When an Expense Is Both Business and Personal: What You Can Deduct
If you run a small business, it’s completely normal to have expenses that overlap between business and personal use. The trick is knowing how much of each one you can write off.
Do it right, and you’ll save money at tax time. Do it wrong, and you’ll raise red flags with the IRS (and probably your bookkeeper, too 😅).
Here’s how to tell what portion you can safely deduct:
Home Office Costs
If you use a space in your home regularly and exclusively for business, you can deduct part of your household expenses — like rent or mortgage interest, utilities, internet, and insurance.
Your deduction is usually based on the percentage of your home’s square footage used for business compared to your total living space.
Mobile Phone & Internet
Phones and internet are classic “mixed-use” expenses. You can deduct the business percentage — not the whole bill.
Example: if about 70% of your usage is work-related (emails, client calls, QuickBooks, etc.), then 70% of your bill is deductible.
Travel Expenses
If a trip includes both business and personal time, only the business portion counts.
Example: airfare to attend a conference is deductible, but the vacation days you add afterward are not. Meals and lodging are only deductible for the business days on your itinerary.
Vehicle Expenses
If you drive your car for both personal and business errands, you can only deduct the business portion.
Track mileage or total-use percentage so you can prove your numbers later. Apps like MileIQ or QuickBooks Mileage make this super easy.
Equipment & Software
When you buy something like a laptop or design tool that you also use personally, you can only claim the business share.
Example: if you use your laptop 80% for client work and 20% for personal use, you can deduct 80% of the cost.
Utilities & Subscriptions
If you share services like streaming platforms, cloud storage, or design tools between personal and business use, deduct only the business portion.
Example: if you use Canva for client projects and personal invitations, you’ll need to split the cost by usage.
Final Tip
You can deduct mixed-use expenses — but only the portion that’s business-related.
Keep simple records like logs, receipts, or usage estimates to back up your claims.
Need help sorting through gray areas? Let’s take a look together. I’ll review your books, organize your accounts, and help you create a simple system for handling mixed-use deductions — stress-free and audit-ready.
