Freelancers can deduct expenses that are ordinary and necessary for their trade. This guide explains what counts, how to prove it, and a simple monthly routine that keeps April quiet.
How Schedule C views expenses
If you are a designer, tools like Figma and a co‑working membership make sense. If you are a developer, a laptop, Git hosting, and test devices are part of the job. Gray areas usually involve mixed use: the phone you also use personally, the car used for errands, or a spare bedroom that doubles as an office.
Think of your business as a small studio with its own bank account. Money that enters is income. Money spent to keep the studio running - tools, workspace, travel to clients - is deductible. For mixed use items like phone, internet, or a car, deduct only the business share and note how you computed it.
Common categories
Home office
If a space is used regularly and exclusively for work, you can deduct it. Use either the simplified method (rate times square footage) or actual costs (rent or mortgage interest, utilities, insurance) multiplied by the office percentage of your home. Take two photos each year and write down the measurements.
Vehicle
Deduct either the standard mileage rate times business miles or the business share of actual costs like gas, insurance, and maintenance. Commuting does not count. Keep a consistent mileage log that shows date, destination, and purpose.
Tools and software
Domains and hosting, design and dev software, email, storage, automation apps, shipping supplies, and similar items usually qualify. For large purchases like a laptop or camera, you may expense it in the year placed in service or depreciate it. Save the invoice and the in‑service date.
Phone and internet
If you do not have separate business lines, choose a reasonable business percentage, write down how you arrived at it, and use it consistently.
Meals and travel
Meals that advance business are generally partly deductible. Keep the receipt and note who and why. For trips that are primarily for business, flights, lodging, and local transport usually qualify. Keep an itinerary or agenda.
Professional services and protection
Accounting and legal services tied to your current trade, coaching related to the business, business insurance, payment processor fees, and bank charges are typically deductible.
Health insurance
Self‑employed health insurance is often deducted above the line rather than on Schedule C. Track it separately to avoid double counting.
Documentation that works
Each expense should have a receipt or invoice (what), a matching bank or card transaction (how you paid), and a short note if the purpose is not obvious (why). For mileage, the log is your receipt. For a home office, keep photos, measurements, and year‑end utility totals. Aim for a record that a stranger could follow.
Find Your Deductions uses confidence levels to show where evidence is complete. A receipt plus matching transaction and clear purpose yields high confidence. A transaction without a receipt prompts you to attach supporting details.
A simple monthly routine
On the first Friday of each month, open your dashboard. Review last month’s charges grouped by your smart rules. Confirm any splits for phone or internet, attach a few receipts from your downloads folder, and add an entry to the mileage log for any client visits. This takes about 10 to 15 minutes.
Each quarter, export a summary by Schedule C category and use it for estimates. In December, take photos of your office, confirm square footage, choose your vehicle method for the year, and download processor fee reports so they match incoming 1099s.
Two quick examples
A designer splits time between home and a co‑working space. She documents a 60 percent business share for phone and internet, auto‑tags co‑working fees, and writes short notes on client meals. At tax time, her records read clearly.
A developer buys a new laptop in July. He saves the invoice, records the date he first used it for work, and tags the purchase to the project that required it. After consulting a CPA, he chooses between expensing and depreciation with confidence.
Pitfalls to avoid
Keep business and personal spending separate if possible. Do not claim 100 percent of a mixed use expense unless it truly is 100 percent. Do not treat commuting as business travel. Do not let the perfect mileage log prevent a consistent one.
Where the product fits
Connect the accounts you use for work, import gaps with CSVs, and set a few smart rules so recurring vendors land in the right category with the right note. Add a sentence of context and attach the receipt when something is unclear. When it is time to file, export a clean summary by category for your tax pro.
For deeper topics, see the charitable giving guide for non‑cash donations and volunteer costs, and the medical deductions guide for timing considerations.
Bottom line
You do not need to memorize tax code. You need a clear, consistent story about your business and reasonable evidence behind each deduction. Follow the routine for a year and April becomes paperwork, not a fire drill.