Keep more of what you earn by claiming ordinary, necessary business costs the right way this tax year. Small choices — tracking mileage, using a qualified home office, or recording office supplies — can reduce taxable income when they meet IRS rules.
Plan early and document everything. Use Schedule C for most items and Schedule SE to compute self-employment tax and its half deduction. For a regular home office, Form 8829 applies; the simplified method caps at $1,500.
Key moves include tracking vehicle miles at the 2025 IRS rate of $0.70/mile or using actual vehicle costs. Save receipts for phone, internet, equipment, and business-related insurance so each claimed amount stays audit-ready.
Think year-round. Consider retirement contributions (Solo 401(k), SEP, SIMPLE) and health insurance premiums reported on Form 7206 to lower your adjusted income. A clear record system makes claiming benefits simpler and safer for freelancers and small business owners in France who earn U.S.-sourced or U.S.-reported income.
Table of Contents
Key Takeaways
- Track ordinary business costs to legally reduce taxable income this tax year.
- Claim a home office (regular or simplified) and use Form 8829 when needed.
- Record vehicle mileage at $0.70/mile (2025) or use actual car expenses.
- Keep receipts for office supplies, phone, internet, and insurance to support claims.
- Use Schedule C, Schedule SE, and Form 7206 where applicable; plan retirement contributions for added savings.
Why deductions matter now: reduce taxable income this tax year
Small, timely choices about business costs can cut how much income is taxable this filing season. Acting before year-end makes a real difference for the amount you report and the payroll levies tied to that income.
Put documentation first. Record qualifying expenses—home office (Form 8829 or the simplified method), vehicle (standard mileage or actual expenses), and health premiums (Form 7206)—so each amount is supported for this year.
Choosing the right method changes your immediate savings. For example, the standard mileage rate (2025 at $0.70 per business mile) simplifies travel claims when tracking actual costs is hard.
« Timely accounting and clear records turn ordinary business expenses into measurable savings on your return. »
- Directly reduce reported income to lower both income tax and self-employment levies.
- Fund a SEP IRA, SIMPLE, or Solo 401(k) to shrink current income while saving.
- Keep receipts, logs, and separate business accounts so fees and travel claims stay audit-ready.
Self-employed tax deductions
A clear category list makes it easy to see what matters. Start by grouping regular business items: home workspace, vehicle use, insurance, retirement, and everyday business costs. This approach helps you spot what to track all year.
Key categories at a glance
Home office: choose annually between Form 8829 (regular method) or the simplified cap of $1,500.
Vehicle: use the 2025 standard rate of $0.70 per business mile or track actual fuel, repairs, insurance, and depreciation for the business-share of use.
Insurance & retirement: premiums for business liability, business auto, and group medical are generally deductible when linked to your trade. Contribute to a Solo 401(k), SEP, or SIMPLE IRA to lower current income.
How smart tracking turns expenses into real savings
Digitize receipts, log mileage for each trip, and keep invoices. Good records make claims audit-ready and improve cash flow planning.
- Organize by category so Schedule C lines map cleanly.
- Capture small office supplies and vendor fees — they add up.
- Use a separate account to keep business and personal funds distinct.
| Category | Common Forms | Quick rule | Record to keep |
|---|---|---|---|
| Home office | Form 8829 or simplified | Choose annually (max $1,500 simplified) | Floor plan, utility bills, receipts |
| Vehicle | Schedule C entries | $0.70/mile (2025) or actual costs | Mileage log, fuel receipts |
| Insurance & retirement | Form 7206; retirement plan forms | Premiums deductible when trade-related | Policy statements, contribution records |
| Everyday business | Schedule C lines | Track subscriptions, supplies, fees | Invoices, bank statements |
« Organize now so filing later is faster and safer. »
Home office deduction: business use of your home
How you measure and document a home workspace matters for your allowable business costs.
The workspace must be used exclusively and regularly for your trade. A dedicated room or a clearly defined area that you never use personally is required. A shared dining table usually will not qualify.
Regular vs. simplified method for home office costs
With the regular method you allocate the office percentage of your home to actual expenses: rent, deductible mortgage interest, homeowners insurance, utilities, repairs, and maintenance. Report those amounts on Form 8829.
The simplified method uses $5 per square foot up to 300 sq. ft. (max $1,500). You skip depreciation and report the result on Schedule C. You may switch methods each year to pick the best result.
Documents to keep for the year and audits
- Simple floor plan and photos showing exclusive use.
