5 Often Overlooked Small Business & Gig Work Expenses You Should Write Off Every Year

Is it possible you could be writing off more as a small business owner or gig worker? These 5 often overlooked write-offs may surprise you. 

Note: This article is for small business owners, self-employed individuals, and gig workers who report their income from those activities with their personal tax return on a Schedule C (1040) Form. One way to help you avoid missing deductions is to read the schedule C instructions and to be familiar with the schedule C form.

1) Tax prep fees 

You can write off tax prep fees paid during the tax year for which you are filing a tax return. Usually, this means the fees paid for the previous tax return. 

But there is a catch. If you prepared your own tax return, you can only deduct the portion of the fees attributed to the business or the gig activity. 

For those paying a tax professional, it may be different. If the only reason you’ve engaged a tax professional for your tax preparation is because of the increased complexity of your tax return due to the business or self-employment, you may deduct the full costs of tax preparation, whether related to the business activity or not. This rule came about from a court case. 

Tax prep fees should be included on line 17 on the 2022 Schedule C. 

2) Insurance

Most business owners remember to deduct business insurance, but some professions may have deductible insurance that may be missed. A gig worker may have insurance that’s required specifically because of the work they do, and that is deductible. 

For example, on-demand drivers and food delivery drivers often need additional coverage for their vehicle insurance to cover the gig work. That portion of their vehicle insurance is fully deductible. How much, if any, of the remaining vehicle insurance is deductible depends on other factors, which will be covered under vehicle expenses. 

Insurance is usually deducted on line 15 of the Schedule C.

3) Vehicle expenses

Deducting vehicle expenses can be a big deduction for many gig workers and business owners. Some self-employed individuals who do just a little driving don’t bother with tracking mileage and trips for this deduction. But it can add up. 

For 2024, the business mileage deduction for the standard mileage rate method is 67 cents per mile. It may not sound like much, but just 100 miles gives you a deduction of $67. 

Most self-employed individuals can and do use the standard mileage rate method when possible. This is simpler, but when this is done, the only related actual costs that can be deducted are generally tolls and parking. 

Vehicle insurance, with the exception noted previously, isn’t deductible if using the standard mileage method. If using the actual costs method, then at least some of the costs of insurance will be deductible.

A good resource to help you determine if you can and should use the standard mileage method or the actual costs method is here

Vehicle expenses are entered on line 9 of the Schedule C, although additional entries are needed in part IV, and another form may be required. Business travel overnight outside of the area of your tax home is entered on line 24a of the Schedule C.

4) Dues and subscriptions

Like all valid deductions, expenses of this type need to have a business purpose and be ordinary and necessary business expenses. 

The membership fees of trade associations and professional organizations can be valid deductions. For me my membership in the National Association of Tax Professionals is deductible. 

Any membership with an organization that has a strong entertainment element or purpose is not deductible. For example, I can’t deduct a country club membership even if I am only going there to try to get clients. 

For publications, they also have to have a specific business purpose and not be for entertainment or another purpose. If I subscribe to my local newspaper, that cannot be deducted. But if I subscribe to the “Do Taxes Better” newsletter, that could be deducted. IRS Pub 535 provides more details. 

These types of deductions are usually entered as “other” deductions in Part V of the Schedule C. 

5) QBI deduction

The Qualified Business Income (QBI) deduction is a relatively new deduction. Most self employed taxpayers qualify for this deduction on up to 20% of their business or self-employed income. 

There are limitations, including income-based limitations. Most tax software do a good job of capturing this deduction, but taxpayers should verify that it’s getting applied as is appropriate. IRS Pub 535 provides details on this credit and Form 8995 is used to calculate the QBI deduction.

The QBI deduction isn’t entered on the Schedule C. Instead it is entered on line 15 of 2022 Form 1040. 

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