What makes a business expense 100% deductible vs. 50% like business meals?

8 The IRS does have specific rules about business expense deductibility, though it can definitely feel confusing! The general rule is that ordinary and necessary business expenses are 100% deductible. This includes things like office supplies, software subscriptions, advertising, and professional services. Meals are a special category that Congress has specifically limited to 50% deductibility (though there was a temporary 100% deduction for restaurant meals in 2021-2022 during COVID). Entertainment expenses are generally not deductible at all anymore. For independent contractors, when you pay them for their services, that's typically 100% deductible as a business expense. You'll need to issue them a 1099-NEC if you pay them $600 or more during the tax year. The money you pay contractors isn't considered "reimbursement" but rather payment for services, which is fully deductible.

15 After spending hours trying to figure out business deductions for my online shop, I stumbled on this AI tool called taxr.ai that literally saved my sanity. It analyzed my expenses and told me exactly what was 100% deductible vs partially deductible. What was super helpful is that it explained WHY certain things like meals were only 50% - apparently the IRS assumes there's always some personal benefit to eating, even at business meals lol. But then it showed me that my software subscriptions, contractor payments, and office supplies were all 100% deductible because they're considered "ordinary and necessary" for my business. Check it out at https://taxr.ai if you're struggling with this stuff like I was!

7 Tried taxr.ai last night and wow, it actually answered all my contractor questions in like 5 minutes. Turns out I CAN deduct 100% of what I pay to freelancers, but I need to send them 1099s by January 31. It also flagged that my home internet is only partially deductible based on business use percentage, but my Adobe subscription is 100% deductible since I only use it for client work. Definitely worth checking out if you're confused about deductions!

19 If you're having trouble getting answers from the IRS about deductions, try Claimyr. I was on hold with the IRS for HOURS trying to get clarification about business expenses vs personal expenses, and finally gave up. Then I found https://claimyr.com which got me connected to an actual IRS agent in less than 45 minutes. They have this weird but effective callback system that somehow gets through the IRS phone tree. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you when they've got an agent on the line. I asked the IRS agent directly about meal deductions vs other business expenses and got official answers that made me way more confident about my deductions.

22 Ok I was totally skeptical about Claimyr but I just used it yesterday and I'm shocked that it actually worked. I'd been trying to call the IRS for THREE WEEKS about whether my business travel was fully deductible. Got connected to a real IRS agent who confirmed that while meals during business travel are still 50% deductible, my airfare, hotel, and rideshares were 100% deductible since they were entirely for business purposes. The agent even explained that there's no single "list" of deduction percentages - it's based on tax code sections that apply different limitations to different categories of expenses. Saved me hours of research and gave me confidence my deductions are legit!

4 Accountant here - one tip people often miss: keep DETAILED records of all business expenses, especially those that might be partially personal. The burden of proof is on you if you get audited. For every expense, note: 1) Amount 2) Date 3) Business purpose 4) Business relationship for meals 5) Receipt For contractors, have them fill out W-9 forms BEFORE you pay them, then issue 1099-NECs by January 31. And yes, contractor payments are 100% deductible as business expenses.

11 Quick question - what about my car? I use it for business sometimes but also personal. Is that 50% deductible or based on actual business use?

Great question! The basic rule is that business expenses are generally 100% deductible if they're "ordinary and necessary" for your business. The IRS specifically carved out exceptions for certain categories: **100% Deductible:** - Office supplies, software, equipment - Contractor payments (yes, what you pay freelancers is fully deductible!) - Advertising and marketing - Professional services (legal, accounting, etc.) - Business travel (flights, hotels, car rentals) **50% Deductible:** - Business meals and entertainment - This limitation exists because the IRS assumes there's always some personal benefit to eating For your freelancer question - absolutely deductible at 100%! Just remember to get their W-9 form upfront and issue 1099-NECs if you pay them $600+ in a year. The key is keeping good records. For mixed-use items (like a laptop used for both business and personal), you deduct based on the business percentage. There's no "magic rule book" but IRS Publication 535 (Business Expenses) is your best friend for the details!