- Utility bills, rent statements, insurance and repair invoices with your allocation math.
- Calendar notes or logs proving regular use and any inventory storage rules that apply.
| Feature | Regular method | Simplified method |
|---|---|---|
| How calculated | Actual expenses × business percentage | $5 × business sq. ft. (max 300) |
| Forms | Form 8829 | Schedule C |
| Depreciation | Allowed for qualifying assets | Not allowed |
| Best if | Large home-related costs or complex utilities | Small space or minimal record-keeping |
« Keep clear records so the business part of your home expenses stands up to scrutiny. »
Vehicle and car expenses for work
Driving for work requires a clear choice between two ways to record vehicle costs. Pick the approach that matches your paperwork habit and mileage profile.
Standard mileage rate vs. actual expense method
Standard mileage: For 2025 the IRS rate is $0.70 per business mile. You can also add parking and tolls. This method bundles wear-and-tear into a simple number and eases recordkeeping for frequent travel.
Actual expense method: Deduct the business-share of real costs—fuel, insurance, repairs, maintenance, depreciation, and registration. Use this when receipts and detailed records show higher business costs than the mileage option.
What counts as business trips, parking, tolls, and maintenance
Business trips include client meetings, job sites, supply runs, and other travel away from your regular workplace. Commuting from home to a regular office is not deductible.
- Keep a contemporaneous mileage log with date, destination, business purpose, start/end odometer, and miles.
- Add parking fees and tolls to your mileage claims or actual expenses where allowed.
- When using actual costs, keep folders for fuel, service, insurance, and registration receipts.
« Only the business portion is deductible — separate personal miles and costs from your records. »
Tip: Reassess yearly. For heavy driving, the mileage rate often wins. For newer or high-cost cars, the actual method can produce a larger benefit. Choose the method that yields the best outcome and matches first-year rules for your vehicle.
Business travel and client meals
When travel supports a clear business purpose, many trip costs can lower your reported income for the year. Deductible travel requires you to be away from your tax home long enough to need sleep or rest.
Eligible expenses include airfare or train fares, lodging, rental cars or business mileage, local transport, baggage fees, and laundry. Keep itemized receipts for each cost and note the business purpose and dates.
Meals while traveling are generally limited to 50% of the actual amount or 50% of the standard per diem. Separate meal receipts from entertainment and avoid lavish settings.
- For client meals: be present, document attendees, and summarize the business discussion.
- Allocate any personal days on a mixed trip; only the business portion is deductible.
- Log phone and data charges tied to client support while on the road.
Recordkeeping matters: store confirmations, receipts, and a brief trip summary in a folder. Travel expenses are reported on Schedule C, and reimbursements may reduce your allowable claim.
« Good receipts and clear business purpose turn travel into defensible expenses. »
For more on managing business expenses, see managing business expenses.
Health insurance premiums and business insurance
Health and business insurance choices shape your annual costs and reporting needs.
Claiming health, dental and long‑term care costs
If you are not eligible for an employer plan, you can usually deduct these premiums on Form 7206. This adjustment to income can cover you, a spouse, dependents, and children under 27.
Long‑term care premiums have age‑based caps that change each year. Track your age limit for 2025 so you claim the right amount.
Business liability, vehicle and employee coverage
Policies tied to your trade—general liability, professional liability, business auto, and group medical for staff—are reported on Schedule C and lower net business income when valid.
- Keep policy documents, invoices, and proof of payment.
- Allocate bundled premiums so only business portions reduce reported income.
- Document employer‑paid shares for employees and handle them through payroll.
| Coverage | Where reported | Records to keep |
|---|---|---|
| Health, dental, LTC | Form 7206 (adjustment) | Invoices, proof of payment, eligibility notes |
| Liability & auto | Schedule C | Policies, endorsements, business purpose |
| Group employee plans | Schedule C / payroll entries | Premium invoices, payroll records |
« Keep clear policy records so premiums reduce reported business costs and hold up under review. »
Qualified Business Income deduction (QBI)
If your earnings come from a pass‑through business, the QBI rule may cut how much income you report.
The core benefit: eligible owners can claim up to 20% of qualified business income as a deduction on Form 1040. This lowers adjusted taxable income and can improve cash flow for the year.
Who qualifies for up to 20%
Full relief generally applies when taxable income is at or below $191,950 (single) or $383,900 (joint) for 2024. Above those levels, phaseouts and limits apply, especially for specified service trades like law, health, or consulting.
