Written by Lorrie Contreras | Last updated: February 2026
Self-employed individuals can deduct ordinary and necessary business expenses on Schedule C. But some deductions attract more IRS scrutiny than others. Here is a practical guide.
Clearly Legitimate Deductions
These are well-supported deductions that are unlikely to trigger issues if properly documented:
- Supplies and materials used exclusively for business
- Professional services (accounting, legal, tax preparation)
- Business insurance premiums
- Software and subscriptions used for business
- Advertising and marketing costs
- Business phone and internet (business percentage only)
- Continuing education related to your current business
Deductions That Require Good Records
These are legitimate but require careful documentation:
- Home office deduction: Must be a dedicated space used exclusively for business. Keep measurements and photos.
- Vehicle expenses: Keep a contemporaneous mileage log. The IRS specifically requires documentation of business purpose, date, destination, and miles.
- Travel expenses: Must be for business purposes with documentation of business meetings or activities.
- Meals: Business meals with clients or for business travel. Keep receipts with notes about the business purpose. Generally 50% deductible.
Risky or Commonly Disallowed Deductions
These areas frequently lead to IRS adjustments:
- Personal expenses claimed as business: Clothing (unless uniforms), personal grooming, commuting to a regular workplace
- 100% vehicle deduction: If you use your car for both business and personal, only the business percentage is deductible
- Lavish entertainment: Entertainment expenses are generally no longer deductible
- Startup costs without proper election: Startup costs have specific rules for deduction timing
Best Practices
- Keep separate business bank accounts and credit cards
- Save all receipts (digital photos are acceptable)
- Record the business purpose for every deduction
- When in doubt, ask your tax preparer before claiming
Need help with your Schedule C? Learn about our self-employed tax services or contact us.