "The account showing it's used for the business" ], "answer": "yes", "mistake": "Mixing personal subscriptions, like streaming or family cloud storage, in with business ones." }, { "slug": "computer", "name": "Laptop or computer", "category": "tech", "aliases": [ "laptop", "computer", "macbook", "pc", "desktop", "ipad", "tablet", "monitor", "printer", "hardware" ], "verdict": "depends", "percent": null, "rule": "A computer used in your business is a business asset. You can deduct it all at once using the small-purchase rule, called the de minimis safe harbor (if $2,500 or less per item or invoice), Section 179 or 100% bonus depreciation, or depreciate it over several years. If you also use it personally, only the business share counts.", "limits": "Since 2018 computers are no longer \"listed property,\" but personal use still reduces the deduction. If business use later falls so it's no longer mainly for business, part of a Section 179 deduction has to be paid back as income (recapture).", "records": "The receipt or invoice, the date you started using it for business, and a record of business versus personal use.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p946", "source_title": "IRS Publication 946 (2025), How To Depreciate Property", "also": [ { "title": "26 U.S.C. § 280F, Limitation on depreciation for luxury automobiles; listed property", "url": "https://www.law.cornell.edu/uscode/text/26/280F" }, { "title": "IRS: Tangible property final regulations (FAQs)", "url": "https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations" }, { "title": "26 U.S.C. § 179, Election to expense certain depreciable business assets", "url": "https://www.law.cornell.edu/uscode/text/26/179" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "laptop", "plain": "Usually yes, for the share you use for work. You can often write off a work laptop all at once (for example, if it costs $2,500 or less), or spread it over a few years.", "example": "Chris buys an $1,800 laptop and uses it 90% for his consulting work. He can write off 90%, or $1,620.", "keep": [ "The receipt", "The date you started using it for work", "A rough record of work versus personal use" ], "answer": "yes", "mistake": "Writing off 100% of a laptop the family also uses. Only the work share counts." }, { "slug": "section-179", "name": "Equipment and machinery (Section 179)", "category": "equip", "aliases": [ "section 179", "equipment", "machinery", "furniture", "office furniture", "desk", "chair", "expensing", "179" ], "verdict": "deductible", "percent": null, "rule": "Section 179 lets you deduct the cost of qualifying business equipment, furniture and off-the-shelf software in the year you start using it, instead of depreciating it over several years.", "limits": "Tax years beginning in 2026: up to $2,560,000, reduced dollar for dollar once qualifying purchases exceed $4,090,000 (2025: $2,500,000 and $4,000,000). Heavy SUVs are capped at $32,000. The deduction can't exceed your taxable income from active business; the excess carries forward.", "records": "Invoices, the placed-in-service date, business-use percentage, and Form 4562.", "applies_to": "Businesses of any type that buy qualifying property for active business use.", "source_url": "https://www.irs.gov/publications/p946", "source_title": "IRS Publication 946 (2025), How To Depreciate Property", "also": [ { "title": "IRS Rev. Proc. 2025-32: 2026 inflation-adjusted figures", "url": "https://www.irs.gov/pub/irs-drop/rp-25-32.pdf" }, { "title": "26 U.S.C. § 179, Election to expense certain depreciable business assets", "url": "https://www.law.cornell.edu/uscode/text/26/179" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "chair", "plain": "Yes. Furniture, machines and other equipment for your business can usually be written off in full the year you start using it, instead of over several years. The write-off can't be more than your business income; any extra moves to next year.", "example": "A landscaper buys a $12,000 mower and starts using it in May. If his business income covers it, he can write off all $12,000 this year.", "keep": [ "Invoices", "The date you started using it", "How much you use it for work" ], "answer": "yes", "mistake": "Expecting it to create a loss. It can't be more than your business income; the extra moves to next year." }, { "slug": "bonus-depreciation", "name": "Bonus depreciation", "category": "equip", "aliases": [ "bonus depreciation", "special depreciation", "first year depreciation", "100% depreciation", "depreciation" ], "verdict": "deductible", "percent": 100, "rule": "Qualified property acquired and placed in service after Jan. 19, 2025 can be written off 100% in the first year through the special depreciation allowance, now permanent under the 2025 tax law (P.L. 119-21). You can elect out, or elect a smaller 40% allowance for the first tax year ending after Jan. 19, 2025.", "limits": "100% for property acquired after Jan. 19, 2025. Property acquired before Jan. 20, 2025 and placed in service in 2025 is limited to 40% (60% for certain long-production property and aircraft).", "records": "Purchase contracts showing the acquisition date, invoices, placed-in-service date and Form 4562.", "applies_to": "Businesses of any type.", "source_url": "https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill", "source_title": "IRS IR-2026-06: Guidance on the 100% additional first-year depreciation deduction (Notice 2026-11)", "also": [ { "title": "IRS Publication 946 (2025), How To Depreciate Property", "url": "https://www.irs.gov/publications/p946" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "chart", "plain": "Yes. Most business equipment bought after Jan. 19, 2025 can be written off 100% in the first year. You can also choose to spread it out instead.", "example": "A food truck owner buys $20,000 of kitchen equipment in 2026. She can write off all of it on her 2026 return.", "keep": [ "The purchase contract showing the date you bought it", "Invoices", "The date you started using it" ], "answer": "yes", "mistake": "Claiming it for something you bought but haven't started using yet. It counts from the year you start using it in the business." }, { "slug": "de-minimis-safe-harbor", "name": "Small equipment purchases ($2,500 or less)", "category": "equip", "aliases": [ "de minimis", "safe harbor", "small purchases", "under 2500", "cheap equipment", "small tools", "2,500" ], "verdict": "deductible", "percent": null, "rule": "With the small-purchase election (the de minimis safe harbor) you can deduct, rather than depreciate, tangible items that cost $2,500 or less per invoice or item. You make the election each year with a statement attached to your timely filed return.", "limits": "$2,500 per invoice or item ($5,000 if you have an applicable financial statement). Items above the limit are depreciated or expensed under Section 179 or bonus depreciation.", "records": "Invoices and the election statement filed with your return.", "applies_to": "Businesses of any type, including sole proprietors.", "source_url": "https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations", "source_title": "IRS: Tangible property final regulations (FAQs)", "also": [ { "title": "IRS Publication 946 (2025), How To Depreciate Property", "url": "https://www.irs.gov/publications/p946" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "tag", "plain": "Yes. Items that cost $2,500 or less each (or per invoice) can be written off right away instead of over several years, if you choose this rule each year on your tax return.", "example": "Tia buys a $1,200 espresso machine for her café. She can write off the full $1,200 this year.", "keep": [ "Invoices", "The election statement filed with your return (your preparer adds it)" ], "answer": "yes", "mistake": "Forgetting to make the choice on your return. It has to be made each year, or a $2,000 item may have to be spread out." }, { "slug": "tools-equipment", "name": "Tools and small equipment", "category": "equip", "aliases": [ "tools", "power tools", "camera", "equipment", "instruments", "supplies" ], "verdict": "deductible", "percent": null, "rule": "Tools and professional instruments you normally use up within a year can be deducted when bought. Longer-lasting tools are depreciated, unless you deduct them right away under the $2,500 small-purchase rule or Section 179.", "limits": "Only the business share if you also use them personally.", "records": "Receipts or invoices and, for larger items, the date you started using them.