In my first full year of self-employment I handed my accountant a shoebox and a spreadsheet and confidently claimed about $4,100 in deductible business expenses. She removed roughly $900 of it in under ten minutes, and every single removal was something I had been sure about.
That was a cheap lesson. The expensive version is finding out three years later, in a letter, that the deductions you took do not hold up.
What follows is the list I wish someone had handed me then. Fifteen things not to do with deductible business expenses, checked against current IRS guidance, with the rules stated plainly rather than hedged into uselessness.
The test all deductible business expenses have to pass
The IRS standard is short. To be deductible, a business expense must be both ordinary and necessary, where ordinary means common and accepted in your line of work, and necessary means helpful and appropriate for it.
Necessary does not mean indispensable. That is the part most people get wrong in the cautious direction, talking themselves out of legitimate deductions because the purchase was not strictly required.
The full definition sits on the IRS page for deducting business expenses. It is worth reading once, properly, because every item below is really just an application of it.
1. Never claim something you cannot connect to the work
A graphic tablet for a designer is ordinary and necessary. A gaming console is not, unless you can articulate exactly how it earns money in your business, and articulate it the same way twice.
The question I use now is whether I would still own the thing if the business closed tomorrow. If the answer is yes, it is probably a personal purchase with a business flavor.
That single filter removed most of the $900 my accountant struck out.
2. Never run business spending through a personal account
Mixed accounts do not make an expense non-deductible, but they make it very hard to prove, and unprovable deductions are effectively lost ones. A separate business checking account is the cheapest bookkeeping upgrade available.
We cover the mechanics of this in detail in our guide on how to separate personal and business expenses, so I will not repeat it here.
Do it before you do anything else on this list.
3. Never deduct 100 percent of something you also use personally
Your phone, your internet, your car, and often your laptop are mixed use. Deductible business expenses in this category have to be split by the business percentage, and that percentage has to be based on something real.
I log my phone at 60 percent business because that is roughly what a month of call and data review showed. It is a defensible number rather than a convenient one.
Rounding everything to 100 percent is the fastest way to make an otherwise clean return look careless.
4. Never skip the home office deduction because it sounds complicated
The simplified method is not complicated. You deduct $5 per square foot of qualifying space, capped at 300 square feet, for a maximum of $1,500.
The alternative is the actual expense method, which apportions real mortgage interest, rent, utilities, insurance and repairs by the business percentage of your home. It is more work and often worth more money.
The IRS explains both on its page for the simplified home office option. You can switch methods year to year, so start with the simple one.
5. Never claim a home office that is also the guest room
The requirement is regular and exclusive use, and exclusive is the word that disqualifies most people. The space has to be used for business and nothing else, and it generally has to be your principal place of business or where you meet clients.
A desk in the corner of a bedroom can qualify if that defined area is only ever used for work. A dining table you also eat at does not.
I measured my office at 11 by 12 feet, which is 132 square feet, or $660 a year under the simplified method. That is a real deduction for about four minutes of work with a tape measure.
6. Never deduct your commute
Driving from home to a regular workplace is commuting, and commuting is not deductible no matter who you work for. This trips up people who rent a studio or a desk somewhere.
Driving from your office to a client site, a supplier, or a conference is business mileage and does count. If your home office is your principal place of business, trips from there to client sites are generally business miles.
The distinction is worth real money, and it is the one I see claimed wrongly most often.
7. Never estimate mileage after the fact
Reconstructed mileage logs are the weakest documentation in a self-employed return. The record needs the date, the destination, the business purpose and the miles, captured at the time.
The rate also moves. For 2026 the IRS set the business rate at 72.5 cents per mile for January through June, then raised it to 76 cents per mile from July 1, so a single annual number will not be right this year.
Always check the current figure on the IRS standard mileage rates page before you file, and note that if you own the vehicle you must choose the standard rate in the first year you use it for business to keep that option later.
8. Never write off clothes you could wear anywhere
Clothing is deductible only when it is required for your work and not suitable for everyday wear. Safety gear and branded uniforms qualify. The suit you bought for client meetings does not, even if you only ever wear it to client meetings.
The same logic covers haircuts, gym memberships and most personal grooming. If a normal person could use it in normal life, it is not one of your deductible business expenses.
This is a bright line rather than a judgment call, which makes it easy to get right.
9. Never expense a large purchase without checking the rules first
Equipment over a certain cost is normally capitalized and depreciated rather than deducted all at once. Section 179 lets you elect to deduct the full cost in the year the item is placed in service instead, within limits that are far above anything a solo business is likely to spend.
There is a catch that matters for freelancers: the Section 179 deduction cannot exceed your business income for the year. A $6,000 camera in a year you netted $3,000 does not produce a $6,000 deduction.
