What qualifies as a business expense?

[laurensaltman]

I am a professional organizer. I have a home office where I do all of my billing, networking, paperwork, writing, etc. I am wondering what I can "write off" as a business expense. Some things are obvious (I track my miles driving to and from clients). But what about the food I bring each work day to eat for lunch? When I grocery shop, I pick up items to eat when I work but it's all on one receipt. I'm curious to know what other items are a tax deduction. Clothes I wear only for work? Equipment I buy for work?

[dsoile]

Hello laurensaltman

According to the IRS, a business expense is considered deductible, if it is "ordinary and neccessary". Ordinary meaning that the expense is one that is common and accepted in your industry. Neccessary meaning that the expense helpful and appropriate for your trade or business. In short, any business-related meals, clothing for business-purposes, equipment you use for your business, as long as it meets the ordinary and neccessary criteria and you are able to justify the reason for these expenses, then they are deductible for business purposes. 

Please refer to this link 

[KarenL4]

Hi, Laurensaltman,

In general to qualify as a business expense, an item must be both ordinary and necessary. This article does a great job of explaining those things.

As to the specific things you mentioned, I also wanted to address those directly.

• Home offices must be a space used regularly and exclusively. Here's more info about that.  To address the exclusive part, as an example, that would not allow for a guest bedroom (if folks sleep there sometimes) or a kitchen table (where you also eat).  One thing to keep in mind is whether or not you have a home office does potentially impact your business miles. If you have a home office, the first place you go on business will count as business miles if you otherwise qualify (you are leaving your home office--business location--and going to a business location). If you don't have a home office, that first destination is often classified as a commute and it would not qualify as a deductible business mile.  If you search "commute" in this IRS publication, you can learn more.
• Personal food is not a deductible business expense.  Business meal rules changed a few years ago. This article can help you understand.
• For clothing to be deductible, they have to be necessary and usable only for work.  Here's an article that helps with that.
• Equipment you buy for work would be deductible to the extent it is ordinary and necessary. This article will give you more information, including about an option to deduct single qualified equipment purchases that cost less than $2500 in a single year if the criteria are met.
• While it is considered best practice to separate business and personal expenditures, you can deduct business expenses you paid for as a sole proprietor even if you didn't strictly separate these expenditures. Itemized receipts are part of appropriate documentation, and you can learn more about record keeping here.  Please note that a credit card statement is not an itemized receipt.

Hope this helps.

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Regards,

Karen

TurboTax Expert