Small Business Expense Categories You're Probably Missing

Software, equipment, and client meals get claimed. The ones that slip through are usually those that don't announce themselves as business expenses — or that live somewhere other than Schedule C on the return.

Half your self-employment tax

The employer-equivalent portion of SE tax is deductible when calculating adjusted gross income — the IRS states this explicitly, and notes it's something wage earners can't do. It's automatic in most software, but worth confirming it appeared.

Self-employed health insurance

Self-employed people can generally deduct premiums for themselves, a spouse, and dependents, provided they aren't eligible for an employer-sponsored plan — including through a spouse's employer, which is the condition people most often trip over. TurboTax covers the mechanics.

The QBI deduction

Section 199A allows qualifying self-employed filers to deduct up to 20% of qualified business income. Kiplinger notes it's available to owners of pass-through entities, with income thresholds and restrictions for certain service businesses. Both the thresholds and the rules have been amended in recent years, so check current guidance rather than an old article.

Home office

Available whether you own or rent, but the space must be used regularly and exclusively for business. "Exclusively" is strict — the kitchen table doesn't qualify. IRS Publication 587 has the detail.

Retirement contributions

Contributions to a SEP IRA, SIMPLE IRA, or solo plan are generally deductible up to annual limits. This is one of the largest levers available to a sole proprietor and is routinely underused because it requires deciding before a deadline rather than at filing.

The quieter ones

Professional development — courses, certifications, industry publications, memberships — where it maintains or improves skills in your current business. Training for a different field doesn't qualify.

Also: payment processing and platform fees, business insurance, professional fees for accountants and lawyers, and bank charges on business accounts.

The thing that actually matters

Substantiation. A deduction you can't document is a deduction you may lose. Record the amount, the date, and the business purpose — the last one is what people skip and what gets asked about.

Bank and card statements are the most complete record of what you actually spent. StatementOrganizer.com will categorise a year of them so you can spot the deductible items you'd otherwise miss.

References

• Overlooked Tax Deductions and Credits for the Self-Employed — Kiplinger
• 20 Tax Deductions for Self-Employed People — TurboTax (Intuit)
• Self-employment tax (Social Security and Medicare taxes) — Internal Revenue Service
• Self-employed individuals tax center — Internal Revenue Service

This article is for general information only and is not tax advice. Deductions described are US federal and subject to eligibility rules, income thresholds, and annual limits that change — several have been amended by recent legislation. Verify current rules on IRS.gov or with a qualified tax professional before claiming.