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS: Tangible property final regulations (FAQs)", "url": "https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "tool", "plain": "Yes. Tools you use up within a year count when you buy them. Bigger, longer-lasting tools are spread over a few years, though many can be written off right away under the small-purchase or equipment rules. If you also use them personally, only the work share counts.", "example": "A plumber's drill bits and saw blades count right away. His new $900 pipe threader can usually be written off this year too.", "keep": [ "Receipts or invoices", "For bigger items, the date you started using them" ], "answer": "yes", "mistake": "Writing off tools you mostly use at home. Only the work share counts." }, { "slug": "repairs-vs-improvements", "name": "Repairs vs. improvements", "category": "equip", "aliases": [ "repairs", "maintenance", "improvements", "renovation", "remodel", "fix", "roof", "hvac", "capital improvement" ], "verdict": "depends", "percent": null, "rule": "Incidental repairs and routine maintenance that keep property in normal working order are deductible. Work that betters, restores or adapts the property to a new use is an improvement: it's capitalized and depreciated.", "limits": "Small taxpayer safe harbor: buildings with an unadjusted basis of $1 million or less, if your average gross receipts are $10 million or less, can deduct repairs, maintenance and improvements up to the lesser of $10,000 or 2% of the building's basis.", "records": "Contractor invoices describing the work done, before-and-after photos, and any safe harbor election statements.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations", "source_title": "IRS: Tangible property final regulations (FAQs)", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "hammer", "plain": "Fixing something to keep it working counts right away. Making it better, bigger or fit for a new use is an improvement, written off over several years. Smaller businesses may be able to write off repairs and improvements on a building right away, up to the lesser of $10,000 or 2% of the building's cost.", "example": "Patching a leak in the salon's roof: write it off now. Replacing the whole roof: that's an improvement, written off over time.", "keep": [ "Contractor invoices describing the work", "Before-and-after photos" ], "answer": "yes", "mistake": "Writing off a full renovation as a \"repair.\" If it makes the property better, bigger or fit for a new use, it's an improvement." }, { "slug": "contractors", "name": "Contractor and freelancer payments", "category": "people", "aliases": [ "contractor", "freelancer", "1099", "1099-nec", "subcontractor", "consultant", "virtual assistant", "contract labor", "upwork", "fiverr" ], "verdict": "deductible", "percent": 100, "rule": "Payments to independent contractors for work done for your business are deductible as contract labor.", "limits": "No deduction limit. For payments made in 2026, you generally must file Form 1099-NEC for anyone you paid $2,000 or more for services (it was $600 for 2025 payments).", "records": "A signed Form W-9 from each contractor, invoices, proof of payment and copies of the 1099s you filed.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Instructions for Forms 1099-MISC and 1099-NEC", "url": "https://www.irs.gov/instructions/i1099mec" } ], "tools": [ "/tools/do-i-need-to-send-a-1099/", "/tools/1099-contractor-tracker/", "/tools/w-9-request-email-template/" ], "checked": "2026-10-21T23:55-04:00", "icon": "handshake", "plain": "Yes. What you pay freelancers and contractors for work on your business counts in full. If you pay someone $2,000 or more for services in 2026, you'll usually need to send them a 1099-NEC.", "example": "Nina pays a freelance web designer $2,400 to redo her site. All of it counts, and she sends the designer a 1099-NEC.", "keep": [ "A W-9 from each contractor", "Invoices and proof you paid", "Copies of the 1099s you file" ], "answer": "yes", "mistake": "Paying a contractor without getting a W-9 first. Ask for it before the first payment so the 1099 is easy at year-end." }, { "slug": "wages", "name": "Employee wages", "category": "people", "aliases": [ "wages", "salary", "payroll", "employees", "staff", "bonus", "w-2", "pay" ], "verdict": "deductible", "percent": 100, "rule": "Reasonable wages, salaries and bonuses you pay employees for work actually done are deductible. As a sole proprietor, what you pay yourself (owner's draws) is not a deduction.", "limits": "Pay must be reasonable for the services. Reduce the deduction by certain employment credits you claim, such as the work opportunity credit.", "records": "Payroll records, Forms W-2 and W-4, timesheets and payroll tax filings. Keep employment tax records at least 4 years.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" }, { "title": "IRS Topic no. 305, Recordkeeping", "url": "https://www.irs.gov/taxtopics/tc305" } ], "tools": [ "/tools/paycheck-tax-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "cash", "plain": "Yes. Reasonable pay, salaries and bonuses for your employees count. What you take out for yourself as a sole owner (owner's draws) doesn't.", "example": "A salon pays its receptionist $32,000 this year, and all of it counts. The money the owner takes out for herself doesn't.", "keep": [ "Payroll records and W-2s", "Timesheets", "Payroll tax filings, kept at least 4 years" ], "answer": "yes", "mistake": "Writing off what you take out for yourself as a sole owner as \"wages.\" Owner's draws aren't an expense." }, { "slug": "payroll-taxes", "name": "Employer payroll taxes", "category": "people", "aliases": [ "payroll taxes", "fica", "employer social security", "futa", "suta", "unemployment tax", "medicare tax employer" ], "verdict": "deductible", "percent": 100, "rule": "The employer's share of Social Security and Medicare taxes, federal unemployment tax (FUTA) and state unemployment contributions are deductible business taxes.", "limits": "Only your share as the employer. Taxes you withhold from employees' pay are part of their wages, not a separate deduction.", "records": "Forms 941 and 940, state payroll filings and deposit confirmations.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Topic no. 305, Recordkeeping", "url": "https://www.irs.gov/taxtopics/tc305" } ], "tools": [ "/tools/paycheck-tax-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "receipt", "plain": "Yes. Your share as the employer of Social Security, Medicare and unemployment taxes counts. The taxes you hold back from employees' paychecks are part of their pay, not an extra write-off.", "example": "Your payroll report lists \"employer taxes\" each payday. Those count. The amounts taken out of your employees' checks are already part of their wages.", "keep": [ "Payroll tax forms (941 and 940) and state filings", "Deposit confirmations" ], "answer": "yes", "mistake": "Writing off the taxes withheld from employees' pay a second time. They're already part of the wages you wrote off." }, { "slug": "employee-benefits", "name": "Employee benefit programs", "category": "people", "aliases": [ "benefits", "health insurance employees", "group health", "group-term life", "dependent care", "employee benefits", "educational assistance" ], "verdict": "deductible", "percent": null, "rule": "Contributions to employee benefit programs, such as accident and health plans, group-term life insurance and dependent care assistance, are deductible.", "limits": "Reduce the deduction by any small employer health insurance credit. Benefits for yourself as a self-employed person don't go here. Employer-paid education assistance is excludable for employees up to $5,250 a year.", "records": "Plan documents, invoices and payment records, and who was covered.