Home Office Costs
If you work from home, there’s a good chance you’re leaving money on the table. The IRS lets you deduct a portion of your rent, utilities, and internet as long as that space is dedicated solely to business. That means a desk in your bedroom doesn’t count unless the area is set up and used only for work. No beds, no TVs, no crossover.
Two options exist: the simplified method (a flat rate per square foot, up to 300 square feet) and the regular method (calculating the percentage of your home used for business). Either way, the key is consistency and documentation. Keep receipts. Take pictures of your setup. If you ever get audited, vague justifications won’t cut it.
Bottom line: if your home doubles as your office, claim those costs. Just make sure it’s legit.
Professional Development
If you’re investing in yourself, the IRS might give you a break. Courses, webinars, certifications anything that builds skills relevant to your current business or trade can often be deducted. We’re not talking about vague self help here; it needs to directly support your existing work. That marketing bootcamp you joined last quarter? Deductible. The industry conference you streamed live with a paid ticket? Also deductible.
What doesn’t count? Stuff that prepares you for a whole new job or business direction. You can’t write off real estate classes if you’re currently a freelance designer.
Bottom line: If it’s directly tied to making you better at what you already do, keep the receipt. These expenses not only grow your skill set but also shrink your taxable income. Win win.
Subscriptions and Journals
If you’re subscribed to trade magazines, industry newsletters, or even niche forums that directly support your work, you might be missing a tax deduction sitting right there on your credit card bill. As long as these subscriptions are tied to your business or profession, they’re usually fair game.
Same goes for certain memberships think professional associations or online communities relevant to your field. The IRS doesn’t love vague personal development, but a membership clearly related to your income source? Different story. Rule of thumb: if you’d mention it in a client pitch or put it on your LinkedIn, it probably counts.
Don’t just chalk these up as minor expenses. They add up over a year and they’re easy to track if you’re checking your statements consistently.
Bank and Payment Processing Fees
Running a business today means dealing with a wide range of financial platforms and the fees that come with them. These small charges may seem insignificant, but over the course of a year, they can add up to a meaningful deduction at tax time.
What to Track:
Transaction fees from payment platforms like PayPal, Stripe, or Square
Monthly bank service fees from your business account
Merchant processing fees applied when clients pay with credit cards
Why It Matters:
Every dollar that flows through your accounts often comes with a cost. While most business owners remember the big ticket expenses, these small, recurring charges are often overlooked and fully deductible.
Tip: Review your monthly bank statements and payment processor summaries regularly. Export and categorize them for tax season accuracy. Even better, use accounting software that automatically tracks these fees.
Pro Move: Ask your CPA about grouping these under ‘merchant fees’ for more streamlined reporting.
Business Use of Personal Vehicle
If you use your personal car for work meeting clients, picking up supplies, or heading to job sites you can deduct a chunk of those costs. The standard mileage rate is the simplest method: track your business miles and multiply by the IRS approved rate. Or, if you prefer, go for the actual expense method and deduct a portion of your gas, maintenance, insurance, registration, and even depreciation. Just make sure it’s tied to qualified business activity, and keep a clear record. Apps make mileage tracking painless, and documentation makes or breaks this deduction. No guesswork here log it or lose it.
Startup Expenses
Starting a business doesn’t begin the day you launch it often starts months earlier with research, planning, and initial investments. Many entrepreneurs overlook the costs incurred during this pre launch phase, but some of these expenses may still be tax deductible.
Qualifying Pre Launch Costs
Be sure to keep detailed records of these common startup related expenses:
Market Research: Surveys, focus groups, or industry reports purchased before you launched.
Business Travel: Costs for business related travel like scouting locations or meeting suppliers.
Licenses and Permits: Fees for registering your business name, applying for permits, or getting professional licenses.
Legal and Professional Fees: Attorney consultations or business formation services like LLC setup.
Training and Education: Courses or certifications completed before you officially started but intended for the business.
Important Notes
Not all pre launch expenses qualify, so consult a tax professional to ensure compliance.
In many cases, these expenses are capitalized and amortized over several years instead of deducted all at once.
Keeping thorough records and receipts will help maximize deductions and streamline your filing process when your business becomes official.
Advertising and Promotion
Every flyer, Facebook ad, or branded hoodie you handed out this year? That’s money toward your brand and a potential deduction. The IRS doesn’t care if your marketing was flashy or DIY; if it helped promote your business, it might be deductible.
This includes traditional tools like business cards and new age costs like social media boosts, sponsored content, influencer partnerships, and even promotional giveaways. Just make sure you kept receipts, invoices, or screenshots. It’s easy to overlook small amounts, but over twelve months, they balloon into real numbers.
(P.S. Want more ideas? Check this out)
Business Meals
Not all meals are tax deductible but many are, especially if they directly relate to your business activities.
What Qualifies?
Business meals can be deductible if they meet certain criteria. Specifically, the meal must be:
With a client, employee, or vendor
Directly related to business discussions or activities
Not considered lavish or extravagant
Depending on the situation, these meals may be 50% or even 100% deductible.
