The fastest way to attract an IRS audit is to start writing off expenses that were never deductible in the first place.

You’ve probably heard versions of these:

“Just talk business on your vacation, and you can write-off the whole trip.”

“That round of golf was for networking, so you can write that off.”

These tax myths gain momentum online, but the IRS rejects them outright.

There’s a clear difference between a legitimate business expense and a personal expense dressed up to look like one. And when you know how the IRS draws that line, you understand why certain write-offs get denied every single time.

Below are the top 10 expenses people mistakenly try to deduct, and how to structure your finances correctly so you get real, legal tax write-offs that reduce your taxable income. 

Watch the full breakdown of all 10 deductions here.

What Rules Does the IRS Actually Use to Judge Your Write-Offs?

Every tax deduction for small businesses and investors—whether you’re running a sole proprietorship, LLC, S-Corp, or working as an independent contractor—must pass three tests.

Section 162 – Is It a Real Business Expense?

To deduct an item, it must be:

• Ordinary in your industry
  
• Necessary for your operations
  
• Directly tied to a business or rental activity you’re actively conducting

This applies whether you’re a landlord building a real estate tax deductions list, a contractor seeking tax write-offs for small business owners, or an entrepreneur looking for legitimate business deductions.

Section 274 – Can You Prove It?

The IRS wants detailed records for:

• Travel
  
• Meals
  
• Lodging
  
• Vehicles
  
• “Listed property”
  
• Business gifts

The documentation must include the amount, date, location, business purpose, and the nature of the business relationship. If you want tax deductions for rental property owners, entrepreneurs, or investors to stick, you need detailed records every time.

Section 262 – Is Any of It Personal?

Personal, family, or living expenses are nondeductible—even in a sole proprietorship.

This is why people get in trouble with:

• Vacations disguised as “business travel”
  
• Clothing framed as “professional appearance”
  
• Streaming labeled as “research”
  
• Family expenses pushed through an LLC

These three filters guide all IRS write-offs, from rental property deductions to tax deductions for entrepreneurs, to self-employed retirement plans.

Why Isn’t Personal Travel Deductible Just Because You Discussed Business?

Talking business on vacation does not make the trip deductible. Travel must be primarily for business to qualify.

If you’re a real estate investor, for example, you can’t simply visit Hawaii, glance at a listing on Zillow, and claim the whole trip as a deduction. The IRS looks at the actual schedule:

• Deductible: airfare tied to business days, hotel, and meals on documented business days
• Not deductible: sightseeing days, family travel, or personal vacation time

For employed individuals, entrepreneurs, and small business owners, the same rule applies.

Travel expenses only become a real estate tax write-off or tax deduction for small business owners when the business purpose is established first.

Are Wellness Expenses, Vitamins, and Supplements Ever Deductible?

Only in very specific scenarios.

You can’t deduct gym memberships, wellness apps, vitamins, supplements, or generic “health routines” just because staying healthy helps you work harder or generate cash flow. 

They may become deductible medical expenses if:

• You have a diagnosed condition
  
• A doctor prescribes the treatment
  
• You deduct them through an HSA or a C-Corp health reimbursement arrangement

They do not become business deductions.

And most taxpayers—even self-employed individuals and sole proprietorships—don’t benefit from Schedule A medical deductions because they must exceed 7.5% of AGI.

If you want to deduct a portion of your health insurance premiums, that’s usually handled through self-employed health insurance deductions or your business entity—not general wellness purchases.

Can Clothes, Grooming, or Jewelry Qualify as Business Deductions?

No. The clothing item must be specifically designed for workplace wear to be deductible. 

Most clothing—regardless of how professional it looks—is personal.

That includes:

• Suits
  
• Dresses
  
• Blazers
  
• Shoes
  
• Jewelry
  
• Haircuts
  
• Makeup
  
• Manicures

Only clothing that isn’t suitable for everyday wear counts:

• Required uniforms
  
• Scrubs
  
• Safety gear
  
• Steel-toed boots
  
• PPE on job sites

If you’re a landlord or real estate investor meeting with tenants, or an entrepreneur meeting with clients, your appearance may matter, but it’s still personal.

Are Golf, Sporting Events, or Entertainment Still Deductible?

Almost never.

The Tax Cuts and Jobs Act removed deductions for:

• Golf
  
• Sporting events
  
• Concerts
  
• Shows
  
• Recreation
  
• Entertainment-related costs

What is deductible?

Business meals, generally at 50%, when there is:

• A clear business purpose
  
• You are present
  
• Documentation of what was discussed

The round of golf? Not deductible. The clubhouse meal afterward? Possibly.

This applies equally across tax planning for real estate investors, entrepreneurs, and small business owners.

Can Streaming Services, Camps, or Tuition Be Written Off as Business Expenses?

Not unless the expense directly improves your current business, not a new one.

Personal expenses:

• Netflix, Max, Disney+, Hulu
  
• Kids’ summer camps
  
• Private school tuition
  
• General education classes

Deductible education must:

• Improve your current skillset, or
  
• Be required to maintain your current credentials

For example:

• A real estate investor taking a class on tax planning for entrepreneurs → deductible
  
• A landlord taking a class on improving rental property management → deductible
  
• A marketer going to law school → not deductible

Are Pet Expenses Deductible If You Call the Animal a Guard Dog or Morale Officer?