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits", "url": "https://www.irs.gov/publications/p15b" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "heart", "plain": "Yes. What you pay toward your employees' health plans, group life insurance and dependent care help counts. Your own benefits as a self-employed owner don't go here.", "example": "A small landscaping company pays $400 a month toward each worker's health plan. That counts.", "keep": [ "Plan documents", "Invoices and payment records", "A list of who was covered" ], "answer": "yes", "mistake": "Putting your own health insurance here. As a self-employed owner, yours follows different rules." }, { "slug": "achievement-awards", "name": "Employee awards and holiday gifts", "category": "people", "aliases": [ "employee gift", "employee award", "length of service", "safety award", "holiday gift employees", "gift cards employees" ], "verdict": "deductible", "percent": null, "rule": "Tangible awards for length of service or safety, given as part of a meaningful presentation, are deductible within limits. Occasional low-value holiday gifts (not cash) can count as a small perk that isn't taxed (a de minimis fringe benefit).", "limits": "Achievement awards: up to $400 per employee a year, or $1,600 under a qualified plan. Cash, gift cards and similar items never count as achievement awards or small untaxed gifts; they are taxable wages.", "records": "What was given, to whom, its cost, the reason for the award and the presentation date.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/publications/p15b", "source_title": "IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "award", "plain": "Yes, within limits. Awards for years of service or safety (real items, not cash) count up to $400 per employee a year. Small, low-value holiday gifts count too. Cash and gift cards are treated as wages.", "example": "A contractor gives a worker a $300 watch at a team dinner for ten years of service, and it counts as an award. A $100 gift card would be taxable wages instead.", "keep": [ "What you gave, to whom and what it cost", "The reason and the date you gave it" ], "answer": "yes", "mistake": "Handing out gift cards and calling them awards. Cash and gift cards are taxable wages." }, { "slug": "business-insurance", "name": "Business insurance", "category": "insurance", "aliases": [ "insurance", "liability insurance", "general liability", "professional liability", "e&o", "malpractice", "workers comp", "property insurance", "cyber insurance", "business owners policy" ], "verdict": "deductible", "percent": 100, "rule": "Premiums for business insurance, such as general or professional liability, property and workers' compensation coverage, are deductible.", "limits": "Employee health coverage is an employee benefit program, and your own health insurance follows the self-employed health insurance rules.", "records": "Policy declarations pages, invoices and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 CFR § 1.162-1, Business expenses", "url": "https://www.law.cornell.edu/cfr/text/26/1.162-1" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "umbrella", "plain": "Yes. Insurance for your business, like general or professional liability, property or workers' comp coverage, counts in full. Health insurance follows its own rules.", "example": "A dog groomer's $600-a-year liability policy counts in full.", "keep": [ "The policy's declarations page", "Invoices and proof you paid" ], "answer": "yes", "mistake": "Lumping health or life insurance on yourself in with business insurance. Those follow their own rules." }, { "slug": "self-employed-health-insurance", "name": "Health insurance (self-employed)", "category": "insurance", "aliases": [ "health insurance", "medical insurance", "dental insurance", "vision insurance", "long-term care insurance", "medicare premiums", "form 7206" ], "verdict": "depends", "percent": null, "rule": "If you're self-employed with a profit, you can deduct medical, dental, vision and qualified long-term care premiums for yourself, your spouse and dependents (and a child under 27). It's an adjustment on Schedule 1, not a Schedule C expense, and the plan must be established under your business.", "limits": "Can't exceed your net earnings from the business. No deduction for any month you (or your spouse) were eligible for a subsidized employer health plan, even if you didn't enroll. Figured on Form 7206.", "records": "Premium statements, proof of payment and which months you had coverage and employer-plan eligibility.", "applies_to": "Sole proprietors, partners with self-employment earnings and more-than-2% S corporation shareholders (through their W-2 wages).", "source_url": "https://www.irs.gov/instructions/i7206", "source_title": "IRS Instructions for Form 7206 (2025), Self-Employed Health Insurance Deduction", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [ "/tools/1099-tax-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "health", "plain": "Usually yes, if you're self-employed and your business made a profit. Health, dental, vision and qualified long-term care premiums for you and your family count, on your personal return. Not for any month you or your spouse could have joined an employer's subsidized plan.", "example": "Leo, a freelance writer, pays $450 a month for his own health plan and has no employer plan he could join. If his profit is more than $5,400, all $5,400 counts.", "keep": [ "Premium statements and proof you paid", "Which months you had coverage", "Whether you or your spouse could join an employer plan" ], "answer": "yes", "mistake": "Claiming it for months when you or your spouse could have joined an employer's subsidized plan, even if you didn't sign up." }, { "slug": "life-insurance", "name": "Life insurance premiums", "category": "insurance", "aliases": [ "life insurance", "term life", "key person insurance", "whole life" ], "verdict": "not", "percent": 0, "rule": "You can't deduct premiums on a life insurance policy when you or your business is directly or indirectly a beneficiary. Premiums on your own personal life insurance are personal.", "limits": "Group-term life insurance for employees can be deductible as an employee benefit, but not coverage for yourself as a self-employed person.", "records": "The policy, showing the owner and beneficiaries.", "applies_to": "All taxpayers.", "source_url": "https://www.law.cornell.edu/uscode/text/26/264", "source_title": "26 U.S.C. § 264, Certain amounts paid in connection with insurance contracts", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" }, { "title": "IRS Publication 529 (Rev. 12/2020), Miscellaneous Deductions", "url": "https://www.irs.gov/publications/p529" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "shield", "plain": "No. Life insurance on yourself is personal, and you can't write off premiums when you or your business would get the payout. Group life coverage for employees can count as a benefit.", "example": "Sam's $50-a-month term life policy, with his wife as the beneficiary, is a personal cost.", "keep": [ "The policy, showing who owns it and who gets paid" ], "answer": "no", "mistake": "Writing off your own life insurance because the business pays the premium. It's still personal." }, { "slug": "sep-ira", "name": "SEP-IRA contributions", "category": "retire", "aliases": [ "sep", "sep ira", "sep-ira", "retirement", "simplified employee pension" ], "verdict": "deductible", "percent": null, "rule": "Contributions to a SEP-IRA for yourself are deductible on