Self-Employed Tax Deductions: The Complete Expenses List & Checklist
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The deductions most self-employed people miss are not exotic — they are the ordinary costs that never got logged: the phone bill, the software subscription, the mileage, the bank fees, the half of self-employment tax that is deductible automatically. A deduction you cannot evidence is one you will not claim, so this is a checklist plus the record each item needs. (Organisational guidance, not tax advice — rules differ by country, state and situation.)
The checklist
| Category | What it covers | The record you need |
|---|---|---|
| Advertising & marketing | Ads, website hosting and domain, business cards, printing, portfolio site | Invoice or receipt |
| Vehicle | Mileage or actual running costs — one method per vehicle | A contemporaneous mileage log either way |
| Home office | A share of housing costs, if you meet both tests below | Square footage and the basis of the split |
| Software & subscriptions | Design tools, accounting, cloud storage, stock assets, domain renewals | Card statements plus the vendor receipt |
| Phone & internet | The business share — rarely 100% | The bill plus your stated business-use percentage |
| Fees | Payment processing, marketplace, bank charges, currency conversion | Processor statements — these are large and invisible until categorised |
| Professional services | Accountant, bookkeeper, lawyer, consultant | Invoice |
| Insurance | Liability, professional indemnity, equipment cover | Policy and payment record |
| Equipment & tools | Computers, cameras, trade tools. Durable items may be depreciated rather than expensed at once | Purchase invoice; keep it for as long as you own the item |
| Supplies | Consumables used doing the work | Receipt |
| Education | Courses, books, certifications that maintain or improve skills for your current business | Receipt plus a note on relevance |
| Travel | Business trips — transport, lodging | Itinerary and receipts; keep separate from meals |
| Meals | Business meals, subject to limits | Receipt plus who you met and why. Keep in its own category |
| Rent or lease | Premises, equipment, storage | Lease and payments |
| Contractors | Anyone you paid to help | Their invoice, and their W-9 if US-based and over the reporting threshold |
| Health insurance premiums | Often deductible for the self-employed, with conditions | Premium statements — ask your accountant, this one has real rules |
| Retirement contributions | Self-employed retirement plans | Plan statements |
| Half of self-employment tax | Applied automatically at filing | Nothing to keep — but know it exists |
Home office: the two tests that decide it
This is the deduction people most often claim wrongly and most often skip entirely. The IRS states two conditions [verified — IRS home office deduction page]:
- Regular and exclusive use: "You must regularly use part of your home exclusively for conducting business." Exclusively is the operative word — a desk in the corner of a bedroom that is also a bedroom fails; a room used only for work passes.
- Principal place of business: "You must show that you use your home as your principal place of business." If you work elsewhere too but use home substantially and regularly for the business, you may still qualify.
There are two calculation methods — a simplified one that multiplies a prescribed rate by your office's square footage, and an actual expenses one that apportions real housing costs. The prescribed rate and its square-footage cap are set by the IRS and change, so take the current figures from the IRS rather than from any blog, this one included.
The six most commonly missed
- Payment processing fees. On $40,000 of card-taken revenue at roughly 2.9% + 30¢, this is well over $1,200 a year — and it is invisible if you record income net instead of gross.
- The business share of phone and internet. Not glamorous, claimed monthly, adds up.
- Mileage on short local trips. One 18-mile round trip a week is 900 miles a year — see the mileage log guide for what that is worth.
- Software you forgot you subscribe to. Annual renewals are the ones that escape, because they appear once and never again.
- Bank charges and currency conversion on international payments — the FX spread is usually larger than the visible fee.
- Anything under $50. Across a year the small entries are routinely a fifth or more of total costs; nobody skips a $1,200 invoice, everybody skips a $20 one.
The four most commonly claimed wrongly
- Commuting. Home to your regular workplace is not deductible, in either direction. It is usually the largest wrong number in an amateur log.
- 100% of a mixed-use cost. A phone at 60% business, recorded with a reason, is defensible. The same bill claimed in full is what turns a routine question into a wider look.
- Ordinary clothing. Something you could wear outside work generally does not qualify, even if you bought it for work.
- Education that qualifies you for a new trade — as opposed to maintaining or improving skills in the one you already have. The distinction matters and is easy to get backwards.
The test that decides everything
A deductible expense generally has to be both ordinary — normal for your line of work — and necessary — helpful and appropriate for it. Necessary does not mean indispensable. If you can state in one sentence why the business needed it, and you have the receipt, you are in the right territory. If the sentence is a struggle, that is your answer.
Whatever qualifies, the record is what makes it claimable: tracking business expenses for taxes covers what the IRS accepts as proof, and expense categories covers where each item belongs. Every deduction you log lowers net profit, which lowers both income tax and the 14.1% self-employment tax on it — see how much to set aside.
Related: tracking expenses for taxes · expense categories · mileage log · self-employed tax calculator
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Quick FAQ
What can I write off as self-employed?
Costs that are ordinary and necessary for your business: advertising, vehicle use, a qualifying home office, software, the business share of phone and internet, processing and bank fees, professional services, insurance, equipment, supplies, relevant education, business travel and meals, rent, contractors, and often health insurance premiums and retirement contributions. Half of your self-employment tax is deducted automatically at filing.
What is a list of allowable expenses for self-employed people?
The table at the top of this page is that list, with the record each item needs beside it — because the record is what turns an expense into a deduction you can actually claim.
Can I deduct my home office?
If you meet both IRS tests: the space is used regularly and exclusively for business, and your home is your principal place of business (or you use it substantially and regularly for the business). A shared-use corner of a room fails the exclusivity test. Two calculation methods exist — a simplified rate-per-square-foot and an actual-expenses apportionment — and the current rate should come from the IRS.
Can I deduct my phone?
The business portion. Record the full bill, the percentage you use for business, and how you arrived at it. Claiming 100% on a phone that is obviously also personal is a common and avoidable error.
Do I need receipts for everything?
Keep them for everything you can — a phone photo takes seconds. A bank statement proves money moved but not what it bought, so it is weaker evidence on its own. The small entries matter most here, because they are both the easiest to lose and collectively a large share of the total.
What can I not deduct?
Commuting between home and your regular workplace, personal expenses, ordinary clothing you could wear outside work, and education that qualifies you for a new trade rather than improving your current one. Also anything you cannot explain in a sentence.
Does a deduction save me the full amount?
No — it reduces the income you are taxed on, so it saves you tax at your marginal rate plus the roughly 14.1% self-employment tax on that profit. A $1,000 deduction is not $1,000 back; on many solo returns it is somewhere in the region of $300–$400. Still worth logging.
General information to help you organise your records — not tax advice. Rules and thresholds change and vary by country and state. Confirm with a qualified tax professional before filing.