Overview

Remote entrepreneurs—freelancers, consultants, and owners of single-member LLCs—have access to a range of business deductions beyond the obvious equipment purchases or advertising costs. Many of these are legal, IRS-allowed write-offs but are underused because taxpayers either don’t know they qualify or fail to document them correctly. This guide explains the lesser-known deductions, who can claim them, how to calculate and substantiate them, and audit risks to watch.

Why these deductions matter

Small differences add up. In my work advising self-employed clients, I routinely see entrepreneurs reduce taxable income materially by aggregating smaller, recurring items (software subscriptions, cell phone business use, coworking fees) and by applying the correct home office method. When combined with retirement contributions and the self-employed health insurance deduction, these uncommon write-offs can change a tax bill materially.

Who can claim these deductions?

Most of the uncommon deductions discussed here apply to people who are self-employed or run pass-through businesses (sole proprietors, single-member LLCs, partnerships). Employees working for an employer generally cannot claim unreimbursed business expenses since the Tax Cuts and Jobs Act suspended that miscellaneous itemized deduction for most employees (see IRS guidance). Always check whether you are filing Schedule C (Form 1040) or are treated as an employee receiving a W-2.

Authoritative sources: IRS Publication 535 (Business Expenses) and IRS Publication 587 (Business Use of Your Home) provide the official rules; the IRS summary pages are helpful overviews (see: “Deducting Business Expenses” and “Home Office Deduction”) (IRS.gov).

List of uncommon deductions and how to use them

  1. Home office — beyond the obvious
  • What qualifies: A regularly and exclusively used space for business qualifies for the home office deduction. You can choose the simplified method ($5 per sq. ft., up to $1,500) or the regular method (allocating actual expenses) (IRS Publication 587). The exclusive-use rule remains a frequent pitfall: shared spaces generally do not qualify.
  • Uncommon angle: Deducting a portion of homeowner insurance increases, termite/pest treatment when related to the office, or capital improvements that directly affect the office (e.g., built-in bookcases) via depreciation rather than immediate expensing.
  • How to claim: Use the simplified method instructions or complete Form 8829 when using the regular method (if filing Schedule C).
  1. Internet and cell phone — apportion business use
  • What qualifies: The business portion of internet and cellphone service is deductible. Full deduction is rare; instead calculate a realistic business-use percentage (call logs, calendars, or billing details help support the claim).
  • Evidence: Monthly bills plus a short contemporaneous log or a percentage allocation tied to work hours.
  1. Virtual office, coworking memberships and business address services
  • What qualifies: Fees for coworking spaces, mailbox/mail-forwarding services used for the business, and virtual receptionist services are deductible as ordinary business expenses. These are especially useful for remote entrepreneurs who need a professional address or meeting space.
  • Watchouts: If the coworking membership includes mixed personal use, segregate the business portion.
  1. Digital subscriptions and SaaS (software-as-a-service)
  • What qualifies: Monthly or annual fees for business software (design tools, project management, hosting, cloud storage) are deductible. If a subscription covers both personal and business use, allocate the business percentage.
  • Uncommon tip: Cost of premium fonts, stock photo subscriptions, paid plugins, and niche developer tools are deductible when essential to your business.
  1. Online marketing, analytics, and SEO tools
  • What qualifies: Paid ad campaigns, subscription SEO tools, analytics platforms, and conversion tracking services are ordinary business expenses.
  • Recordkeeping: Keep invoices and examples of campaigns tied to revenue outcomes to show business purpose.
  1. Continuing education and professional development
  • What qualifies: Courses, certifications, and training that maintain or improve skills in your current trade are deductible (not education that qualifies you for a new trade).
  • Examples: Paid webinars, industry conferences, or specialized online courses tied to your business offering.
  1. Business use of a personal vehicle and travel for client work
  • What qualifies: Mileage for client meetings, deliveries, or other business travel (not commuting) can be claimed using the standard mileage rate or actual expenses. Overnight travel for clients or conferences is deductible with lodging, transportation, and 50% of business meal costs subject to current IRS rules.
  • Documentation: Maintain contemporaneous mileage logs or travel itineraries and receipts.
  1. Contract labor, virtual assistants, and gig platforms
  • What qualifies: Payments to independent contractors (including virtual assistants) are deductible. For payments of $600 or more in a year, issue Form 1099-NEC (see IRS requirements) or collect a W-9.
  1. Home improvements tied to the office (depreciation)
  • What qualifies: Capital improvements that benefit the home office can be depreciated over time rather than expensed immediately. Keep invoices and allocate the improvement to the office’s percentage of the home.
  1. Small recurring items many overlook
  • What qualifies: Office supplies, backup drives, ergonomic chairs, and even certain work-related coffee or snacks provided during business meetings. Aggregate small costs: they add up and are legitimate business expenses when properly documented.
  1. Health-insurance premiums and retirement contributions
  • What qualifies: Self-employed individuals may deduct health insurance premiums (subject to limits) on Form 1040 and can contribute to SEP IRAs or Solo 401(k)s—both reduce taxable income and are powerful tax-saving tools.