Schedule 1, not Schedule C; contributions for employees go on Schedule C. You can set up the plan and contribute as late as your return's due date, including extensions.", "limits": "2026: the lesser of 25% of compensation or $72,000 per person (2025: $70,000), with compensation counted up to $360,000 (2025: $350,000). For your own contribution, compensation is net self-employment earnings minus half of SE tax and minus the contribution itself, so the effective rate is lower than 25%.", "records": "Plan document (for example, Form 5305-SEP), contribution confirmations and your calculation of the limit.", "applies_to": "Self-employed people and businesses of any size.", "source_url": "https://www.irs.gov/publications/p560", "source_title": "IRS Publication 560 (2025), Retirement Plans for Small Business", "also": [ { "title": "IRS: 401(k) and profit-sharing plan contribution limits", "url": "https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits" } ], "tools": [ "/tools/1099-tax-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "piggy", "plain": "Yes. Money you put into a SEP-IRA for yourself lowers your taxes, on your personal return. For 2026 the cap is 25% of pay or $72,000, whichever is less, and for the self-employed the math works out a bit lower. You can open and fund it up to your tax deadline, including extensions.", "example": "A consultant with a strong 2026 puts $15,000 into her SEP-IRA in March 2027, before filing. It counts for 2026.", "keep": [ "Plan paperwork (for example, Form 5305-SEP)", "Contribution confirmations", "How you figured your limit" ], "answer": "yes", "mistake": "Assuming you can put in a full 25% of your profit. For the self-employed, the math works out lower." }, { "slug": "solo-401k", "name": "Solo 401(k) contributions", "category": "retire", "aliases": [ "solo 401k", "solo 401(k)", "one-participant 401k", "individual 401k", "self-employed 401k", "401k", "retirement" ], "verdict": "deductible", "percent": null, "rule": "In a one-participant 401(k) you can contribute as both employee (elective deferrals) and employer (profit-sharing). Contributions for yourself are deducted on Schedule 1, not Schedule C.", "limits": "2026: elective deferrals up to $24,500, plus $8,000 catch-up at 50 or older ($11,250 instead at ages 60 to 63). Total employee and employer additions up to $72,000 (more with catch-up). Compensation counted up to $360,000.", "records": "Plan document, deferral elections, contribution confirmations and your limit calculation.", "applies_to": "Self-employed people and owner-only businesses.", "source_url": "https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits", "source_title": "IRS: 401(k) and profit-sharing plan contribution limits", "also": [ { "title": "IRS IR-2025-111: 401(k) limit increases to $24,500 for 2026", "url": "https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500" }, { "title": "IRS Publication 560 (2025), Retirement Plans for Small Business", "url": "https://www.irs.gov/publications/p560" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "piggy", "plain": "Yes. If it's just you, a solo 401(k) lets you save as both the \"employee\" and the \"employer.\" For 2026: up to $24,500 as the employee, plus extra if you're 50 or older, and up to $72,000 in total. You claim it on your personal return.", "example": "A one-person video editing business puts $24,500 into a solo 401(k) as the employee, plus an employer contribution on top, and claims them on the owner's personal return.", "keep": [ "Plan paperwork", "Your contribution elections and confirmations", "How you figured your limit" ], "answer": "yes", "mistake": "Forgetting a day-job 401(k). The $24,500 employee limit covers all your 401(k) plans combined." }, { "slug": "employee-retirement", "name": "Retirement contributions for employees", "category": "retire", "aliases": [ "401k match", "employer match", "profit sharing", "pension", "simple ira", "employee retirement" ], "verdict": "deductible", "percent": null, "rule": "Contributions you make to a retirement plan for the benefit of your employees are deductible on Schedule C. Contributions for yourself go on Schedule 1 instead.", "limits": "Plan limits apply. For 2026, SIMPLE IRA deferrals are up to $17,000 and 401(k) deferrals up to $24,500.", "records": "Plan documents, contribution records and annual plan filings.", "applies_to": "Businesses with employees.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS IR-2025-111: 401(k) limit increases to $24,500 for 2026", "url": "https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500" }, { "title": "IRS Publication 560 (2025), Retirement Plans for Small Business", "url": "https://www.irs.gov/publications/p560" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "piggy", "plain": "Yes. Matches and other contributions you make to your employees' retirement plans count as a business expense.", "example": "A dental office matches 3% of each employee's pay into their 401(k). That match counts.", "keep": [ "Plan documents", "Contribution records", "Yearly plan filings" ], "answer": "yes", "mistake": "Writing off your own contributions here. Yours go on your personal return, not as a business expense." }, { "slug": "legal-professional-fees", "name": "Legal and accounting fees", "category": "pro", "aliases": [ "legal fees", "lawyer", "attorney", "accountant", "bookkeeper", "bookkeeping", "consultant fees", "professional fees", "accounting fees", "tax advisor" ], "verdict": "deductible", "percent": 100, "rule": "Fees for accountants, bookkeepers, attorneys and other professionals that are normal and needed for your business are deductible.", "limits": "Personal legal fees (a will, a divorce) aren't deductible.", "records": "Engagement letters, invoices and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Publication 529 (Rev. 12/2020), Miscellaneous Deductions", "url": "https://www.irs.gov/publications/p529" } ], "tools": [ "/tools/do-i-need-to-send-a-1099/" ], "checked": "2026-10-21T23:55-04:00", "icon": "scale", "plain": "Yes. Fees for accountants, bookkeepers, lawyers and other pros you hire for your business count in full. Personal legal fees, like a will or a divorce, don't.", "example": "Kayla pays a bookkeeper $200 a month and a lawyer $800 to review a client contract. All $3,200 counts.", "keep": [ "Engagement letters", "Invoices and proof you paid" ], "answer": "yes", "mistake": "Running personal legal bills, like a will or a divorce, through the business." }, { "slug": "tax-prep-fees", "name": "Tax preparation fees", "category": "pro", "aliases": [ "tax prep", "tax preparation", "tax return fees", "turbotax", "tax software", "tax advice" ], "verdict": "partly", "percent": null, "rule": "Tax preparation and tax advice fees related to your business are deductible on Schedule C. The part of the fee for the rest of your personal return isn't a business expense.", "limits": "Ask your preparer to split the invoice between business schedules and the personal return.", "records": "The preparer's invoice showing the business portion, and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs; businesses deduct the cost of their own returns.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "calc", "plain": "Partly. The cost of preparing the business part of your return counts. The part for the rest of your personal return doesn't, so ask your preparer to split the bill.", "example": "Your preparer charges $600: $400 for the business schedules and $200 for the rest. You write off $400.", "keep": [ "The preparer's invoice showing the business part", "Proof you paid" ], "answer": "partly", "mistake": "Writing off the whole tax prep bill. Only the business part counts." }, { "slug": "professional-dues", "name": "Professional and trade association dues", "category": "pro", "aliases": [ "dues", "membership", "trade association", "professional association", "chamber of commerce", "bar dues", "license renewal", "professional body" ], "verdict": "deductible", "percent": null, "rule": "Dues to professional organizations, trade associations, business leagues, chambers of commerce, real estate boards and civic or public service groups are deductible, as long as the group's main purpose isn't entertainment.", "limits": "The part of dues a tax-exempt group tells you goes to lobbying or political activity isn't deductible. Social, athletic and similar clubs are never deductible.", "records": "Membership invoices and any statement from the group showing the nondeductible lobbying share.