The IRS says there are three basic qualifications for a business deductible expense:

You must have paid or incurred the expense while conducting your business. You can’t deduct expenses that are personal in nature, such as an automobile or a cell phone. Expenses do not have to be directly related to your business activity; however, they must be “ordinary and necessary” in accordance with Section 162 of the Internal Revenue Code. An ordinary expense is one that’s common and accepted in your field of trade, occupation or profession. A necessary expense is one that’s helpful and appropriate for your business. You can generally only deduct the portion of expenses relating to your trade, business or profession as a business deduction and may only claim those deductions allowed by law. For example, you can’t deduct any personal meals (i.e., breakfast at Denny’s).

Here are some common examples of allowable expenses:


Auto expenses (mileage and depreciation)

Business conventions, seminars or conferences (if they meet the requirements)

Business meals and entertainment (50% deduction allowed) — no entertaining your friends or business associates on your company’s dime unless it is a legitimate part of conducting the business. If you run a restaurant, for instance, you can deduct food costs related to any meals you have while working in the business. However, if you eat at home for lunch every day and bring some leftovers back to work with you to get through the afternoon hours (or don’t even take time for lunch), that’s not deductible. Similarly, if you go out for an occasional dinner with fellow employees or clients as part of conducting business but do not include it on your return because it’s not a requirement of doing business, that is also not deductible. But if going out for dinner every other week during certain seasons is expected as part of doing business in your field or trade, then those expenses are deductible. For example: Accountants from different offices meeting at a conference and eating together in order to discuss practice management issues qualify as allowable deductions; accountants having dinner together on their own personal time would not qualify as allowable deductions since there was no relationship to their businesses in that situation).

Dues/subscriptions/memberships which may be directly related to one’s line of work – e.g., attorneys can deduct dues paid to state bar associations; some states allow attorneys who practice before certain state courts to deduct dues paid to those courts’ bar associations; Members of airline clubs are allowed by law deductions related to their memberships