What kind of expenses can i write off

Track all actual expenses of maintaining your home, such as mortgage interest or rent, utilities, real estate taxes, housekeeping and landscaping service, homeowners association fees, and repairs. Multiply these expenses by the percentage of your home devoted to business use. Regular and exclusive use. To pass the regularly and exclusively requirement, you must regularly use your home office exclusively for conducting business activities. You may want to keep photos of your home office workspace with your tax documentation as evidence in case the IRS selects your return for audit.

Principal place of business. Your home office must be your principal place of business. This means you spend the most time and conduct important business activities here. Learn more about the home office deduction. If you take out a loan or use a credit card to cover business expenses, you can deduct the interest paid to your lender or credit card company as long as you meet the following requirements:.

You are legally liable for the debt. For example, if your parents take a second mortgage on their home to help you start a business, you are not legally liable for the debt. In that case, interest on the loan is not deductible, even if you make all of the payments on the mortgage. Both you and the lender intend for the debt to be repaid. The IRS tends to scrutinize loans between related parties, such as family members.

If you use the accrual method of accounting , you cannot deduct interest owed to a related person until the payment is made. Keep in mind that if a loan is part business and part personal, you need to divide the interest between the business and personal parts of the loan.

Legal and professional fees that are necessary and directly related to running your business are deductible. These include fees charged by lawyers, accountants, bookkeepers, tax preparers, and online bookkeeping services such as Bench. The Tax Cuts and Jobs Act of eliminated the deduction for moving expenses for all nonmilitary individuals, but businesses can still deduct the cost of moving business equipment, supplies and inventory from one business location to another.

If you rent a business location or equipment for your business, you can deduct the rental payments as a business expense.

Keep in mind, rent paid on your home should not be deducted as a business expense, even if you have a home office. That rent can be deducted as a part of home office expenses. Salaries, benefits and even vacation time paid to employees are generally tax-deductible, as long as they meet a few criteria:. If telephone and internet services are integral to your business, they can be deductible business expenses.

Keep in mind, if you use a landline at home, you cannot deduct the cost of your first line, even if you use it solely for work. However, if you have a second landline devoted to the business, the cost of that line is deductible. If you use your cell phone and internet connection for both personal and business reasons, you can only deduct the percentage allocable to business use.

As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business and you need to keep the following documentation related to the meal:. The easiest way to track business meal expenses is to keep your receipt and jot down notes on the back about the details of the meal.

All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals and more. You can reference the IRS website for a full list of deductible business travel expenses.

To qualify as work-related travel, your trip must meet the following conditions:. If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it. If your car use is mixed between business and personal reasons, you can only deduct costs that related to the business usage of the vehicle. You can deduct the cost of your business insurance on your tax return. To qualify as a tax deduction, your work area has to be used exclusively for business i.

You can write off office supplies including printers, paper, pens, computers and work-related software, as long as you use them for business purposes within the year in which they were purchased.

You can also deduct work-related postage and shipping costs. Be sure to file all receipts for office supply purchases, for documentation. If using the phone and internet is vital to running your business, you can deduct these expenses. If, however, you use the phone and internet for a mix of work and personal reasons, you can only write off the percentage of their cost that goes toward your business use.

If you borrow money to fund your business activities, the bank will charge you interest on the loan. Come tax season, you can deduct the interest charged both on business loans and business credit cards. You can also write off any fees and additional charges on your business bank account and credit card, such as monthly service fees and any annual credit card fees. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal finance, energy and cybersecurity.

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Send feedback to the editorial team. Rate this Article. Thank You for your feedback! Something went wrong. Please try again later. You can deduct the business part. Refer to chapter 4 of Publication , Business Expenses , for information on deducting interest and the allocation rules.

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. If you use your car in your business, you can deduct car expenses.

If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. For a list of current and prior year mileage rates see the Standard Mileage Rates.

This list is not all inclusive of the types of business expenses that you can deduct. For additional information, refer to Publication , Business Expenses. More In File. What Can I Deduct? It is important to separate business expenses from the following expenses: The expenses used to figure the cost of goods sold,.

Direct labor costs including contributions to pensions or annuity plans for workers who produce the products.