Self-Employed Tax Deductions with Examples

A self-employed landscape designer works at a job site

When you’re self-employed, you can deduct the expenses you incur for your job as long as they are considered necessary and ordinary to earn income. Here are nine real-life situations in which self-employed tax filers can claim a tax deduction. 

Can I deduct advertising and marketing expenses for my small business? 

Example: 

A dog walker wants to get the word out about their business within local neighborhoods. They decide to create business cards for their dog-walking business, and they also want to hire someone to build a website for their business. 

What is deductible: 

The cost of creating business cards, website subscription fees, and the cost of hiring a designer can be deducted on their tax return. This is because the IRS understands that to promote a business and attract clients, you must advertise your services. Whether you opt for traditional or digital marketing, these expenses are usually deductible. 

Can I deduct computer software expenses for my small business? 

Example: 

A content designer does some freelance work in the evenings and on weekends. They get a new computer for home and purchase their own access to data visualization platforms. They also need to edit images and add copy for their clients, so they invest in photo editing software. 

What is deductible: 

Many self-employed people rely on specific software to do their job. In fact, if you work in a creative field like web design, photography, or blog writing, your entire business may revolve around the programs you use.  

The IRS allows you to deduct the cost of off-the-shelf software products the year you put them into use. “Off-the-shelf” means the software is not custom-designed and is available to the general public for purchase. 

Can I deduct tools and equipment expenses related to my small business? 

Example: 

A landscape designer needs a mower, an edger, and a blower to get their business started. They also need a trailer to transport all the equipment. The truck they use to haul the trailer is also used as a personal vehicle when they are not on the job. 

What is deductible: 

When you work for yourself, the IRS will allow you to write off your business equipment. In the case where tools are especially expensive – like a mower, edger, blower, and trailer could be – they can either be written off in the year they are used or they could be depreciated

The truck is not a tax deduction, but the landscape designer could write off the miles they travel for business. This accounts for the wear and tear that happens to the vehicle while they are on the job. 

Learn more: Deducting Business Mileage: The Standard Rate vs. The Actual Expense Method   

Can I deduct the cost of meals used to entertain clients?  

Example: 

A photographer meets with a prospective client at a coffee shop to show their photography portfolio. They both order food and a drink. 

What is deductible: 

The photographer can write off half of what they spent at their business meeting. They’ll need to hang on to the receipt as proof of the expense. Good record-keeping practices can make claiming deductions easy during tax time.  

Under the current tax code, you can deduct 50% of the cost of your business-related meals. But, you’re no longer allowed to deduct entertainment expenses, so if your job-related conversation happens at a baseball game, you shouldn’t deduct the price of the tickets. 

Can I deduct licensing fees and related expenses? 

Example: 

A hair stylist must be licensed to cut, color, and style hair. Continuing education is required to renew licenses, and training must be completed to keep up with current trends and styles. 

What is deductible: 

License or regulatory fees paid to your local or state government are usually deductible. 

Learn more: How to File Your Taxes: A Guide for Hairstylists and Cosmetologists 

Can I deduct subscriptions needed to do my job? 

Example: 

A medical writer, who is a member of the American Medical Writers Association, has subscribed to AMWA Journal to stay informed of the latest news and opportunities in medical communications. 

What is deductible: 

A subscription to a trade or professional journal associated with your business is usually deductible.

Learn more: Subscriptions That Could Actually Be Tax Deductible 

Can I deduct business mileage? 

Example: 

An artist uses a van they bought just for business to transport artwork to and from galleries. At art festivals, they sell their paintings out of the van. 

What is deductible: 

If you use your vehicle to get from job site to job site, or for transporting your supplies to a point of sale, the IRS will allow you to deduct vehicle expenses based on the number of miles you travel. In the above example, the artist uses their van only for business, and not for any personal travel, so they do not have to divide their mileage between personal and business use. 

If you drive the same vehicle for work and for personal travel, you’ll need to track and report only those miles that count for the deduction. 

Learn more: Deducting Business Mileage: The Standard Rate vs. The Actual Expense Method   

Can I deduct the cost of shipping and materials? 

Example: 

A jewelry maker buys beads and shipping materials to run their Etsy shop. 

What is deductible: 

The cost of materials needed to make the jewelry and shipping materials that aren’t covered by Etsy. 

Read also: Etsy Shop Owners: You Might Have to Collect Sales Tax for Online Sales 

Disclaimer:
This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.