Unlock Your Tax Savings: The Ultimate Guide to Business Expenses
Based on IRS Publication 535, this interactive guide demystifies business deductions. Learn what you can claim, maximize your savings, and stay compliant with confidence.
The Golden Rules of Deductibility
For an expense to be deductible, it must meet two fundamental tests.
Ordinary
An expense that is common and accepted in your trade or business. It doesn't have to be habitual; it just needs to be a recognized cost within your industry.
Necessary
An expense that is helpful and appropriate for your business. It doesn't have to be indispensable to be considered necessary.
Major Deduction Categories
Click on a category to explore the key tax benefits and rules.
Interactive Deduction Simulators
Choose the most advantageous deduction method for your situation.
🚗 Vehicle Expense Calculator
🏠 Home Office Calculator
Compliance Cornerstones
Understanding these concepts is key to accurate and defensible tax filing.
Deduct vs. Capitalize?
Follow this flow to decide how to treat a cost.
1. Does the cost provide a future economic benefit extending substantially beyond the current year?
YES ➔ Capitalize the cost.
Add it to the basis of an asset and recover the cost over time through depreciation or amortization.
Examples: Business startup costs, purchasing machinery, building improvements.
NO ➔ Deduct the cost currently.
It's likely a repair, maintenance, or other current operating expense.
Examples: Routine maintenance, supplies, advertising.
The Importance of Recordkeeping
The burden of proof is on you, the taxpayer. Without proper records, deductions can be disallowed upon audit. Your records must prove:
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The Amount: Keep receipts, invoices, and bank statements that clearly show the amount of the expense.
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The Business Purpose: Your records should explain how the expense was ordinary and necessary for your business. For travel, meals, and vehicle use, this means keeping logs of who, what, when, where, and why.