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.law.cornell.edu/cfr/text/26/1.274-2", "source_title": "26 CFR § 1.274-2, Entertainment expenses (club dues)", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "badge", "plain": "Yes. Dues for professional groups, trade associations and the chamber of commerce count. Social clubs, golf clubs and gyms never do.", "example": "A home inspector's yearly trade association dues count.", "keep": [ "Membership invoices", "Any note from the group about the share spent on lobbying, which doesn't count" ], "answer": "yes", "mistake": "Filing a gym or country club membership under \"dues.\" Those never count." }, { "slug": "advertising", "name": "Advertising and marketing", "category": "marketing", "aliases": [ "advertising", "ads", "marketing", "google ads", "facebook ads", "instagram ads", "business cards", "flyers", "sponsorship", "seo", "promotion", "website ads", "website", "logo design", "social media ads" ], "verdict": "deductible", "percent": 100, "rule": "Advertising and other selling expenses, such as online ads, print ads, business cards, flyers and promotional campaigns, are ordinary business expenses.", "limits": "No dollar limit. Political advertising and lobbying are not deductible.", "records": "Invoices, ad platform receipts and statements.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.law.cornell.edu/cfr/text/26/1.162-1", "source_title": "26 CFR § 1.162-1, Business expenses", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "megaphone", "plain": "Yes. Ads, business cards, flyers, Google or Instagram ads and other marketing count in full.", "example": "An Etsy seller spends $90 a month on ads. That's $1,080 a year in write-offs.", "keep": [ "Invoices and ad platform receipts" ], "answer": "yes", "mistake": "Calling a political ad or a campaign donation \"advertising.\" Neither counts." }, { "slug": "client-gifts", "name": "Gifts to clients", "category": "marketing", "aliases": [ "gifts", "client gifts", "holiday gifts", "gift basket", "thank you gift", "customer gifts", "gift", "present" ], "verdict": "partly", "percent": null, "rule": "Business gifts to clients, customers and referral partners are deductible, but only up to $25 per person per year.", "limits": "$25 per recipient per year. Incidental costs such as engraving, packaging, gift wrapping, insuring and mailing don't count toward the $25.", "records": "Receipts, the date, a description and cost of each gift, the recipient's name and their business relationship to you.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "gift", "plain": "Partly: up to $25 per person per year. Wrapping, engraving and shipping don't count toward the $25.", "example": "Sending a client a $60 gift basket: $25 counts, plus the $12 shipping.", "keep": [ "Receipts", "Who got it, what it was, the cost and the date", "How they're connected to your business" ], "answer": "partly", "mistake": "Writing off the full price of a pricey gift. Only $25 per person per year counts." }, { "slug": "promotional-items", "name": "Branded promotional items", "category": "marketing", "aliases": [ "swag", "promotional items", "branded pens", "logo items", "giveaways", "merch", "tote bags" ], "verdict": "deductible", "percent": null, "rule": "Low-cost items with your business name clearly and permanently imprinted, handed out widely (pens, keychains, desk sets and the like), don't count as gifts, so the $25 limit doesn't apply.", "limits": "Items must cost $4 or less each and be one of a number of identical items you distribute widely. Pricier items given to a person count toward the $25 gift limit.", "records": "Invoices showing the unit cost and quantity.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "pen", "plain": "Yes. Low-cost items with your logo that you hand out widely, like pens or keychains, aren't treated as gifts, so the $25 limit doesn't apply. They need to cost $4 or less each.", "example": "A realtor orders 500 logo pens at $1 each. All $500 counts.", "keep": [ "Invoices showing the cost per item and how many" ], "answer": "yes", "mistake": "Treating a nice logo jacket for one client as a promo item. Over $4 each, it's a gift with the $25 limit." }, { "slug": "business-education", "name": "Courses, training and conferences", "category": "education", "aliases": [ "education", "course", "training", "seminar", "conference", "workshop", "certification", "cpe", "webinar", "coaching", "books", "class", "online course", "masterclass" ], "verdict": "depends", "percent": null, "rule": "Education that maintains or improves skills you need in your current business, or is required by law to keep your status, is deductible. Education that qualifies you for a new trade or business, or meets the minimum requirements to enter your field, isn't.", "limits": "No dollar limit for qualifying education. Books and materials you normally use within a year can be deducted when bought. Travel to a qualifying course follows the travel rules, and meals are 50%.", "records": "Receipts, course descriptions or agendas, and a note of how the course relates to your current work.", "applies_to": "Self-employed people. Employers can also provide employees up to $5,250 a year of excludable educational assistance.", "source_url": "https://www.law.cornell.edu/cfr/text/26/1.162-5", "source_title": "26 CFR § 1.162-5, Expenses for education", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" }, { "title": "IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits", "url": "https://www.irs.gov/publications/p15b" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "book", "plain": "Yes, if it keeps up or improves skills for the work you already do. Not if it trains you for a new line of work, or covers the basic requirements to get into your field.", "example": "A licensed esthetician takes a $400 advanced skincare course, and it counts. Going to beauty school to get licensed in the first place doesn't.", "keep": [ "Receipts", "The course description or agenda", "A note of how it relates to your current work" ], "answer": "yes", "mistake": "Writing off a degree or licensing course for a new line of work." }, { "slug": "bank-card-fees", "name": "Bank and card processing fees", "category": "banking", "aliases": [ "bank fees", "merchant fees", "credit card processing", "stripe fees", "paypal fees", "square fees", "wire fees", "account fees", "transaction fees" ], "verdict": "deductible", "percent": 100, "rule": "Monthly fees on a business bank account, wire fees and the fees payment processors take from your sales are normal business expenses you can deduct.", "limits": "Only fees on business accounts and transactions. Fees on personal accounts are personal.", "records": "Bank and processor statements (they show the fees taken).", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.law.cornell.edu/uscode/text/26/162", "source_title": "26 U.S.C. § 162, Trade or business expenses", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "card", "plain": "Yes. Fees on your business bank account, wire fees and the cut Stripe, Square or PayPal takes from your sales all count.", "example": "Square keeps $300 in fees from a hairdresser's card sales this year. That $300 is a write-off.", "keep": [ "Bank and processor statements (they show the fees)" ], "answer": "yes", "mistake": "Reporting only what lands in the bank. If Stripe or Square takes its fees first, report the full sales and write off the fees." }, { "slug": "business-interest", "name": "Interest on business loans and credit cards", "category": "banking", "aliases": [ "interest", "loan interest", "business loan", "line of credit", "credit card interest", "sba loan", "mortgage on business property", "car loan interest" ], "verdict": "partly", "percent": null, "rule": "Interest on money borrowed for your business is deductible. Interest is allocated by how the borrowed money was used, so on a card or loan used for both, only the business share counts. Personal interest isn't deductible.", "limits": "Small businesses that meet the gross receipts test ($32 million average for tax years beginning in 2026; $31 million in 2025) are exempt from the business interest limit. Larger businesses may be limited.", "records": "Loan agreements, Forms 1098 and statements, and records tracing how loan proceeds were spent.