CITADEL

To help you decide whether a particular expense is likely to be deductible, we've provided a list of the most common business deductions.

  • advertising
  • bad debts from sales or services (for those using accrual accounting)
  • bank fees on business accounts
  • car and truck expenses
  • commissions and fees
  • cost of goods sold
  • depreciation
  • dues for trade associations and other not-for-profit, business-related organizations
  • employee benefits
  • Gifts to customers, suppliers, etc.
  • insurance (casualty and liability)
  • interest
  • legal and professional services
  • meals and entertainment
  • office expenses
  • pension and profit-sharing plans
  • rent or lease expense
  • repairs and maintenance
  • services performed by independent contractors
  • supplies and materials (not included in cost of goods sold)
  • travel expenses
  • utilities
  • wages of employees

If you don't see an item on this list, check our list of common nondeductible expenses

  • A bar or professional examination fees
  • Charitable contributions or gifts by a business that's not a C corporation (sole proprietors may deduct contributions on their individual tax returns, rather than on Schedule C.)
  • clothing, unless it's protective equipment, or a uniform that would not be worn during non-working hours
  • country club, social club, or athletic club dues
  • commuting expenses
  • estate or inheritance tax (even if largely due to the ownership of a business interest)
  • expenses, including interest, paid to generate tax-exempt income
  • federal income tax
  • Fines and penalties incurred for violations of law, such as child labor violations, federal income tax penalties, traffic tickets, and penalties for overweight or over-length trucks.
  • gift tax
  • gifts to employees that are valued at more than $25
  • any portion of a gift to a business contact that is valued at more than $25
  • hobby losses
  • interest on indebtedness incurred by a business taxpayer to purchase life insurance coverage in excess of $50,000 on the life of any its officers, employees, or other person having a financial interest in the taxpayer's trade or business
  • interest on indebtedness incurred to purchase single premium life insurance contracts, or any life insurance contract under a plan of financing the purchase by withdrawing some or all of the yearly build-up in policy cash values
  • job hunting expenses (for a new trade or business)
  • Life insurance premiums, if the business, or the business owner, is a direct or indirect beneficiary.
  • lobbying expenses (appearances before legislative bodies and expenses to influence voters)
  • partnership organizational expenses, unless amortization election made
  • personal, living, or family expenses; however, certain interest, taxes, bad debts, medical expenses, theft or casualty losses, or charitable contributions may be deductible in whole or in part as an itemized deduction on your individual tax return
  • political contributions, including tickets to political dinners
  • tax penalty payments
  • transfer taxes on business property

The following expenses are not deductible as business expenses, but they may qualify for other tax benefits (such as tax credits or recovery through depreciation).

  • Capital expenditures (not fully deductible in the year placed in service, but yearly deductions are allowed to recover the cost of the item over a specified time period). The most common type of capital expenditure occurs when you purchase or otherwise acquire any asset that will benefit your business for more than one year.
  • start-up costs for a new business