Self employed first timer - do I have to itemize business expenses if I'm taking the standard deduction?

Hey all, this is my first year filing taxes as self-employed and I'm super confused about deductions. I started my freelance graphic design business in May last year and made around $43,000. I've been keeping receipts for all my business expenses (about $7,800 in software, new computer, office supplies, etc). My main question is: if I'm planning to take the standard deduction ($13,850 as single filer), do I still need to itemize all my business expenses separately? Or does taking the standard deduction mean I can't claim any of my business expenses? I feel like I'm missing something really basic here, but all the tax articles I've read are making my head spin. Thanks in advance for any help!

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19 comments

Mateo Martinez

•8M

The good news is that you can absolutely take the standard deduction AND still deduct your business expenses! These are two completely different parts of your tax return. Your business expenses go on Schedule C where you report your self-employment income and expenses. This determines your net profit from self-employment. The standard deduction comes later on Form 1040 and has nothing to do with your business expenses. So yes, definitely track and deduct all legitimate business expenses on Schedule C (computer, software, supplies, etc.). This reduces your self-employment income, which means lower income tax AND lower self-employment tax. Then, on your personal 1040, you can still take the full standard deduction ($13,850 for single filers) instead of itemizing personal deductions like mortgage interest or charitable donations.

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Mateo Martinez

•8M

That's exactly right! You've got the concept down perfectly now. Regarding receipts, it's definitely good practice to keep them for all business expenses. While you don't need to submit them with your tax return, you should keep them for at least 3 years in case of an audit. For smaller items (under $75), the requirements are a bit more relaxed, but I still recommend keeping as much documentation as possible. If you're missing a few minor receipts, you can still claim those expenses if you have other ways to verify them (like bank or credit card statements showing the purchase).

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QuantumQueen

•8M

I was in the exact same boat as you last year and was so confused by this! I discovered this amazing tool called taxr.ai (https://taxr.ai) that actually analyzed all my business receipts automatically and categorized them for me. It saved me hours of staring at spreadsheets trying to figure out what counts as a business expense vs personal. They explained this exact issue to me - the business deductions on Schedule C are completely separate from the standard deduction vs itemized personal deductions choice. The tool walked me through the whole process and made it super clear which expenses belonged where. I think they have a free guide specifically for first-time self-employed filers too!

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QuantumQueen

•8M

Yes, it actually works with all types of receipts! I had a mix of digital receipts, photos of paper receipts, and even some handwritten ones from a farmers market where I buy props for my photography business. Their system uses some kind of AI that can recognize even messy handwriting, though sometimes you need to verify the amounts. Totally understand the security concern - I was hesitant too. They use bank-level encryption and don't store your actual financial data after processing. They explained that they're SOC 2 compliant (which I learned is a big deal for financial services). You can also just upload individual receipts rather than connecting accounts if you prefer. I checked reviews online before using them and they seemed legitimate.

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Aisha Rahman

•8M

Wanted to follow up - I tried taxr.ai after seeing this thread and it's legit! I was seriously struggling with organizing my business expenses (I had them scattered across 3 different credit cards and a pile of receipts in a shoebox). The tool identified over $2,800 in deductible expenses I would have missed, including some recurring subscriptions I forgot were business-related. The explanation about Schedule C vs standard deduction was super clear too - they have these simple video tutorials that finally made it click for me. Now I understand that my business profits (after expenses) flow to my personal return, and then I can still take the standard deduction. Seriously wish I'd known about this last year!

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Yuki Sato

•8M

If you're trying to get clarification from the IRS directly (which I'd recommend for a first-time filer), good luck getting through on the phone! I spent WEEKS trying to reach someone last year with a similar question. Then a colleague told me about Claimyr (https://claimyr.com) - they somehow get you through the IRS phone tree and have an actual IRS agent call YOU back. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical but desperate after being on hold for 2+ hours multiple times. Claimyr got me a callback from an IRS agent within 48 hours who confirmed exactly what others are saying here - your business deductions on Schedule C are completely separate from your decision to take the standard deduction on your personal return. The agent also gave me some tips specific to my situation that saved me a bunch of money.

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Yuki Sato

•8M

It's actually pretty clever how they do it. They use an automated system that continually redials and navigates the IRS phone tree until it gets through, then it holds your place in line. When they reach a live agent, their system transfers the call to your phone. It's basically doing the waiting for you, which is why they can guarantee a callback. I was super skeptical too! I thought it might be some sketchy service that pretends to be the IRS or something. But they don't actually talk to the IRS for you - they just connect you directly with a real IRS agent. The call comes from the actual IRS number and everything. I checked their reviews before using them and they had thousands of positive ones. It worked exactly as advertised for me - got a call from an actual IRS agent the next day who answered all my questions about self-employment taxes.

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Carmen Flores

•8M

I have to admit I was completely wrong about Claimyr! After seeing it mentioned here, I was still super skeptical but decided to try it as a last resort after spending 3 hours on hold with the IRS and eventually getting disconnected. Honestly, it worked exactly as advertised. I got a call back from a real IRS agent the very next morning who confirmed that business expenses and the standard deduction are completely separate things. The agent walked me through exactly where to report my rideshare driving expenses on Schedule C while still taking the standard deduction on my 1040. The peace of mind from getting this info directly from the IRS was totally worth it. Now I'm confidently tracking all my business expenses separately while still planning to take the standard deduction.

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Andre Dubois

•8M

One thing nobody mentioned yet - make sure you're also deducting half of your self-employment tax as an adjustment to income! This is separate from both your business expenses AND the standard deduction. It's on Schedule SE and gets transferred to the first page of your 1040 as an adjustment to income. Also, since this is your first year self-employed, don't forget you'll likely need to make quarterly estimated tax payments for this tax year. The IRS doesn't like waiting until April for self-employment taxes!

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Andre Dubois

•8M

Your cousin is incorrect. The deduction for half of your self-employment tax is still very much available and was NOT eliminated in any recent tax law changes. This is different from some itemized deductions that were changed or limited. The self-employment tax deduction is an "adjustment to income" (sometimes called an "above-the-line deduction"), not an itemized deduction, so it remains unaffected. You calculate it on Schedule SE, and it flows to Schedule 1, then to your Form 1040. It's definitely worth claiming as it can save you hundreds of dollars!

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