My Friend Told Me I Can I Deduct....

One of the most common questions I get from small business owners is, "Can I deduct xyz".  For the most part they are able to discuss the things they ask about whether that be work travel, a new printer, tax software, lawn mowing equipment, etc.  Of course those answers are different based on the line of work the client is in.  If I, as an accountant, tried to deduct the cost of my lawn mower, that would be a no go.  However, if I had an office where I was required to maintain the outside appearance of my building, a lawn mower may be perfectly acceptable.  See how this can get tricky? :)

The IRS says for an expense to be a deductible business expense it has to be "ordinary and necessary".  That is a fairly vague explanation.  Typically if the IRS does an audit and something is considered not deductible in their eyes, it is up to the business owner to prove that it is.  You can usually find case law specific to the types of deductions you may be looking to take if you're unsure.  Also, as I stated before, what's necessary and ordinary for me as an accountant, may not be necessary and ordinary for someone in a different field.  

Questions come up a lot around personal appearance items and clothing.  People say, "I need to look professional because I'm a realtor, that's why I get my nails done."  However, if we go back to the IRS description of necessary and ordinary, I think we see that may not cut it.  Can you successfully do your job as a realtor without having your nails done?  Now, let's say you're an actress or a model, it may be a requirement of your job that you look and present yourself a certain way, and thus maybe your nail appointments can count.

Business owners will tend to get very passionate regarding what they feel should be deductions.  Typically a quick Google search can tell you what the IRS stance was on a certain item for your profession, because odds are someone has tried to argue that it is "ordinary and necessary" in the past and either won or lost their argument.

If you're unsure if something is deductible, or even the type of deduction you can get for an item, I suggest reaching out to a tax professional before making any big purchases.  

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