Schedule C Deductions: The Complete Guide for US Freelancers
Every deduction available on IRS Schedule C explained — from home office and vehicle expenses to the qualified business income deduction that can cut your tax bill by 20%.
Jennifer Walsh
CPA, Tax Advisor
Schedule C (Profit or Loss from Business) is the IRS form where sole proprietors and single-member LLC owners report self-employment income and claim business deductions. Every dollar of legitimate deductions on Schedule C reduces both your income tax and your self-employment tax — a double benefit that makes thorough tracking essential.
Part II — Expenses: Line by Line
- Line 8 — Advertising: paid ads, website hosting, business cards, promotional materials
- Line 9 — Car and truck: either standard mileage rate or actual expenses
- Line 11 — Contract labor: amounts paid to subcontractors (issue Form 1099-NEC if over $600)
- Line 13 — Depreciation: deduct large equipment costs over time or use Section 179 to expense upfront
- Line 14 — Employee benefit programs: health insurance, retirement plans for employees
- Line 15 — Insurance: liability, professional, business property (not health insurance for self)
- Line 17 — Legal and professional: accounting fees, legal advice, tax preparation
- Line 18 — Office expense: supplies, postage, small equipment under $2,500
- Line 22 — Supplies: materials used in providing your service
- Line 25 — Utilities: electricity and internet for a dedicated business location
- Line 27a — Other expenses: software subscriptions, professional memberships, education
The Qualified Business Income (QBI) Deduction
Under Section 199A, most freelancers can deduct up to 20% of their qualified business income from their taxable income. This deduction is separate from Schedule C — it's claimed on Form 8995. Income limits and phase-outs apply for certain 'specified service trades or businesses' (law, health, consulting, etc.) at higher income levels.
The QBI deduction is one of the most valuable available to freelancers — but it depends on clean income records. ReceiptOne keeps your expenses organized year-round so your accountant can make the most of every deduction.
Self-Employment Tax Deduction
You pay self-employment tax (15.3%) on your net Schedule C profit. But you can deduct 50% of that SE tax on Schedule 1 — reducing your adjusted gross income before income taxes are calculated. It's automatic but easy to miss if you're filing manually.