The Truth About Write-Offs: What You Can and Can’t Deduct
Lya Kimbrough, MBA | Lookout Bookkeeping
Let’s start with the real question:
What does it even mean to write something off?
A write-off (or tax deduction) is a business expense the IRS allows you to subtract from your total income so you’re only taxed on what’s left, but it doesn’t mean you get the item for free, and it doesn’t mean the IRS refunds the cost. It simply reduces your taxable income; and the goal is to reduce it with legitimate business expenses.
Quick example:
- Business made: $60,000
- Deductible expenses: $10,000
- Taxable income: $50,000
See? Lower taxable income = lower taxes.
Simple math. Not magic.
But the confusion comes in when people start calling every purchase “a write-off.” So let’s break down the myths…
Myth #1: “If I paid for it, I can write it off.”
Reality: The IRS doesn’t care that you paid for it—they care why you paid for it.
To be deductible, an expense must be:
- Ordinary → common in your industry
- Necessary → helpful and appropriate to running your business
This means the expense must directly support how your business makes money.
People often mix up “I used it while doing business” with “I bought it for the business.”
For example, using your personal phone for a business call doesn’t make your entire phone bill a deduction. Same with clothes; unless it’s a true uniform that can’t double as regular wear, it’s personal.
Examples:
- Buying office supplies for client projects? → ✔️ Deductible
- Buying a new couch because you answer work emails from it? → ❌ Not deductible
- Upgrading your laptop for client work? → ✔️ Deductible
- Buying a TV for your home office “to stay inspired”? → ❌ Not deductible
This rule removes anything that is “kind of business, kind of personal.”
Myth #2: “Meals and entertainment are always deductible.”
Reality: Meals are partially deductible (usually 50%), and entertainment is almost never deductible now.
A meal only qualifies if:
- You’re actively discussing business, and
- The meal is not extravagant for your industry
If you and a friend catch up and you casually mention your business? That’s not deductible. If you take a client to lunch to review their proposal? That is.
As for entertainment:
Concerts, shows, sporting events; those used to be deductible, but not anymore. Even if you invited a client. Even if you discussed business before the show. It’s still a no.
Examples:
- Lunch meeting with a potential client → ✔️ 50% deductible
- Coffee while planning content by yourself → ❌ not deductible (that’s personal)
- Drinks with your friend “who might start a business one day” → ❌ no
- Catered meeting for employees → ✔️ can be 50%–100% deductible depending on rules
Meals = sometimes.
Entertainment = almost never.
Myth #3: “I can write off my whole car because I use it for business.”
Reality: You can only deduct the portion of the car used exclusively for business.
The IRS gives you two options:
- Standard mileage deduction → a set rate per business mile driven
- Actual expenses → a percentage of gas, insurance, repairs, depreciation, based on business use
The only miles that count are the ones that directly support your business.
Examples:
- Driving to a client → ✔️ deductible
- Driving to the bank to deposit business checks → ✔️ deductible
- Driving to lunch by yourself without business purpose → ❌ not deductible
- Driving on vacation and answering a work call → ❌ that call doesn’t turn it into a deduction
If you’re not tracking miles, you’re either over-deducting (dangerous) or under-deducting (missing money).
Myth #4: “If I work from home, I can deduct my whole house.”
Reality: You can only deduct the portion of your home used exclusively and regularly for business.
The home office must be:
- A specific space
- Used only for work
- Used on a consistent basis
The IRS is picky here. If the space doubles as a guest room, gaming room, or storage room—even occasionally—you lose eligibility.
You can deduct a percentage of:
- Rent or mortgage interest
- Utilities
- Internet
- Home insurance
- Repairs
- Property taxes
But again, only for the portion that belongs to the business.
Examples:
- A dedicated office room → ✔️ deductible percentage
- A corner of your bedroom → ✔️ sometimes deductible
- Your couch → ❌ not exclusive
- Your kitchen table → ❌ not exclusive
- A shared playroom/office → ❌ no
If your workspace has a day job and a night job, it’s not deductible.
The Real Takeaway
Write-offs are powerful tools, when you actually understand them.
They reduce your taxable income and help you keep more of what you earn.
But making up deductions or stretching the truth can lead to penalties, audits, and unnecessary stress.
If you’re ever unsure, ask yourself:
“Does this expense directly help me run or grow my business?”
If the answer isn’t a confident yes, it probably isn’t deductible.
And if you want help reviewing your expenses—that’s exactly what Lookout Bookkeeping is here for.
