Self employed deductions people miss

Most self employed people I speak to are leaving money on the table, and it is rarely because they do not know deductions exist. It is because the record was not kept, so the deduction cannot safely be claimed.

Vehicle mileage

Almost always the largest missed deduction for anyone who drives for work. At the 2026 second half rate of 76 cents per mile, even modest driving adds up to thousands. The rules and the two 2026 rates are covered in detail on the IRS mileage rate page.

Home office

The space has to be used regularly and exclusively for business, and be your principal place of business. Exclusively is the word that disqualifies most people, because the kitchen table does not count. If you have a room or a clearly defined area that is only used for work, claim it. The simplified method gives five dollars per square foot up to 300 square feet with almost no record keeping, and for most people it is the sensible choice.

Phone and internet

Deductible at the business use percentage rather than in full, unless you have a line used only for business. Have something behind the percentage you claim rather than a round guess.

Tools, equipment and software

Tools, a laptop, a printer, subscriptions to software you actually use for the business. Larger purchases may need to be depreciated over several years, though Section 179 often allows the whole cost in the year of purchase. This is worth an accountant's input because the choice affects several years of returns.

The ones people forget entirely

• Half of your self employment tax. Deductible automatically, but only if you know to take it.
• Health insurance premiums if you are self employed and not eligible for an employer plan.
• Professional insurance and licence fees.
• Bank and payment processing fees. Card processing fees on every invoice add up substantially over a year.
• Continuing education that maintains or improves skills for your current trade.
• Retirement contributions through a SEP IRA or Solo 401k, which for a good year can be a very large deduction indeed.

The record is the deduction

A deduction you cannot evidence is not a deduction, it is a risk. Two practical habits fix most of this:

• Photograph receipts the day you get them. Thermal paper receipts fade to blank within a year or two, sometimes months in a hot vehicle. A photograph does not.
• Separate the money. A dedicated business account and card turns your statement into most of your bookkeeping and removes the annual job of picking business spending out of personal spending.

Sources

• IRS small business and self employed centre
• IRS home office deduction, including the simplified method
• IRS Publication 535 on business expenses

This is general information, not tax advice. Deduction rules are detailed and depend on your circumstances. Speak to an accountant before filing.