The rules are in IRS Publication 946. Keep the invoice, the date it went into service, and a note on how it is used.
10. Never deduct the full cost of a client meal
Business meals are generally limited to 50 percent, and you or an employee has to be present when the food is provided. The temporary 100 percent restaurant deduction applied only to 2021 and 2022 and is long gone.
The expense also cannot be lavish or extravagant for the circumstances, and you need the date, the amount, the place and who you were with.
I write the client name on the receipt before I photograph it. Two seconds then saves a guessing game in March.
11. Never put health insurance premiums on Schedule C
This one costs people money through simple misplacement. The self-employed health insurance deduction is an adjustment to income taken on Schedule 1 of Form 1040, not a business expense on Schedule C.
That placement matters because the deduction reduces your income tax but does not reduce the net earnings your self-employment tax is calculated on.
Premiums for yourself, a spouse and dependents can qualify, subject to limits. It is one of the larger deductible business expenses most independents overlook entirely.
12. Never spend the tax set-aside
If you expect to owe $1,000 or more when you file, the IRS generally expects estimated payments during the year. Missing them creates penalties on top of the bill.
The safe harbor is what I actually plan against: pay at least 90 percent of the current year’s tax, or 100 percent of last year’s tax shown on the return, whichever is smaller. If your prior year adjusted gross income was over $150,000, that second figure rises to 110 percent.
The common advice to hold back 25 to 30 percent of income is a rule of thumb, not a rule. Check the schedule on the IRS estimated taxes page, and see our guide to quarterly taxes for the self-employed for how to size each payment.
13. Never rely on a bank line as your only record
A card statement proves you spent money somewhere. It does not prove what you bought or why, and the why is the part that has to survive a question.
Keep the receipt, plus a one line note on the business purpose for anything that is not self-explanatory. I do this weekly and it takes about fifteen minutes.
If you want to automate the capture side, our notes on QuickBooks Self-Employed best practices cover the tooling so this article does not have to.
14. Never forget the money you spent before you had clients
Costs incurred getting a business off the ground, before it was open for business, are start-up costs rather than ordinary operating expenses. They follow separate rules, and a portion can generally be deducted in the first year with the rest amortized.
Most people simply lose these because they were not thinking like a business owner yet. The domain, the logo, the first software subscriptions, the professional licence.
Go back through the three months before your first invoice. There is usually something there.
15. Never let the deduction drive the purchase
A deduction returns your marginal tax rate on the dollar, not the dollar. Spending $1,000 in December to save perhaps $300 in tax leaves you $700 poorer, which is only a good trade if you needed the thing anyway.
Deductible business expenses are a way of not overpaying on money you had to spend. They are not a reason to spend.
Our overview of how tax deductions and write-offs actually work walks through the arithmetic if that distinction is new.
Get a second opinion before you file
Everything here is general information about deductible business expenses under federal rules, and it is not tax advice for your situation. State rules vary, entity choice changes the analysis, and the edge cases are where the money is.
A CPA or enrolled agent should handle your individual return. Mine costs a few hundred dollars a year and has found more than that every year since the shoebox.
Frequently asked questions
What makes an expense deductible for a self-employed person?
It has to be both ordinary and necessary for your trade or business. Ordinary means common and accepted in your field, and necessary means helpful and appropriate. An expense does not have to be indispensable to qualify.
Can I deduct my home office if I rent?
Yes. Renters can use either the simplified method at $5 per square foot up to 300 square feet, or the actual expense method that apportions rent and utilities by the business percentage of the home. The space still has to be used regularly and exclusively for business.
How much of a business meal can I deduct?
Generally 50 percent of the cost, provided you or an employee were present and the meal was not lavish or extravagant. The temporary 100 percent deduction for restaurant meals applied only to 2021 and 2022.
Is my drive to a coworking space deductible?
If the coworking space is your regular place of work, the trip from home is a commute and is not deductible. Trips from your regular workplace to client sites, suppliers or conferences are business miles.
Where do self-employed health insurance premiums go?
On Schedule 1 of Form 1040 as an adjustment to income, not on Schedule C as a business expense. The deduction reduces income tax but does not reduce the net earnings used to calculate self-employment tax.
How much should I set aside for quarterly taxes?
Rather than a flat percentage, plan against the IRS safe harbor: 90 percent of this year’s tax or 100 percent of last year’s, whichever is smaller. That rises to 110 percent of last year’s tax if your prior year adjusted gross income exceeded $150,000.
Do I need receipts for every deductible business expense?
Keep documentation that shows what you bought and why. A bank statement alone shows an amount and a vendor but not the business purpose, which is the part that has to hold up if the deduction is ever questioned.
Photo by Recha Oktaviani; Unsplash
