Every year, business owners hand the IRS money they didn’t owe — not through fraud, but through legitimate deductions they never tracked or were afraid to take.
The fear of an audit causes a lot of owners to under-claim. But a legitimate, well-documented deduction isn’t a red flag — it’s the law working as intended. The key word is documented. Here are the ones most often left on the table.
The home office
If you use part of your home regularly and exclusively for business, you can deduct a share of your housing costs. “Exclusively” is the catch — the dining table doesn’t count, but a dedicated room does. There’s a simplified method based on square footage and a detailed method based on actual costs; the detailed one is more work and usually worth more.
Vehicle use
Business miles are deductible — but “I drive a lot for work” is not a record. You can use the standard mileage rate or actual expenses, and in both cases you need a log: date, destination, purpose, miles. A phone app that tracks it automatically turns a vague guess into a defensible number.
- Driving between job sites or to clients: deductible.
- Your regular commute from home to a fixed office: generally not.
- A qualifying home office can change that math — trips from a home office may count.
A deduction you can document is one you can defend. A deduction you can’t is a liability. The difference is almost always a record kept in the moment, not reconstructed in April.
The quieter ones
- Retirement contributions. A SEP-IRA or solo 401(k) can shelter a large slice of business income — a deduction and savings in one move.
- Health insurance premiums for the self-employed.
- Continuing education, professional dues, and subscriptions tied to your work.
- A portion of your phone and internet used for business.
None of this is exotic. It’s ordinary money that ordinary systems capture — and that a shoebox of receipts loses. Set up the tracking once and the deductions take care of themselves.