Answers · Individual tax · Form 1040
Tax Deductions for Self-Employed Individuals
Self-employed taxpayers may deduct ordinary and necessary business expenses allowed by law, subject to limitations, capitalization and substantiation.
How it works
The rule, and what it turns on.
Common categories include supplies, insurance, professional fees, vehicle, meals/travel, depreciation and home office where qualified.
Example
$1,200 professional liability insurance used solely for the business is generally a Schedule C expense.
Common mistakes
What we see go wrong, and what we do instead.
- Personal expenses.
- No receipts/logs.
- Expensing capital assets.
A better approach
- Create category-specific documentation procedures.
Authority
Where this comes from, so you can check it.
IRC §162(a) (ordinary and necessary trade or business expenses); IRC §262 (personal expenses generally nondeductible).
Relevant case law
Welch v. Helvering, 290 U.S. 111 (1933) - foundational interpretation of “ordinary and necessary.”
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930) - reasonable estimates may sometimes be permitted, but the rule
does not override strict substantiation requirements such as IRC §274(d).
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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