How to calculate and document business use

  • Choose a credible method: For home office, pick simplified or regular method and stay consistent year to year unless your situation changes. For mixed-use items (internet, phone), use realistic, contemporaneous allocations.
  • Keep contemporaneous records: Save receipts, billing statements, invoices, canceled checks, and digital logs. The IRS recommends keeping records that substantiate the amount, the date, and the business purpose (IRS recordkeeping guidance).
  • Use accounting software: Platforms like QuickBooks, FreshBooks, or a simple spreadsheet with categories reduce errors and support an audit.

Claiming the deductions on your tax return

  • Self-employed: Report most deductions on Schedule C (Form 1040). Use Form 8829 to report regular-method home office expenses if applicable. Keep copies of calculations.
  • Partnerships/LLCs: Business deductions flow through to partners or members; consult your tax advisor or accountant for entity-specific reporting.

Authoritative references: See IRS pages on Deducting Business Expenses and Home Office Deduction (IRS.gov). For home office calculation details, refer to IRS Publication 587 and the instructions for Schedule C and Form 8829.

Audit red flags and common mistakes

  • Overstating exclusive use: claiming a living room corner without meeting the exclusive-use rule is a common audit trigger.
  • No contemporaneous records: vague estimates without bills or logs increase examination risk.
  • Confusing personal and business use: backup documentation should support the percentage allocation for cell/internet or mixed-use subscriptions.
  • Failing to issue required 1099-NEC forms to contractors.

Practical examples

  • Example 1 (digital professional): A freelance web designer pays $75/month for a professional-grade prototyping tool and $30/month for cloud storage. If these subscriptions are used 90% for client work, about $945/year is deductible.
  • Example 2 (consultant with coworking): A consultant pays $300/month for a coworking membership and uses it 100% for client meetings. The full $3,600 is deductible as an ordinary business expense.
  • Example 3 (home office regular method): A sole proprietor with a 200 sq. ft. exclusive office in a 2,000 sq. ft. home (10% business use) can allocate 10% of mortgage interest, utilities, and homeowners insurance to the business portion and either depreciate qualifying improvements or use Form 8829 to compute allowable deductions.

State tax and local rules

State tax rules vary: some states conform to federal treatment of business deductions while others do not. Remember to check your state’s department of revenue guidance or consult a local tax professional.

Best-practice checklist before filing

  • Reconcile business bank accounts and credit-card statements to ensure expenses are categorized correctly.
  • Save digital copies and a backup of all receipts and logs for at least three years; consider longer retention for items tied to depreciation or if you substantially underreported income (IRS guidance notes longer retention in some cases).
  • If in doubt, document the business purpose in writing contemporaneously (calendar entries, meeting notes, client emails).

Internal resources

For deeper reading on home-office specifics and documentation, see FinHelp’s guides on Home Office Deduction: Eligibility, Calculation, and Pitfalls and Home Office Internet Expenses Deduction. For uncommon home-office examples, review Uncommon home office deductions you might qualify for.

Professional guidance and disclaimer

This article is educational and reflects best practices current as of 2025. It is not a substitute for personalized tax advice. Tax rules change and individual circumstances vary; consult a qualified tax professional or CPA before making filing decisions.

Quick references

Author: Senior Financial Content Editor, FinHelp.io