If you’re self-employed or own a small business, you can deduct eligible business expenses in order to pay fewer taxes. These expenses must be common for your type of business and also necessary for your operations.
Business expenses are deducted on Schedule C. To deduct these expenses, you must use TurboTax Self-Employed or TurboTax Home & Business. Once you add in business income in the Income and Expenses section, TurboTax will ask you to enter your business expenses.
For any expenses split between personal and business use, be sure to deduct only the business portion from the total cost. Always keep records of your expenses in case the IRS asks to see documentation.
Note: If you use an expense to figure the cost of goods sold, may not also deduct that expense. In addition, certain costs that are part of an investment in your business must be capitalized, rather than deducted. For more information, visit the IRS page on deducting business expenses.
Some of the more common tax-deductible business expenses include:
- Advertising and promotion
- Phone and internet
- Business meals (generally, 50% of qualifying food and beverage costs can be deducted)
- Insurance premiums, including liability coverage, workers' compensation, and business-interruption insurance
- Health insurance premiums
- Independent contractor wages
- Shipping and postage
- Equipment rental
- Employee salaries and benefits
- Taxes and licenses, including state income tax, payroll taxes, personal property taxes, real estate taxes paid on business property, sales tax, and business licenses
- Business travel expenses, including travel to and from your destination (not including travel to and from your regular place of work), parking and toll fees, taxi costs, and accommodation
- Software subscriptions
- Depreciation
- Supplies, utilities, and repairs
- Rent paid on business property
- Car and truck expenses
- Interest on business debt
- Mortgage interest
- Bad debts
- Bank fees/credit card convenience fees
- Startup costs
- Moving expenses
- Membership dues for boards of trade, business leagues, chambers of commerce, civic or public service organizations, professional organizations, real estate boards, and trade associations
