Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Business; Form 1040, Line 12

Business Expenses In Scope for VITA/TCE

Types of Business Expenses

Taxpayers deduct the costs of running their business—otherwise known as business expenses. A business expense must be both ordinary and necessary to be a deductible expense. An ordinary expense is one that is common and accepted in the taxpayer's industry. A necessary expense is one that is helpful and appropriate for the taxpayer's trade or business. Examples of these expenses include the following:

  • Advertising
  • Car and truck expenses
  • Commissions and Fees
  • Insurance
  • Other Interest
  • Legal and professional services and fees
  • Office expenses
  • Rent or lease expenses
  • Repairs and maintenance
  • Supplies
  • Taxes and licenses
  • Travel
  • 50% of business meals and entertainment
  • Utilities (including telephone)

All ordinary and necessary expenses incurred in a self-employed taxpayer's business must be reported. For details, see Schedule C instructions for examples of these types of expenses.

Caution

Every self-employed taxpayer must claim all allowable deductions in computing net earnings from self-employment.

Form 1040, Schedule C Instructions

Form 1040, Schedule C Instructions