Income thresholds and forms to use this year
Use Form 8995 for simpler cases and Form 8995‑A when your situation is complex. Evaluate W‑2 wages and qualified property basis if your income exceeds thresholds.
- Coordinate QBI with retirement contributions, health insurance, and timing of income.
- Keep clear accounts and run example scenarios during the year to estimate the amount.
- Remember the provision is scheduled to sunset after 2025—plan conservatively.
« A well‑documented approach to QBI protects benefits and smooths year‑end planning. »
Self-employment tax deduction
Paying both payroll halves affects your bottom line. Running your own business means you cover the employer and employee shares of Social Security and Medicare.
Social Security and Medicare rates
The combined rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. An extra 0.9% Medicare surtax applies if combined wage and self-employment income exceed $200,000 (single) or $250,000 (joint).
How the 50% adjustment works
You compute the full amount on Schedule SE. Then you may claim half of that amount as an adjustment on Schedule 1 of Form 1040.
This benefit lowers adjusted gross income but does not change the net earnings used to compute the original levy.
| Item | Rate / Rule | Form | Effect |
|---|---|---|---|
| Social Security | 12.4% of net earnings | Schedule SE | Included in 15.3% total |
| Medicare | 2.9% + 0.9% surtax over threshold | Schedule SE / Form 8959 if applicable | May add surtax if income exceeds limits |
| 50% adjustment | Half of computed amount | Schedule 1 (Form 1040) | Lowers AGI, not net business earnings |
« Calculate the levy on Schedule SE, then claim the half‑share on Schedule 1 to lower your AGI. »
Track earnings during the year to refine quarterly estimates and avoid penalties. Good accounting and clear records tie net business income to the calculated amounts and support your claim when filing.
Office supplies, equipment, and internet/phone
Small purchases and monthly services matter more than you think. Stocking paper, ink, postage, and subscriptions creates simple, year‑of purchase write‑offs when used for the business.
Everyday supplies add up: keep invoices and a clear purpose note for each purchase. Items like paper, printer cartridges, and postage are fully deductible in the year you buy them.
Phone and internet: separate personal from business use
Internet, web hosting, and business software are deductible to the extent of business use. Annotate monthly bills and estimate a reasonable business percentage for mixed services.
The first home landline is not deductible, but a second line for commercial calls generally is. Allocate cell phone costs by documented usage for calls, data, and apps tied to work.
Equipment, maintenance, and recordkeeping
Routers, monitors, and printers may be expensed under Section 179 or depreciated over time depending on your election. Small repairs and routine maintenance are usually deductible—keep service tickets and warranty records.
- Use separate accounts where possible to simplify bill tracking.
- Keep invoices, credit card statements, and annotated bills to support each claim.
- Reassess subscriptions yearly to confirm they remain ordinary and necessary for the business.
« Document purchases now so routine costs become defensible business expenses later. »
Depreciation, Section 179, and bonus depreciation
Deciding whether to expense a purchase today or spread its cost over years affects both cash flow and reported business income.
Longer-lived assets are usually depreciated over their class life. That spreads the write‑off across several years and smooths reported profits.
Section 179 lets you elect to expense eligible equipment up to $1,220,000 for 2024, phasing out after $3,050,000 of purchases. A business income cap can limit how much you claim.
When to expense vs. depreciate
Use Section 179 or bonus depreciation when you need immediate relief. Bonus depreciation may allow a large first‑year write‑off (about 60% for qualifying 2024 property).
If you prefer steady accounting, choose standard depreciation and map each asset to its class life and method. File Form 4562 to report Section 179, bonus, and remaining depreciation.
Practical rules and records
- Weigh cash flow and projected profits before electing an expense.
- Keep purchase agreements, placed‑in‑service dates, serial numbers, and invoices.
- Coordinate purchases with year‑end planning and review insurance for new assets.
« Use Form 4562 to make elections and substantiate the amount you claim. »
Professional fees, bank charges, and credit card interest
Professional services and bank fees quietly chip away at profits unless you track them carefully.
Keep clear records. Payables to CPAs, bookkeepers, attorneys, and consultants are allowable when the work directly supports your business. Store engagement letters and invoices to show the amount paid and the purpose.
Accountants, processors, and loan interest
Bank service charges, merchant processing fees, and platform transaction fees lower reported profit. Note each line on your ledger so Schedule C entries match bank statements.