Usually not.

The IRS rejects almost all pet-related deductions.

The only legitimate exceptions:

• A trained guard dog on a business property
  
• A certified service animal (deductible as a medical expense, not a business expense)

A “morale officer” dog in your home office doesn’t count.

Can Commuting, Car Payments, Gas, or Car Washes Be Deducted as Business Expenses?

Commuting is always personal—even for real estate investors, independent contractors, and sole proprietorship owners.

Driving from home to your office (or first job site) is not deductible, regardless of whether you talk business en route.

Vehicle expenses become deductible only for true business miles, and the IRS requires:

• A mileage log
  
• Separation of business vs. personal miles
  
• Clear documentation
  

Common deductions include:

• Mileage reimbursement
  
• Actual vehicle expenses proportional to business use
  
• Depreciation for business-use vehicles (subject to limits)

But without detailed records, none of this survives audit review.

Can Your Business Deduct Personal Legal or Accounting Bills?

No. This issue affects many small business owners and real estate investors, especially those looking for valid real estate investment tax deductions and ways to reduce their taxable income.

Running personal legal bills through your business becomes either:

• A constructive dividend, or
  
• Taxable wages/distributions

Businesses can deduct:

• Entity formation
  
• Contract reviews
  
• Lease agreements
  
• Evictions (for landlords)
  
• Business tax prep
  
• Legal work tied directly to the business

Businesses cannot deduct:

• Living trusts
  
• Divorces
  
• Personal tax prep
  
• Estate plans
  
• Will updates

If a bill covers both personal and business matters, your tax advisor should allocate between the two.

Are GoFundMe Donations or Person-to-Person Gifts Deductible?

No. Charitable contributions are only deductible when given to a qualified 501(c)(3) organization.

Most crowdfunding pages are not charities. Even if it’s for a good cause, they have not completed the appropriate filings to be recognized by the IRS as a deductible charitable contribution.

This applies to everyone:

• Small business owners
  
• Employed individuals
  
• Independent contractors
  
• Real estate investors
  
• Sole proprietorship owners

If you want the tax benefit, use a real charity and keep your acknowledgment letter.

How Do People Misuse the Home Office Deduction and the Augusta Rule?

Home Office Deduction

A home office must be:

• Regularly and exclusively used for business
  
• Your principal place of business or a meeting location

Many real estate investors and entrepreneurs benefit more by having an S-Corp or C-Corp adopt an accountable plan to reimburse a portion of home expenses. This helps correctly deduct a portion of utilities, internet, insurance, and more—while protecting the deduction.

Augusta Rule (Section 280A)

You can rent your home to your corporation for up to 14 days per year tax-free. But:

• The event must be legitimate
  
• The rate must be reasonable
  
• Payment must actually occur
  
• Records must support the rental

This strategy is powerful in tax planning for small business owners—but only when executed properly.

What Other “Creative Deductions” Does the IRS Deny Immediately?

Auditors routinely reject:

• Groceries labeled as “business meals”
  
• Political contributions
  
• Federal income taxes
  
• Penalties and fines
  
• Club memberships
  
• Fake family payroll
  
• Personal education
  
• Jewelry, grooming, and appearance
  
• Car repairs when the business doesn’t own the car

If it sounds too clever, it likely won’t survive IRS scrutiny.

What Business Expenses Are Actually Deductible?

A business expense is only deductible when it is ordinary, necessary, and clearly connected to your business operations. 

Whether you’re a real estate investor, small business owner, sole proprietor, or independent contractor, the IRS requires that each item deducted be supported by detailed records and tied to income-producing activity.

Common deductible expenses include:

• Professional services, such as legal guidance or working with a tax advisor
  
• A portion of the home office costs when the space is used exclusively for business
  
• Retirement plans that help reduce your taxable income
  
• Depreciation deduction for rental properties, vehicles, and equipment used in your business
  
• Health insurance premiums, when properly structured
  
• Mileage, travel, and operational expenses that meet Section 162 and Section 274 rules
  
• Legitimate expenses incurred while managing rental properties or real estate investments

Self-employed individuals are also responsible for Social Security and Medicare through self-employment tax, which makes proper tax planning even more important to protect cash flow and your bottom line. For entrepreneurs seeking reliable tax write-offs, the key is simple: document everything, separate personal and business expenses, and ensure every deduction directly supports your business or rental activity.

What’s the Right Way to Approach Business Deductions Legally?

Real tax planning—not TikTok tax hacks—comes down to:

• Clean separation between business and personal spending
  
• Keeping detailed records
  
• Choosing the right entity (sole proprietorship vs. LLC vs. S-Corp)
  
• Deducting a portion of expenses only when appropriate
  
• Using IRS-approved strategies, like retirement plans, to reduce your taxable income
  
• Consulting a qualified tax advisor who understands your activity

When done properly, you get legitimate IRS write-offs, stronger cash flow, and a tax structure that supports—not threatens—your success.

If you want help identifying the right tax write-offs for entrepreneurs, small businesses, or real estate investors, schedule a free 45-minute Strategy Session with a Senior Advisor at Anderson Advisors. We’ll walk you through your entity structure, income, rental activity, and deduction opportunities, ensuring your tax plan works for you—not against you.