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 U.S.C. § 163, Interest", "url": "https://www.law.cornell.edu/uscode/text/26/163" }, { "title": "IRS Rev. Proc. 2025-32: 2026 inflation-adjusted figures", "url": "https://www.irs.gov/pub/irs-drop/rp-25-32.pdf" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "percent", "plain": "Partly. Interest on money borrowed for your business counts. On a card or loan used for both business and personal spending, only the business share counts.", "example": "Mo borrows $10,000 to buy a used van for his moving business. The interest on that loan counts. Interest on his personal shopping doesn't.", "keep": [ "Loan agreements and statements", "Records of what the borrowed money paid for" ], "answer": "partly", "mistake": "Writing off all the interest on a card or loan you also use personally. Only the business share counts." }, { "slug": "bad-debts", "name": "Unpaid invoices (bad debts)", "category": "banking", "aliases": [ "bad debt", "unpaid invoice", "uncollectible", "client didn't pay", "write off receivable", "unpaid client" ], "verdict": "depends", "percent": null, "rule": "A business bad debt is deductible only if the amount was already included in your income. Most small businesses use the cash method, so an unpaid invoice was never income and can't be deducted.", "limits": "Deduct it only in the year it becomes wholly or partly worthless, after reasonable collection efforts. Refund claims for bad debts have a 7-year window.", "records": "The invoice, proof it was included in income, collection attempts and why it became worthless.", "applies_to": "Mostly accrual-method businesses, and loans or credit sales made in the business.", "source_url": "https://www.irs.gov/taxtopics/tc453", "source_title": "IRS Topic no. 453, Bad debt deduction", "also": [ { "title": "IRS Publication 334 (2025), Tax Guide for Small Business", "url": "https://www.irs.gov/publications/p334" }, { "title": "IRS Topic no. 305, Recordkeeping", "url": "https://www.irs.gov/taxtopics/tc305" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "invoice", "plain": "Usually not for small businesses. If you never counted the unpaid invoice as income (most small businesses don't until they're paid), there's nothing to write off.", "example": "A designer bills $1,500 and the client never pays. She never reported that $1,500 as income, so there's no deduction, and no tax on it either.", "keep": [ "The invoice and proof it was counted as income", "Your attempts to collect" ], "answer": "no", "mistake": "Writing off an unpaid invoice you never reported as income. There's nothing to deduct." }, { "slug": "startup-costs", "name": "Startup costs", "category": "startup", "aliases": [ "startup costs", "start-up", "before opening", "market research", "pre-opening", "launch costs", "new business costs" ], "verdict": "partly", "percent": null, "rule": "Costs of investigating or setting up a business before it opens (market research, pre-opening advertising, training, consultants) can be deducted up to $5,000 in the year you start, with the rest amortized over 180 months.", "limits": "$5,000 deduction, reduced dollar for dollar once total startup costs exceed $50,000 (none at $55,000 or more). The remainder is deducted evenly over 180 months from the month the business starts.", "records": "Receipts and invoices dated before opening, and the date the business began.", "applies_to": "Any new active trade or business.", "source_url": "https://www.law.cornell.edu/uscode/text/26/195", "source_title": "26 U.S.C. § 195, Start-up expenditures", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" } ], "tools": [ "/llc-formation/" ], "checked": "2026-10-21T23:55-04:00", "icon": "rocket", "plain": "Partly. Costs before you open, like market research, pre-launch ads or training, can be written off up to $5,000 in your first year. The rest is spread over 15 years.", "example": "Before opening her bakery, Rosa spends $8,000 on research, ads and training. She writes off $5,000 in year one and the other $3,000 bit by bit over 15 years.", "keep": [ "Receipts dated before you opened", "The date your business started" ], "answer": "partly", "mistake": "Writing off every pre-opening cost in year one. Only up to $5,000 counts right away." }, { "slug": "organizational-costs", "name": "Business formation costs", "category": "startup", "aliases": [ "llc fees", "formation", "incorporation", "articles of organization", "state filing fee", "legal fees to form", "organizational costs" ], "verdict": "partly", "percent": null, "rule": "Costs to form a corporation or partnership (including a multi-member LLC), such as state filing fees and legal fees for the organizing documents, can be deducted up to $5,000 in the first year, with the rest amortized over 180 months.", "limits": "$5,000, reduced dollar for dollar once these costs exceed $50,000; the remainder over 180 months. Partnership costs to sell ownership interests (syndication costs) aren't deductible.", "records": "State filing receipts, attorney invoices and the date the business began.", "applies_to": "Corporations and partnerships, including multi-member LLCs taxed as partnerships.", "source_url": "https://www.law.cornell.edu/uscode/text/26/248", "source_title": "26 U.S.C. § 248, Organizational expenditures (corporations)", "also": [ { "title": "26 U.S.C. § 709, Organization and syndication fees (partnerships)", "url": "https://www.law.cornell.edu/uscode/text/26/709" }, { "title": "26 U.S.C. § 195, Start-up expenditures", "url": "https://www.law.cornell.edu/uscode/text/26/195" } ], "tools": [ "/llc-formation/" ], "checked": "2026-10-21T23:55-04:00", "icon": "doc", "plain": "Partly. Costs to form a partnership or corporation (including a multi-member LLC), like state filing and legal fees, can be written off up to $5,000 in the first year, with the rest spread over 15 years.", "example": "Two friends form an LLC for their cleaning company and pay $1,200 in state and legal fees. All of it can be written off in the first year.", "keep": [ "State filing receipts", "Lawyer invoices", "The date the business began" ], "answer": "partly", "mistake": "Mixing one-time formation fees in with yearly state fees. Yearly fees are regular expenses; formation costs follow the startup rules." }, { "slug": "inventory-cogs", "name": "Inventory and cost of goods sold", "category": "inventory", "aliases": [ "inventory", "cost of goods sold", "cogs", "products", "merchandise", "stock", "materials", "resale" ], "verdict": "depends", "percent": null, "rule": "Products you buy or make to sell aren't deducted when bought. Their cost is deducted as cost of goods sold (Schedule C, Part III) when they are sold. Small businesses that meet the gross receipts test can choose not to keep inventories, under the method in the Schedule C instructions.", "limits": "The small business option is available if average annual gross receipts for the prior 3 years are $32 million or less for tax years beginning in 2026 ($31 million for 2025).", "records": "Purchase invoices, beginning and ending inventory counts, and your inventory method.", "applies_to": "Businesses that sell products.