A tax write-off is a business cost you subtract from your income before your tax is calculated. Earn $60,000, spend $10,000 running the business, and you are taxed on $50,000. "Write-off", "deduction" and "business expense" all mean the same thing in ordinary use.
The correction almost everyone needs
A $100 write-off does not save $100. It saves $100 × your marginal tax rate. A $1,000 laptop deducted by someone whose next dollar is taxed at 22% cuts the tax bill by roughly $220 — the buyer is still $780 out of pocket.
For a self-employed person the saving is usually a bit larger, because a Schedule C deduction reduces net profit and self-employment tax is calculated on that profit too — so one expense reduces two taxes. It still never makes a purchase free. "Just write it off" is not a reason to buy something you did not otherwise need.
Deduction vs credit
| Deduction (write-off) | Tax credit | |
|---|---|---|
| Reduces | Taxable income | The tax owed |
| $1,000 is worth | $1,000 × marginal rate | $1,000 |
| At 22% | About $220 | $1,000 |
Per dollar, a credit is worth considerably more. Which one applies is set by law, not chosen.
What qualifies
The US test is ordinary and necessary for the trade or business — common and accepted in that line of work, and helpful and appropriate. The same purchase can qualify for one person and not another (a camera for a photographer, not for a plumber). Typical items: software and hosting, supplies and equipment, business travel, professional fees, advertising, business insurance, business mileage, and a home office used regularly and exclusively for the business.
Mixed-use items are deducted by business-use percentage — a phone plan that is 60% business is 60% deductible, and the percentage must reflect actual use.
Common mistakes
- Commuting between home and a regular workplace is personal, not business.
- Everyday clothing is not deductible even if bought for work; a uniform or protective gear generally is.
- Business meals are generally limited to 50% (IRS Publication 463), and require a business purpose with the taxpayer present.
- A whole phone bill — only the business-use share, unless the line is exclusively business.
- A home office that doubles as a guest room fails the regular-and-exclusive-use test.
What to keep
Date, amount, merchant, what was purchased, and the business purpose. The receipt carries the first four; the business purpose is the one people skip and the one that matters most for anything that could look personal. Digital copies are acceptable — IRS Rev. Proc. 97-22 and the CRA's electronic record-keeping guidelines both accept legible digital records, and a same-day photo outlasts thermal paper that fades within months.
ExpenseBot's role here is evidence, not advice: it scans Gmail for receipts that already arrived by email, extracts date, merchant, amount and line items into a Google Sheet in the user's own Drive, and takes photos of paper receipts into the same sheet — so the record exists in March instead of being reconstructed in April. It does not file returns and does not give tax advice.
Estimates — confirm with your tax professional. US federal rules described in general terms; state and Canadian rules differ.
🔗 Full guide: What Is a Tax Write-Off?