Interest rules: Interest on a bona fide business loan is generally deductible; keep loan papers and amortization schedules. Credit card interest is deductible only when tied to business purchases, even if charged on a personal card.
- If one card mixes personal and business, allocate interest each billing cycle.
- Negotiate processing rates to reduce fees and the overall amount you report.
- Include related insurance endorsements or licensing fees when required for operations.
« A tidy account trail makes fee and interest claims quick, accurate, and defensible. »
Education to improve your current skills
Training that preserves or improves what you already do professionally can be claimed as a work-related expense. Courses and workshops count when they maintain or enhance skills for your current trade or are required to keep a license or status.
What you can claim: tuition, books, lab fees, software, and reasonable travel tied directly to the qualifying education. Keep syllabi, receipts, and certificates showing how the course supports current income.
- Classes and CE that improve existing business skills usually qualify as a deductible expense.
- If a course makes you eligible for a new trade, it is not allowed as a business write-off.
- When travel is involved, separate personal days and keep itemized lodging, airfare, and transport records.
- Avoid double claiming: you cannot use the same cost on Schedule C and also take an education credit for the same year.
« Document the business purpose: certificates, CE credits, and course outlines make claims defensible. »
Consider paying before year-end to lock the benefit into this year. Review professional rules in France so required training tied to client or employer demands is captured accurately.
Cost of goods sold, startup and organizational costs
A clear inventory method saves time and prevents surprises when you file for the year.
Cost of goods sold is the basic formula many product sellers use: beginning inventory plus purchases and production costs, minus ending inventory. Report the result on Schedule C so your gross profit and net income reflect true business activity.
Small business taxpayers—those with average annual gross receipts at or below the simplified threshold—may use easier inventory methods. This reduces bookkeeping while still keeping accounting accurate for French residents reporting U.S. income.
Inventory basics and tracking stock
- Start each period with an opening inventory count, add purchases and production costs, then subtract ending inventory to compute COGS.
- Keep purchase orders, vendor invoices, and stock counts. Regular spot checks and a physical year‑end count strengthen your records.
- Decide whether shipping, packaging, and handling are part of COGS or an operating expense, and apply that rule consistently.
Startup and organizational costs — up‑front write‑offs
You can deduct up to $5,000 of startup costs and $5,000 of organizational costs in your first active year. Amounts above the phase‑out threshold must be amortized over 15 years.
Startup costs include market research, travel to set up the business, initial training, and early advertising. Organizational costs apply to entity formation and related legal work.
| Item | Where reported | Immediate amount | Remainder |
|---|---|---|---|
| Cost of goods sold | Schedule C | Calculated per period | Not applicable |
| Startup costs | Schedule C / amortization | Up to $5,000 | Amortize over 15 years |
| Organizational costs | Schedule C / amortization | Up to $5,000 | Amortize over 15 years |
| Inventory insurance & equipment | Schedule C / Form 4562 | Premiums deductible when business‑related | Equipment may be Section 179 or depreciated |
« Keep routines for counting, invoicing, and documenting so product costs reflect real activity. »
Advertising and marketing to grow your business
Treat each campaign as an investment: record results, invoices, and the intended audience. Good records make it clear that ads serve a business purpose and support amounts reported for the year.
Deductible ads: social, search, print, events, and promotional items
Most advertising costs are ordinary and allowable when they directly promote your trade. This includes social and search ads, print, radio, events, mailers, signage, and branded giveaways.
- Keep vendor invoices and platform reports to show spend and results.
- Separate meal or entertainment charges from promotional outlays; they follow different rules.
- Track campaign metrics and tie leads or clients to specific efforts when possible.
- Record platform fees, placement costs, and any creative or agency fees as business costs.
| Channel | What to keep | Why it matters |
|---|---|---|
| Social & search | Invoices, dashboard screenshots, CTR/lead data | Shows intent and performance for reporting |
| Events & mailers | Receipts, attendee lists, promo codes | Proves business purpose and reach |
| Promotional items & signage | Purchase orders, photos of distribution | Documents business use vs. personal |
« Tie each ad to measurable goals so advertising fees and costs stand up to review. »
Conclusion
Finish with clear steps to convert everyday costs into defensible savings when you file.
Focus on the high‑impact items: home office (Form 8829 or simplified), vehicle miles at $0.70/mile for 2025, business travel and 50% meal limits, health premiums on Form 7206, retirement contributions, QBI (Form 8995/8995‑A), and the 50% adjustment from Schedule SE/Schedule 1.
