When an Expense Is Both Business and Personal: What You Can Deduct

As a business owner, it’s pretty common to have expenses that do double duty - part business, part personal. The challenge? Knowing what portion you can actually deduct. Done right, these deductions can save you serious money at tax time. Done wrong, and you could raise unnecessary red flags with the IRS.

Here’s how to handle those in-between expenses:

Home Office Costs

If you use a dedicated space in your home for work, you can deduct a percentage of household expenses like rent or mortgage interest, utilities, internet, and insurance. The percentage is usually based on the square footage of your office compared to your entire home.

Mobile Phone & Internet

Phones and internet are classic mixed-use expenses. Deduct the percentage that’s truly for business - calls, emails, and work tasks. Example: if 70% of your phone use is business-related, you can deduct 70% of the bill.

Travel Expenses

Business trip with a side of vacation? Only the business portion is deductible. Airfare for a conference counts. A few extra vacation days, family activities, or personal meals - those don’t. Lodging and meals are deductible only for the days you’re working.

Vehicle Costs

If your car moonlights as both your commuter and business vehicle, only the business use portion is deductible. This is typically tracked by mileage or percentage of total use.

Equipment & Software

Bought a laptop, tablet, or design tool that you also use personally? Deduct the portion used for business. For example: if you use your laptop 80% for work and 20% for personal projects, you can deduct 80% of the cost.

Utilities & Subscriptions

Streaming services, cloud storage, design tools - if you share them between personal and business use, you’ll need to allocate accordingly. Canva used strictly for your business? Fully deductible. Canva also used for your side hobby? Deduct only the business portion.

The Key: Good Records

Mixed-use expenses can be deducted - but only if you can back it up. Keep logs, receipts, or reasonable usage estimates to support your claims.

Need Some Clarity?

We can help you sort it all out. Let us review your books, organize your accounts, and create a system that makes mixed-use deductions simple and stress-free.