Question

I have a question about how to deduct business expenses. If I deduct business expenses on my tax return what information do I provide and where? How do I know what is considered an acceptable business expense?

Answer

If you’re self-employed you may deduct your business expenses on the same form you use to report your business income. Ex: Schedule C for a sole proprietor

If you’re an employee, you may have deductible unreimbursed business expenses. If so, use Form 2106 to report the expenses. Form 2106 results transfer to your Schedule A.

To know how to deduct business expenses from your tax return, you must understand what is considered a business expense. And it is important to not confuse personal expenses with your business expenses.

A business expense must be considered both necessary to the function of the business and ordinary to the business. To be considered an ordinary business expense it must qualify as something commonly accepted in your industry. A necessary business expense must be considered useful and relevant to your business industry.

To qualify as a business expense, the expense does not have to be considered essential to be viewed as necessary.

 

Related Topics

Related Resources

Where’s my refund – Oregon?

Looking for more information about your Oregon refund? Find out details on how to check your refund status, who to contact, and more from H&R Block

Claiming Job Hunting Expenses

Can you deduct job hunting expenses from your taxes this year? Learn more from the tax experts at H&R Block.

Claim Business Expenses: Documents

Do you know which documents you need to claim business expenses? Learn more from the tax experts at H&R Block.

Tennessee Taxes

Do you have to pay income tax in Tennessee? Find out everything you need to know about Tennessee taxes, with help from the tax pros at H&R Block.