Use the right forms, keep receipts, mileage logs, and date‑stamped records, and time larger purchases to the year that gives the best outcome. Consider startup write‑offs, Section 179 or bonus depreciation for equipment, and reconcile advertising and professional fees regularly.
For a practical companion to planning and quarterly estimates, see this helpful guide to being your own boss. When in doubt, consult a qualified professional to validate strategies and ensure compliance.
FAQ
What are common deductible business expense categories?
Typical groups include office supplies and equipment, rent and utilities for a workspace, vehicle costs for business trips, advertising and marketing, insurance premiums, professional fees, travel and client meals, and retirement plan contributions. Track receipts and classify each expense by category to support your claims.
How does the home office deduction work?
You can claim a portion of home costs if a space is used exclusively and regularly for work. Choose between the simplified method, which uses a set rate per square foot, or the regular method, which prorates actual home expenses like mortgage interest, rent, utilities, and repairs based on business use.
Which method should I pick for calculating home office costs?
Use the simplified method for small, low-cost setups or when you want an easy calculation. Use the regular method if your home expenses are high and your business use percentage is large—this often yields a bigger write-off but needs more documentation.
What records should I keep for home office and other expenses?
Keep invoices, canceled checks, credit card statements, receipts, lease or mortgage documents, and utility bills. Maintain a floor plan or measurement for the workspace and a calendar or log showing regular use. Keep records for at least three years in case of an audit.
How do I deduct vehicle costs: mileage or actual expenses?
You can use the standard mileage rate, multiplying business miles by the IRS rate, or claim actual expenses including gas, repairs, insurance, depreciation, and registration apportioned for business use. Choose the method that yields the larger deduction and keep a detailed mileage log and receipts.
What counts as a deductible business trip or client meal?
Travel for meetings, conferences, and client calls away from your tax home usually qualifies—airfare, lodging, and transportation are eligible. Meals with clients are generally 50% deductible when directly related to business; retain separate receipts and note the business purpose and attendees.
Can I deduct health and business insurance premiums?
Health, dental, and qualified long-term care premiums may be deductible if you meet eligibility rules. Business insurance such as liability, property, and commercial auto policies is deductible as an ordinary business expense.
What is the Qualified Business Income (QBI) deduction?
QBI may allow eligible owners of pass-through businesses to deduct up to 20% of qualified business income, subject to income limits and phase-outs. Eligibility depends on business type, taxable income, and other factors; report QBI on the appropriate forms for the tax year.
How does the self-employment tax deduction work?
You pay Social Security and Medicare on net earnings, and you can deduct half of the self-employment tax when figuring adjusted gross income. This helps reduce taxable income while you still contribute to Social Security and Medicare.
Which office supplies and subscriptions are deductible?
Items like paper, printer ink, postage, software subscriptions, and small equipment are deductible when used for business. For mixed-use items such as streaming or cloud services, prorate the cost for business versus personal use and document the allocation.
How should I handle phone and internet costs?
If you use a personal phone or internet for work, allocate the business percentage and deduct that portion. If you have a dedicated business line or connection, you can deduct the full cost. Keep bills and a log of business calls or usage to substantiate the claim.
When should I expense equipment versus depreciate it?
Small-dollar equipment can often be expensed in the year purchased. For larger assets, consider Section 179 or bonus depreciation to deduct more upfront, or use regular depreciation to spread costs over several years. Limits and income caps may apply, so choose based on cash flow and taxable income.
Are professional fees and bank charges deductible?
Fees paid to accountants, attorneys for business matters, and payment processing or merchant service charges are deductible. Interest on business loans and credit card interest tied to business purchases is deductible; personal interest generally is not.
Can I deduct education and training expenses?
Courses, workshops, books, and conferences that maintain or improve skills in your current line of work are typically deductible. Costs for education that qualify you for a new trade or profession are not deductible. Keep receipts and describe how the education ties to your work.
How do I handle inventory, startup, and organizational costs?
Cost of goods sold and inventory tracking affect gross profit and are deductible when sold. You may be able to deduct certain startup and organizational expenses up front or amortize them over several years. Follow the rules that match your business size and filing method.
What advertising and marketing expenses qualify?
Expenses for digital ads, social media campaigns, website design, print materials, events, and promotional items are generally deductible. Track each campaign’s cost and keep receipts, invoices, and contracts to support your marketing expenses.
