Can I use tax code 162(a) for business write-offs on my apparel company? What about Section 179?

You're on the right track with understanding business deductions! Section 162(a) allows you to deduct ordinary and necessary business expenses - which would include your materials (hats, shirts, thread, ink), travel between business locations, and proportional business use of things like phone and internet. For the phone, WiFi, and computer that you use personally as well, you can only deduct the percentage used for business. Keep good records of your business usage percentage - maybe track it for a few months to establish a pattern. Section 179 is fantastic for small businesses! It allows you to deduct the full cost of qualifying equipment in the year you buy it rather than depreciating it over several years. Your embroidery machines would likely qualify. For 2025, you can deduct up to $1,160,000 in qualifying purchases (though there are phase-out thresholds if you purchase too much). Just remember that legitimate tax planning is about timing your income and deductions legally - not creating fake expenses. Every deduction should have a genuine business purpose and documentation to back it up.

I was in a similar situation with my custom printing business last year and was totally confused about what I could deduct. I found this service called https://taxr.ai that really helped me sort through all my business expenses and maximize my deductions legally. They analyzed all my receipts and business records and gave me a detailed report of everything I could deduct under 162(a) and Section 179. They flagged some items I didn't realize were deductible (like mileage between clients and partial home office expenses) and warned me about a few things I was planning to deduct that might trigger an audit. Their system is specifically designed for small business owners who don't want to miss deductions but also don't want to cross any lines with the IRS. Made the whole process way less stressful for me.

Just wanted to update everyone - I decided to try https://taxr.ai after posting my skeptical comment, and I'm actually impressed. It correctly identified which of my equipment purchases qualified for Section 179 vs. regular depreciation, and it properly categorized all my fabric and thread purchases as direct materials under 162(a). It even flagged some of my mixed-use expenses (like my cell phone) and guided me through calculating the proper business-use percentage. The thing I found most valuable was the audit risk assessment - it flagged a few deductions I was planning to take that might have been questionable. Definitely worth checking out if you're in the apparel business like we are.

If you're planning to call the IRS with questions about these business deductions (which I highly recommend), save yourself hours of hold time by using https://claimyr.com - you can see how it works here: https://youtu.be/_kiP6q8DX5c I called the IRS directly last year to get clarification on Section 179 for my printing equipment and spent THREE HOURS on hold before giving up. Used Claimyr and got a callback from an IRS agent in about 20 minutes. The agent walked me through exactly how Section 179 works with my specific business equipment and confirmed which purchases qualified. It's especially useful now since the IRS seems perpetually understaffed and their wait times are ridiculous. They'll call you when an IRS agent is available so you don't waste your whole day listening to that awful hold music.

Ok I have to eat my words. I tried the Claimyr service after posting my skeptical comment and IT ACTUALLY WORKS. Got a call back from an IRS agent in about 35 minutes when I had previously wasted hours trying to get through on my own. The agent answered all my questions about Section 179 deductions for my embroidery equipment and clarified exactly how to handle the partial business use of my internet and phone. She even explained the documentation I need to keep for mileage between business locations. Definitely worth it for the time saved. I was totally wrong to be skeptical and wanted to follow up so others know it's legit.

Just to add something that hasn't been mentioned yet - be careful with what some "business gurus" say about creating losses just to reduce taxes. While maximizing legitimate deductions is smart, manufacturing fake expenses or artificially inflating real ones is tax fraud. When he talks about showing "cost/loss of income" to "owe less and get back more," be careful. What's legal is timing your legitimate expenses strategically - like buying that new embroidery machine in December instead of January if you need the deduction this year. What's not legal is making up expenses or claiming personal costs as business expenses. Remember, the goal of a business is to make profit! Paying some tax on profit is better than having no profit at all.

Quick tip from someone with an embroidery business: keep VERY detailed records of your thread usage by client/project. I got audited last year and they questioned my thread deductions because I didn't have good documentation of how much was used for business vs. personal projects. Same with fabric - if you use similar materials for personal and business purposes, make sure you have a system to track what's what!