Self-employed tax deductions

Scope, and what this page is not

This describes US federal rules, checked on 16 August 2026 against the IRS Self-Employed Individuals Tax Center, the home office deduction pages and Publication 583, each named where it is used. It is not tax advice. State rules differ, your circumstances change the answer, and anything specific belongs with an accountant.

The test every deduction has to pass

Publication 583 puts it plainly: an ordinary expense is one that is common and accepted in your field of business, and a necessary expense is one that is helpful and appropriate for it. Necessary does not mean indispensable. If a cost does not clear that bar, no amount of record keeping rescues it — and if it does clear it, poor records can still cost you the deduction.

That asymmetry is the reason this page is organised around evidence. Arguments about whether a category qualifies are rare in practice. Expenses lost because the slip faded, the reason was never written down, or the personal share was never separated are extremely common, and every one of them is preventable at the point of purchase.

Home office: the strictest test, the simplest sum

The IRS requires that you regularly use part of your home exclusively for business, and that you show the home is your principal place of business. Exclusively is the word that disqualifies most claims — a dining table used for work in the day is not an exclusive-use space.

There are two ways to calculate it. The simplified option is $5 per square foot of home used for business, capped at 300 square feet, so a maximum of $1,500; it allows no depreciation deduction and no loss carryover. The regular method uses actual expenses and is claimed on Form 8829. Records to keep either way: the square footage and how you measured it, and for the regular method the utility, insurance, mortgage interest or rent, and repair records for the year.

Vehicle and mileage: the log is the deduction

Business use of a car is claimed either at the standard mileage rate or on actual expenses, and both require a contemporaneous record of business mileage — date, destination, purpose and distance. The standard rate changes every year, so take the figure for the year you are filing from the IRS rather than from any article, including this one.

The log is not optional paperwork around the deduction; for practical purposes it is the deduction. A reconstructed mileage estimate is exactly what the substantiation rules were written to exclude. If you drive for work at all, the highest-return habit available to you is logging the trip when you arrive, in whatever app or notebook you will actually open.

Travel and meals: four elements, no estimation

For travel and meals away from home you need the amount, the time and place, the business purpose, and — where other people are involved — who they were and their business relationship to you. Business meals are generally limited to 50% of the unreimbursed cost. Estimation is barred for this category, so a missing record is a lost deduction rather than a smaller one.

Record the full amount you paid rather than pre-halving it, and let the limit be applied at filing. The travel page on this site covers the tax home test, the sleep-or-rest rule and what counts as a travel cost in more detail. The short version for record keeping: write the purpose and the people down while you are still at the table.

Equipment, software and supplies

Ordinary running costs — software subscriptions, materials, small tools, office supplies — are recorded like any other expense: receipt, date, merchant, amount, purpose. Larger purchases may be treated as capital rather than as an immediate deduction, which is a question about the item and the year, not about the receipt.

Keep purchase records for equipment for as long as you hold the asset plus the retention period afterwards, not just for the year you bought it, because the record supports depreciation across multiple years and any eventual disposal. This is the one category where the standard keep-for-N-years rule reliably gets people into trouble.

Mixed personal and business use

Where something is used for both, deduct only the business share and write down the basis you used: hours, mileage, floor area, a call log. The method is what you can explain later, and applying it consistently year to year is what makes it credible.

Phone, internet, vehicle and home are the four that come up constantly, and all four are places where a round number invented in April looks exactly like what it is. A basis recorded once and applied all year costs nothing and answers the question permanently.

Things that are not expense deductions but change the bill

Self-employment tax is the Social Security and Medicare tax on self-employment income, and as the IRS notes, estimated tax is how the self-employed pay income and SE tax because nobody is withholding it. Deductions available at the return level — such as those relating to SE tax, health insurance or qualified business income — are separate from business expenses and have their own rules.

They are mentioned here only so you know they are a different conversation from the receipts in your pocket. Business income and loss is reported on Schedule C (Form 1040). Which return-level deductions apply to you, and in what amounts, is precisely the kind of question worth paying an accountant for once rather than guessing at annually.

What to build during the year

A separate business account, four fields on every receipt on the day it happens, a mileage log if you drive, a note of the basis for anything mixed, and a monthly reconciliation against the statement. That set of habits produces defensible records for every deduction on this page.

None of it is sophisticated and all of it is boring, which is why it does not happen. It is also the entire difference between a return you can support and a return you hope nobody asks about. The tools are secondary — ours photographs a receipt into an editable record, free to enter and organise, with export behind Pro — but the habit is what carries the deduction.