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Rev. Proc. 2025-32: 2026 inflation-adjusted figures", "url": "https://www.irs.gov/pub/irs-drop/rp-25-32.pdf" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "box", "plain": "Products you buy or make to sell count when they sell, not when you buy them. Smaller businesses can often use a simpler method.", "example": "A candle maker buys $2,000 of wax and jars and uses $1,500 of it in candles she sells this year. The $1,500 counts now; the rest counts when those candles sell.", "keep": [ "Purchase invoices", "Inventory counts at the start and end of the year" ], "answer": "yes", "mistake": "Writing off a big stock order the day you buy it. Products generally count as they sell." }, { "slug": "shipping-postage", "name": "Shipping and postage", "category": "inventory", "aliases": [ "shipping", "postage", "usps", "ups", "fedex", "mailing", "courier", "packaging" ], "verdict": "deductible", "percent": 100, "rule": "Postage and the cost of shipping orders to customers are deductible business expenses.", "limits": "Only shipments for the business. Postage is reported with office expenses.", "records": "Carrier receipts or account statements.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "truck", "plain": "Yes. Shipping orders to customers and business postage count in full.", "example": "An Etsy shop spends $300 a month on shipping labels. That's $3,600 a year in write-offs.", "keep": [ "Carrier receipts or account statements" ], "answer": "yes", "mistake": "Mixing personal packages in with business shipping." }, { "slug": "self-employment-tax", "name": "Self-employment tax", "category": "taxes", "aliases": [ "self-employment tax", "se tax", "social security self employed", "medicare self employed", "schedule se" ], "verdict": "partly", "percent": 50, "rule": "Half of your self-employment tax (the employer-equivalent part) is deductible in figuring adjusted gross income, on Schedule 1. It isn't a Schedule C expense and doesn't reduce the SE tax itself.", "limits": "50% of SE tax. SE tax is 15.3% on 92.35% of net self-employment earnings, with the Social Security part stopping at the $184,500 wage base for 2026.", "records": "Schedule SE and your Schedule C.", "applies_to": "Self-employed people who owe SE tax (net earnings of $400 or more).", "source_url": "https://www.irs.gov/pub/irs-pdf/f1040es.pdf", "source_title": "IRS Form 1040-ES (2026), Estimated Tax for Individuals", "also": [ { "title": "IRS: Self-employment tax (Social Security and Medicare taxes)", "url": "https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes" }, { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" } ], "tools": [ "/tools/1099-tax-calculator/", "/tools/quarterly-estimated-tax-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "percent", "plain": "Half. You can write off half of your self-employment tax on your personal return. It lowers your income tax, not the self-employment tax itself.", "example": "If your self-employment tax is $7,000, you can deduct $3,500.", "keep": [ "Schedule SE and your Schedule C (tax software or your preparer handles this)" ], "answer": "partly", "mistake": "Putting it on your business schedule. Half of it is deducted on your personal return instead." }, { "slug": "business-taxes", "name": "Business taxes", "category": "taxes", "aliases": [ "taxes", "property tax", "real estate tax business", "sales tax", "state taxes", "federal income tax", "excise tax", "highway use tax" ], "verdict": "partly", "percent": null, "rule": "Deductible: sales taxes imposed on you as the seller, real estate and personal property taxes on business assets, and federal highway use tax. Not deductible: federal income tax (including SE tax), estate and gift taxes, and taxes on personal property.", "limits": "Sales tax you pay on property bought for the business is added to its cost. Sales tax imposed on your customers that you collect and pay over isn't deductible.", "records": "Tax bills, returns and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "gov", "plain": "Partly. Property taxes on business assets and some business taxes count. Federal income tax and self-employment tax never do, and sales tax you collect from customers and pass on isn't yours to write off.", "example": "The property tax bill on a food truck counts. The owner's federal income tax payments don't.", "keep": [ "Tax bills and proof you paid" ], "answer": "partly", "mistake": "Writing off the sales tax you collected from customers. That money was never yours." }, { "slug": "licenses-permits", "name": "Business licenses and permits", "category": "taxes", "aliases": [ "license", "permit", "business license", "registration fee", "annual report fee", "regulatory fee", "professional license" ], "verdict": "deductible", "percent": 100, "rule": "Licenses and regulatory fees you pay each year to state or local governments for your business are deductible.", "limits": "Fees to form an entity follow the startup or organizational cost rules instead.", "records": "Receipts and renewal notices.", "applies_to": "Sole proprietors and single-member LLCs (Schedule C); the same rule generally applies to partnerships and corporations.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "cert", "plain": "Yes. Yearly business licenses, permits and state or local regulatory fees count.", "example": "A cosmetologist's license renewal and her city business permit both count.", "keep": [ "Receipts and renewal notices" ], "answer": "yes", "mistake": "Lumping one-time formation fees in with yearly license fees. Formation costs follow the startup rules." }, { "slug": "commuting", "name": "Commuting", "category": "not", "aliases": [ "commute", "commuting", "drive to work", "train to office", "subway", "metro card", "home to office" ], "verdict": "not", "percent": 0, "rule": "Getting between your home and your regular place of work is commuting, a personal expense, however far it is and even if you work during the trip. That includes parking at your regular workplace.", "limits": "0%. Exceptions: trips from a home office that is your principal place of business to other work sites, between two workplaces, and to a temporary work location can be business miles.", "records": "If you claim trips as business, a mileage log showing they weren't commutes.", "applies_to": "All taxpayers.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [], "tools": [ "/tools/mileage-deduction-calculator/" ], "checked": "2026-10-21T23:55-04:00", "icon": "train", "plain": "No. Getting from home to your regular workplace is personal, however far it is. But if your home office is your main place of business, trips from there to clients or job sites can count.", "example": "A barber's daily drive to his shop doesn't count. A consultant who works from a home office and drives to a client's office can count that trip.", "keep": [ "If you claim trips, a mileage log showing they weren't commutes" ], "answer": "no", "mistake": "Thinking a long commute, or taking work calls on the way, makes it business. It doesn't." }, { "slug": "fines-penalties", "name": "Fines and penalties", "category": "not", "aliases": [ "fines", "penalties", "parking ticket", "speeding ticket", "irs penalty", "late fee government", "violation" ], "verdict": "not", "percent": 0, "rule": "Fines and penalties paid to a government for breaking a law aren't deductible, including traffic and parking tickets and tax penalties.", "limits": "0%. A narrow exception covers amounts a court order or settlement specifically identifies as restitution or as costs to come into compliance with the law.", "records": "The order or settlement, if you rely on the restitution exception.", "applies_to": "All taxpayers.