Lands on Schedule C — Part II, for business costs — and two deductions that land elsewhere
If you are an employee paid on a W-2, this article is not for you: employees generally cannot deduct unreimbursed job costs at all, which the site covers in what a "1099 employee" is. It is not a list of "write-offs" to try, either. Every deduction below comes with the test that decides it, because a deduction that fails its test is a correction waiting to happen.
It is for the self-employed person who wants to know what they can deduct, and where each deduction goes — which turns out to decide what it is worth.
The short answer
| Where it lands | What it is, and what it lowers |
|---|---|
| Schedule C, Part II | Business costs — both taxes |
| Schedule 1 | Half of self-employment tax — income tax only |
| Form 1040 | Qualified business income deduction — income tax only |
What each one lowers is the reason to sort deductions by place rather than by alphabet. A Schedule C deduction reduces the profit that self-employment tax is charged on, so a dollar of business cost saves both taxes. The other two save income tax alone.
On Schedule C: the costs of earning the income
Schedule C deductions are business costs — the instructions call them "ordinary and necessary" expenses of the trade or business. The same categories keep appearing, and each has its own rule.
Getting around
- Car and truck, line 9. Either the standard mileage rate or actual expenses, and the choice is made in the car's first business year: choose actual expenses first and that car stays on actual expenses. The first-year choice and the mileage calculator work through it.
- The log that proves it. A mileage deduction is only as good as the record behind it — why a mileage log fails — and the drive from home to a first stop can be commuting rather than business, as delivery drivers find.
- Travel away from home, line 24a, depends on where your tax home is, which is the whole question for travel nurses. Meals are generally deductible at 50%; transportation workers under the hours-of-service rules use 80%.
Where you work
- Home office, line 30. The space must pass its own test before any method applies; the administrative-use test is where most home offices qualify or fail. The simplified option is $5 per square foot, up to 300 square feet — at most $1,500 — and cannot exceed the income from the business use of the home. The home office calculator compares both methods.
- Phone and internet, lines 18, 22 and 25. A home's first phone line is treated differently from any line added for business — the first-line rule.
What you buy
- Tools and small equipment. Items up to $2,500 each can be expensed under the de minimis safe harbour rather than depreciated.
- Larger equipment, line 13. Section 179 allows up to $2,560,000 of expensing for 2026, but not more than your business income — the income limit and the carryforward — and property also used personally must be used more than 50% for business, as the camera test shows.
- Inventory. Goods bought for resale are not deducted when bought; they become cost of goods sold when sold — why inventory is not a December deduction.
Paying for help and advice
- Professional fees, line 17. The business share of accounting and tax-preparation fees — the business split.
- Contract labour, line 11. Payments to other self-employed people, with a W-9 first — paying a second shooter.
- Business gifts, capped at $25 per recipient per year — the $25 limit.
What does not qualify
A degree that qualifies you for a new trade or business is not deductible, even when the work depends on it — the education rules. And money you transfer to yourself is not a business expense for a sole proprietor: paying yourself explains why.
On Schedule 1: half of self-employment tax
Self-employed people pay both halves of Social Security and Medicare, and deduct the half an employer would have paid. The IRS is exact about its reach: "This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax." It needs no receipt and no test; it follows automatically from Schedule SE.
Retirement contributions for the self-employed also land on Schedule 1 rather than Schedule C — the arithmetic for a high earner is in the physician's deferral article.
On Form 1040: the qualified business income deduction
The last deduction is taken after adjusted gross income: "up to 20 percent" of qualified business income, limited to 20% of taxable income less net capital gain, and available "regardless of whether taxpayers itemize deductions on Schedule A or take the standard deduction." Above the 2026 threshold of $201,750 for a single filer, the type of work starts to matter — whether your work is an SSTB — and the QBI calculator shows where you stand.
Taken together, the three places explain a result that surprises people: on the same profit, a self-employed person can pay less income tax than an employee while paying more in total. The worked example is in self-employed tax brackets.
Common questions
What can self-employed people deduct?
Do deductions reduce self-employment tax?
Can I deduct something I use for both business and personal life?
What is the simplest home office deduction?
Can I expense equipment instead of depreciating it?
Is the cost of a degree deductible?
This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.