What Counts as a Business Expense: The Gray Areas

The IRS rule is simple in theory, ordinary and necessary, and confusing in practice. Here's where freelancers actually get tripped up.

This is general information, not tax advice, a CPA who knows your specific situation is worth the cost if you're unsure about a significant deduction. That said, a few patterns come up constantly for freelancers.

Usually fine

The genuine gray areas

Usually not fine

Personal expenses that happen to touch your work (your regular gym membership, your everyday commute, a laptop used mostly for personal use with occasional work) don't become deductible just because you can construct a business rationale for them. When in doubt, the test is whether the expense would exist at all if you didn't run this business.

Keep the records regardless

Whatever you deduct, the burden is on you to substantiate it if asked. The expense tracker keeps a running log with categories, so you're not reconstructing a year of spending from memory in March.

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