Gig Workers: What Counts as a Business Expense (And Why It Matters)
In our last article, we talked about how gig workers are taxed on profit—not total income. That means your business expenses directly reduce your tax bill.
So the next question is: What actually counts as a business expense?
The Basic Rule: Ordinary and Necessary
The IRS standard is simple: a business expense must be ordinary and necessary for your work.
Ordinary = common in your type of business
Necessary = helpful and appropriate for earning income
If an expense meets those two tests, there’s a good chance it qualifies.
Common Business Expenses for Gig Workers
While every business is different, many gig workers commonly deduct:
- Supplies and equipment used for your work
- Software, apps, and subscriptions
- Phone and internet (business-use portion)
- Advertising and marketing costs
- Professional fees (like tax preparation and attorneys)
The key is that the expense must be tied to your business activity—not personal use.
Two Big Deductions to Know About
There are two areas that often create the largest deductions for gig workers—but also the most confusion:
Vehicle Expenses (Mileage vs. Actual)
If you use your car for business, you may be able to deduct those costs.
There are two main methods:
- Standard mileage
- Actual vehicle expenses
Each has its own rules, and choosing the right one can significantly impact your tax outcome.
Home Office Deduction
If you use part of your home regularly and exclusively for business, you may qualify for a home office deduction.
This can include a portion of:
- Rent or mortgage interest and property taxes
- Utilities
- Internet
- Other home-related costs, like insurance and repairs
We’ll cover both of these in detail in a follow-up article, since they can have a major impact on your taxes.
Good Recordkeeping Is Everything
No matter which expenses you claim, you need to be able to support them.
That means:
- Keeping receipts
- Tracking mileage
- Separating business and personal expenses
If you don’t track it, you generally can’t deduct it.
The Bottom Line
Your expenses are not just a formality—they are one of the most powerful tools you have to reduce your tax bill. The better you track your expenses, the more control you have over your taxes.
Questions? Let’s Talk
Starting out as a gig worker can feel overwhelming, but getting the basics right makes a big difference.
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation to help you get started the right way.
GurelCPA: Tax and Nonprofit Accounting
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.