How To Claim Expenses When Self-Employed

Are you self-employed, but feel a little lost when it comes to how to claim expenses when self-employed on your tax return?  It is actually relatively easy to claim all of your business expenses, as long as you remain organized and use your common sense.

  1. Educate yourself. There are a large number of expenses that the self-employed person can claim, as long as those expenses meet certain requirements. The expense must be ordinary, necessary to your business, and reasonable. In most cases, if an expense meets these requirements, it is deductible. If you need help in determining which expenses to deduct, you can check out Publication 535 at  
  2. Keep good records. You do not need to have an elaborate set of books in order to claim expenses from self-employment. However, it helps if you are somewhat organized with whatever system you choose to use. If you keep track of your receipts on an ongoing basis as the year progresses, you will not have as many headaches at tax time. At a bare minimum, keep a notebook or ledger book with a running list of your expenses, grouped by category. Also, it helps to maintain all of the source documents, such as receipts, invoices, and cancelled checks in file folders or envelopes for easy access if they are needed.
  3. Prepare the proper IRS schedule. The IRS requires that a self-employed person file a Schedule C, which is attached to their individual income tax return, or Form 1040. This Schedule shows your business activity for the year, with expenses listed by category.  When preparing the schedule C, refer to the instructions that are provided at These instructions walk you through the preparation of the form, and break it down in an understandable manner. Note that there may also be supplemental schedules to file, such as those for self-employment and depreciation, but the requirements to file those forms are based on your personal circumstances. 

Claiming expenses relating to self-employment is really not a scary thing. Simply follow the steps as outlined above, and while other people are pulling their hair out at tax time, you’ll be kicking back with a good cold beer.

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