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "26 U.S.C. § 162, Trade or business expenses", "url": "https://www.law.cornell.edu/uscode/text/26/162" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "warn", "plain": "No. Parking tickets, speeding tickets and IRS penalties can't be written off, even if you got them while working.", "example": "A delivery driver's $45 parking ticket on a job doesn't count.", "keep": [ "Nothing for a deduction, unless a court order or settlement names part of it as restitution (see the fine print)" ], "answer": "no", "mistake": "Writing off a parking ticket because you got it on a job." }, { "slug": "political-lobbying", "name": "Political contributions and lobbying", "category": "not", "aliases": [ "political", "campaign", "donation to candidate", "pac", "lobbying", "political party" ], "verdict": "not", "percent": 0, "rule": "Contributions to candidates, campaigns and political parties aren't deductible, and neither are most costs of lobbying or trying to influence legislation or elections.", "limits": "0%. Part of your trade association dues may also be nondeductible if the group lobbies.", "records": "Nothing to keep for a deduction.", "applies_to": "All taxpayers.", "source_url": "https://www.law.cornell.edu/uscode/text/26/162", "source_title": "26 U.S.C. § 162, Trade or business expenses", "also": [ { "title": "IRS Publication 529 (Rev. 12/2020), Miscellaneous Deductions", "url": "https://www.irs.gov/publications/p529" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "flag", "plain": "No. Donations to candidates, campaigns and political parties, and most lobbying costs, can't be written off.", "example": "A $500 donation to a local candidate from your business account doesn't count.", "keep": [ "Nothing to keep for a deduction" ], "answer": "no", "mistake": "Running a campaign donation through the business as \"marketing.\"" }, { "slug": "club-dues", "name": "Club memberships", "category": "not", "aliases": [ "country club", "golf club", "social club", "gym membership business", "airline club", "athletic club", "club dues" ], "verdict": "not", "percent": 0, "rule": "Dues for clubs organized for business, pleasure, recreation or other social purposes, such as country clubs, golf and athletic clubs, airline and hotel clubs, aren't deductible.", "limits": "0%. Professional and trade associations, chambers of commerce and civic groups are different, and are generally deductible.", "records": "Nothing to keep for a deduction.", "applies_to": "All taxpayers.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "26 CFR § 1.274-2, Entertainment expenses (club dues)", "url": "https://www.law.cornell.edu/cfr/text/26/1.274-2" }, { "title": "26 U.S.C. § 274, Disallowance of certain entertainment, etc., expenses", "url": "https://www.law.cornell.edu/uscode/text/26/274" } ], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "golf", "plain": "No. Country clubs, golf clubs, gyms and other social or athletic clubs don't count, even if you meet clients there. Professional groups and the chamber of commerce are different.", "example": "A consultant's golf club membership doesn't count, even if he plays with clients.", "keep": [ "Nothing to keep for a deduction" ], "answer": "no", "mistake": "Calling a country club or golf membership \"networking.\" It still doesn't count." }, { "slug": "gym", "name": "Gym and fitness memberships", "category": "not", "aliases": [ "gym", "gym membership", "fitness", "health club", "yoga", "pilates", "crossfit", "peloton", "fitness class", "workout" ], "verdict": "not", "percent": 0, "rule": "Gym, health club and fitness memberships are personal expenses. Dues to athletic clubs and other clubs organized for recreation or social purposes aren't deductible, even if you use them to meet clients.", "limits": "0%. Professional and trade associations, chambers of commerce and civic groups are different, and are generally deductible.", "records": "None needed for a deduction.", "applies_to": "All taxpayers.", "source_url": "https://www.irs.gov/publications/p463", "source_title": "IRS Publication 463 (2025), Travel, Gift, and Car Expenses", "also": [ { "title": "IRS Instructions for Schedule C (Form 1040) (2025)", "url": "https://www.irs.gov/instructions/i1040sc" } ], "tools": [], "checked": "2026-10-23T09:30-04:00", "icon": "gym", "plain": "Gym, health club and fitness memberships are personal, even if staying fit helps you work. Meeting clients there doesn't change that.", "example": "A real estate agent pays $60 a month for a gym where she sometimes meets clients. None of it counts.", "keep": [ "Nothing to keep for a deduction" ], "answer": "no", "mistake": "Writing off a gym membership because staying fit helps you work, or because you sometimes meet clients there." }, { "slug": "personal-expenses", "name": "Personal expenses", "category": "not", "aliases": [ "personal", "groceries", "gym", "haircut", "vacation", "family", "rent at home", "personal phone", "netflix", "childcare" ], "verdict": "not", "percent": 0, "rule": "Personal, living and family expenses aren't business deductions, even if paid from a business account. When something is used for both, deduct only the business share.", "limits": "0% for the personal part. Paying a personal bill from the business account doesn't make it deductible.", "records": "Keep business and personal spending in separate accounts.", "applies_to": "All taxpayers.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [], "tools": [], "checked": "2026-10-21T23:55-04:00", "icon": "cart", "plain": "No. Groceries, your gym, haircuts, vacations and family costs aren't business expenses, even if you pay with the business card. If something is used for both, only the business part counts.", "example": "Paying for Netflix or the family groceries from the business account doesn't make them deductible.", "keep": [ "Keep business and personal spending in separate accounts" ], "answer": "no", "mistake": "Paying personal bills from the business account and treating them as business expenses." }, { "slug": "charitable-contributions", "name": "Charitable donations by your business", "category": "not", "aliases": [ "charity", "donation", "charitable", "nonprofit donation", "sponsorship of charity" ], "verdict": "not", "percent": null, "rule": "A sole proprietor or single-member LLC can't deduct charitable contributions as a business expense on Schedule C. They may be deductible on your personal return under the charitable contribution rules.", "limits": "Not on Schedule C. On your personal return, itemize on Schedule A, or, starting in 2026, deduct up to $1,000 of qualifying cash gifts ($2,000 married filing jointly) without itemizing. See Publication 526 and Publication 6196.", "records": "Written acknowledgments from the charity and proof of payment.", "applies_to": "Sole proprietors and single-member LLCs. Corporations follow their own charitable deduction rules.", "source_url": "https://www.irs.gov/instructions/i1040sc", "source_title": "IRS Instructions for Schedule C (Form 1040) (2025)", "also": [ { "title": "IRS Publication 526 (2025), Charitable Contributions", "url": "https://www.irs.gov/publications/p526" }, { "title": "IRS Publication 6196 (10-2026), Charitable Contribution Deduction Tips for Non-Itemizers", "url": "https://www.irs.gov/pub/irs-pdf/p6196.pdf" } ], "tools": [], "checked": "2026-10-23T09:30-04:00", "icon": "hands", "plain": "Not as a business expense if you're a sole owner. On your personal return they can count if you itemize, and starting in 2026 up to $1,000 in cash gifts ($2,000 for married couples filing jointly) counts even if you don't.", "example": "A salon owner gives $500 to a local food bank. It can't go on her business schedule, but it may count on her personal return, even if she doesn't itemize.", "keep": [ "A written receipt from the charity", "Proof you paid" ], "answer": "no", "mistake": "Putting donations on your business schedule as a sole owner. They belong on your personal return." } ] }