Taxpayers who operate a business can generally deduct business-related costs on their income tax returns.
Taxpayers who operate a business can generally deduct business-related costs on their income tax returns. But they must keep thorough, contemporaneous records proving that the deductions are for legitimate business expenses. An information technology consultant and handyman deducted the cost of professional education on his return. But the IRS found the amounts weren’t business-related because they were for his child’s tuition. He submitted many documents for other expenses such as phone use, vehicle use and computer-related costs. But the records weren’t contemporaneous, were inconsistent and didn’t show how they connected to his businesses. The IRS limited his deductions. (TC Memo 2022-83)