Check if this expense is deductible, before you toss the receipt.
For sole proprietors, subcontractors and small business owners who want to stop leaving money on the table at tax time.
Sound familiar?
- “You're not sure if that tool, truck cost, or job-site meal actually counts as a business write-off.”
- “You don't want to over-claim and invite an audit, or under-claim and hand the IRS more than you owe.”
- “Your receipts are a shoebox and you're guessing at what's deductible on your Schedule C.”
What this tool does
Checks an expense against the IRS 'ordinary and necessary' test (IRC §162) and the usual Schedule C deductibility rules for the trades. Flags partial deductions (like phone, vehicle and home-office costs) with the usual business-use split.
If you take an action based on what you read here, that action is yours. We are a guide, not an advisor, and we give this away for free.
General guidance, not tax advice. For your situation, talk to VITA, the IRS free tax preparation program (generally $69,000 or less), free for low-income tradespeople: www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers, 800-906-9887.
What the law actually says
- •The IRS lets you deduct expenses that are 'ordinary and necessary' for your trade (Internal Revenue Code §162). Ordinary means common in your line of work; necessary means helpful and appropriate.
- •Personal costs aren't deductible, and mixed-use costs (phone, vehicle, home office) are split to the business-use portion. Big equipment can be expensed in full under Section 179 or bonus depreciation instead of depreciated over years.
- •Keep records: receipts, a mileage log and a clear business reason. If the IRS asks, the deduction is yours to prove.