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