Examples of Deductible Business Meals
A lunch meeting to discuss a proposal with a potential client
Coffee with a contractor to review a project
Team dinners during off site business trips
Key Rules to Follow
To make sure your deductions stand up to scrutiny:
Keep itemized receipts that show the date, location, amount, and participants
Note the purpose of the meal on the receipt or in a tracking app
Avoid personal meals that have no clear business reason
Tip: Organize Your Receipts
Whether you use a physical folder, a spreadsheet, or expense tracking software, staying organized will protect you in the event of an audit and save time during tax season.
Unpaid Invoices
Did a client ghost you after the work was done? You’re not alone and you might not be out of luck at tax time. In certain situations, you can claim unpaid invoices as bad debt. It has to meet specific criteria: the income must have been previously included in your taxable revenue, and you must be operating on an accrual accounting basis (not cash based). If those boxes are checked, you may be able to write off that unpaid amount.
This is one of those deductions that isn’t always cut and dry. The IRS wants to see reasonable effort to collect the debt emails, follow ups, maybe even a formal letter. And not every unpaid invoice qualifies. That’s why looping in a tax professional is essential here. They’ll help you navigate whether a deduction applies and how to properly document it. Don’t guess get it right.
Co Working Spaces
If you rent a desk, office, or even a hot seat in a co working space, the monthly fee is usually deductible. That includes not just the rent itself, but the extras bundled in like internet, shared amenities, printing, and even coffee in some cases. As long as the space is used for work, you can likely write it off.
This applies even if you’re only using the space part time or a few days a week. Just keep records of your payments and save any receipts or lease agreements. If the workspace charges you a flat monthly fee, that’s easy. If you’re billed per hour or by the day, track dates and usage for accurate reporting.
Bottom line: co working overhead is a legit business expense. Treat it like one.
Phone and Tech Equipment
If your phone rings for business, it deserves a spot on your list of deductions. A separate business line or a portion of your personal phone bill if you’re a sole proprietor can be written off. Same goes for any tech gear that’s essential for work: laptops, monitors, hard drives, even those pricey noise canceling headphones that keep distractions at bay while editing or on calls. The key is usage. If it’s used primarily for business, it’s likely deductible. Keep purchase records and note what each piece of equipment is used for. This isn’t just about convenience it’s about smart, legal savings.
Software Subscriptions
If you’re paying for tools like Zoom, Canva, QuickBooks, or any other software that helps you run your business, those subscriptions can likely be written off. Think accounting tools, design platforms, communication apps basically anything you use regularly to create, manage, or deliver your work. Monthly or annual fees both count. Just make sure the subscription is tied directly to your business activity. Personal Spotify doesn’t fly, but a licensed music library for your video content? That’s a yes. Keep digital receipts and track billing dates it’s an easy deduction to miss, but a simple one to claim.
Business Insurance
Many business owners overlook just how much of their insurance spending is tax deductible. If your coverage is tied directly to your operations, those premiums likely qualify.
What You Can Deduct
Here are some common types of business related insurance that may be eligible:
General liability insurance Protects against standard business risks, such as injury or property damage.
Professional liability (errors & omissions) Covers service based businesses or consultants in case of client disputes or contract issues.
Commercial property insurance If you lease or own office space, this policy likely applies.
Cyber liability insurance Increasingly common for online and tech centered businesses.
Business interruption insurance Helps cover loss of income during unexpected downtime.
Key Tip
To qualify, the insurance must be directly related to business operations not personal or unrelated coverage. Always separate business and personal policies.
Keep annual statements or invoices on file
Record payments as operating expenses
Double check categorizations with your accountant when filing
Proper tracking turns necessary protection into a smarter expense and a smaller tax bill.
Retirement Contributions
Self employed? You’ve got options when it comes to retirement and serious tax perks to go with them. Contributions to a traditional IRA might be fully or partially deductible, depending on your income. The real power move, though, is a SEP IRA. With a SEP (Simplified Employee Pension), you can sock away up to 25% of your net earnings from self employment capped at a generous limit. That’s a solid way to lower your taxable income while investing in your future.
It’s not just about saving for retirement it’s about using the tax code to your advantage. These accounts are relatively easy to set up, and you don’t need a team of financial advisors to make it happen. Just make sure you contribute before the deadline (often your tax filing date, not December 31), and keep solid records.
Run the numbers or better yet, have a tax pro do it. Miss this, and you’re leaving money on the table.
Contractor Payments
Hiring independent contractors to support your business? Those payments can be deducted just make sure you’re documenting everything correctly.
What Qualifies
If you’ve paid $600 or more to an individual or business for services related to your business, you likely qualify to write those payments off.
Freelancers, consultants, and temporary staff
Designers, developers, or marketers
Any other independent service providers
Don’t Skip the 1099 NEC
To stay compliant with IRS rules:
Issue a Form 1099 NEC to any contractor you paid $600 or more during the tax year.
Submit a copy to the IRS and make sure the contractor receives their form by the annual deadline.
Keep thorough payment records for your protection.
Why It Matters
Contractor payments are often one of the larger deductions for small businesses and self employed individuals. Don’t leave them off your return.
Looking for more deduction opportunities? Explore more business expense ideas.
