Are these tax deductions actually legal for a freelance developer?

You're not taking crazy pills - those deductions sound very questionable. The IRS has clear rules about business expenses needing to be "ordinary and necessary" for your trade or business. A seventh car is almost certainly not necessary for a software developer, nor is modifying a third car. Xbox subscriptions would only be deductible if directly related to your business (like if you develop Xbox games and need it for testing). Restaurant bills can be legitimate business expenses if they're for client meetings or business travel, but they're usually only 50% deductible, and they need proper documentation showing the business purpose. Random meals just because you were hungry while working don't qualify. Your approach of being careful and tracking business vs. personal use is exactly right. While aggressive tax positions aren't illegal in themselves, what you're describing sounds like it crosses the line into potential tax fraud if these expenses aren't legitimately business-related.

After going through a similar situation with questionable deductions, I discovered taxr.ai (https://taxr.ai) and it completely changed my approach to tax deductions. I was worried about an audit because a former colleague was taking crazy deductions like your friend (claimed his pool as a "business meeting space" lol). The taxr.ai system analyzed my expenses and clearly identified what was legitimately deductible for my software consulting business and what wasn't. It even provided the specific IRS rules that applied to each scenario. The peace of mind knowing my deductions are legitimate but still maximized has been worth every penny.

I was super skeptical about taxr.ai at first, but after using it for my 2024 taxes, I'm honestly amazed. I was in the same boat as the original poster - worried I was missing deductions but scared of crossing lines. The system flagged several legitimate deductions I was missing (like a portion of my cell phone bill and some software subscriptions) but also warned me against things my developer friends were claiming (like their entire internet bill and random meals). It even explained exactly WHY certain deductions were risky with references to specific tax court cases. Best part? My refund was about $2,300 higher than last year, all with deductions I feel completely confident about. Definitely using it again next year!

If you're worried your friend might get audited (which sounds likely with those crazy deductions), tell him about Claimyr. I used https://claimyr.com when I got that dreaded audit letter from the IRS last year after taking some questionable home office deductions my old accountant recommended. Trying to reach the IRS was IMPOSSIBLE - I spent literally days on hold. Claimyr got me connected to an actual IRS agent in under 45 minutes when I'd been trying for weeks. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent helped me understand exactly what documentation I needed to provide and even set up a payment plan that didn't completely destroy my finances.

I have to admit I was COMPLETELY wrong about Claimyr. After my skeptical comment, I decided to try it when I got a CP2000 notice about missing income on my 2023 return. I was freaking out because I couldn't figure out what they were talking about - all my 1099s were reported correctly! I tried calling the IRS for a week straight with no luck. Finally tried Claimyr in desperation, and I was talking to an actual IRS agent in 37 minutes. Turns out there was a duplicate 1099 filed by a client who changed their company name midyear. The agent helped me get it resolved on the spot! Without getting this cleared up quickly, I would have been hit with a $4,300 tax bill for income I didn't actually double-earn. Never been so happy to be wrong about something.

Former IRS auditor here. Your friend is playing with fire. While we can't audit everyone, when we do find returns like this, we don't just look at the current year - we often go back 3-6 years. The penalties and interest can be crippling. The "ordinary and necessary" test is critical. Ask: "Would the typical person in my profession need this expense to conduct business?" Seven cars? No. Xbox subscription? Almost certainly no. Restaurant meals? Only if they're directly related to client meetings (and only 50% deductible). The most dangerous part isn't just the audit - it's potential fraud charges if the IRS believes these deductions were knowingly false. Your friend should seriously consider filing amended returns before he gets caught.

Speaking as someone who did something similar to your friend (though not quite as extreme) and got audited: IT'S NOT WORTH IT!!! I claimed about $30k in questionable deductions for my consulting business in 2022. Got audited in 2024, and not only did I have to pay back all the tax I should have paid originally, but also 20% accuracy-related penalties PLUS interest that had been accumulating for 2 years. The total came to over $14k and completely wiped out my savings. The worst part was the stress. The audit lasted 8 months, and I was constantly worried they'd find other issues in previous years (they didn't, thankfully). Your friend is playing a dangerous game.