Complete List of Self-Employed Expenses and Tax Deductions

Self-employed professionals face unique challenges when tax season comes around. But because they don’t have taxes withheld from their paychecks like traditional workers, they can use deductions to cover their expenses and lower their tax burden. But when it comes to self-employed deductions, the process certainly isn’t one-size-fits-all.

Deductible expenses are those that are seen as “ordinary and necessary” for conducting business. These expenses can range from advertising to utilities and everything in between. Remember, however, that you can only deduct the business use of the expense you’re deducting.

This list is relevant for many self-employed professionals. This may include ridesharing drivers, such as Uber or Lyft drivers, who claim large mileage deductions, or writers who might take the home office deduction as part of a quiet refuge from the corporate scene. These deductions can also apply to designers, housekeepers, photographers, construction workers, consultants or any other professionals who work for themselves.

Some tax deductions may not apply to your profession, but you might be surprised by the number that do. When you’re ready to file, you’ll list the majority of your deductions in Part II of your Schedule C (Form 1040). If you have less than $5,000 in claims, you may be able to use Schedule C-EZ. Whichever you choose, both are due April 15, along with your annual tax return.

(NOTE: If April 15 falls on a weekend or holiday, it is observed the following Monday. In 2016, this means your taxes aren’t due until April 18. In Massachusetts and Maine, the delayed celebration of Patriot’s Day further moves the tax deadline to April 19.)

Here is a list of common expenses that are ordinary and necessary for many self-employed individuals. Note that all of the lines specified are for Schedule C only, with two exceptions noted below.

Less Common Expenses for the Self-Employed

You might encounter some of these expenses in your line of work, but they’re generally less common.

Health Insurance Deduction (Line 29 of Form 1040)

You can deduct the costs of your personal health insurance premiums as a self-employed person as long as you meet certain criteria:

• Your business is claiming a profit. If your business claims a loss for the tax year, you can’t claim this deduction.
• You were not eligible to enroll in an employer’s health plan. This also includes your spouse’s plan. If you were eligible to enroll in one and chose not to, you cannot claim this deduction.
• You can only claim premiums paid for the months when you were not eligible for an employer’s health plan.

Self-Employed Contributions Act (SECA) Tax Deduction (Line 27 on Form 1040)

If you’re a traditional employee, your Federal Insurance Contributions Act tax burden, known as FICA, is split between you and your employer. If you’re self-employed, you’re responsible for paying your own share of those Social Security and Medicare contributions, collectively known as SECA.

But fear not! You too can be taxed just like your traditionally employed peers by claiming an SECA deduction on Line 27 of Form 1040. You will compute this amount as part of Schedule SE.

While it may seem like a frustrating and time-consuming process, tracking your expenses and claiming them as deductions can save you a good amount of money when it comes time to file taxes. You can also save time and relieve some stress by using financial software like QuickBooks Self-Employed to track expenses throughout the year and automatically classify them as deductions, but it’s also smart to keep this list handy to ensure you’re on the right track.

For more tax-time tips, check out our guide to taxes for the self-employed. For other expenses that may qualify for a personal deduction, see our article on Schedule A deductions. And to see a list of common expenses for your profession, see our guides below:

• Cleaning Professionals
• Construction and General Contractors
• Consultants
• Ridesharers