what are tax deductible expenses

Tax-deductible expenses are costs that individuals or businesses incur that can be subtracted from their total income to reduce the amount of taxable income and therefore the amount of tax owed. These expenses must be ordinary, necessary, and reasonable to qualify as deductible. They can include both direct expenses, which are directly tied to making money, and indirect expenses, which are necessary to run a business but not directly linked to income. Common examples of tax-deductible expenses include office supplies, phone and internet bills (for business use), rent and utilities for business premises, travel and transport expenses for business purposes (excluding commuting), legal and professional fees, raw materials and stock for businesses selling products, marketing costs, staff wages and benefits, medical and dental expenses that exceed a certain percentage of income, health insurance premiums (especially for self-employed), certain education expenses, and many business operational costs like advertising, insurance, repairs, and taxes. It is important to separate personal and business expenses, as personal expenses are generally not deductible. Some common non-deductible expenses include daily commuting costs, personal meals, fines and penalties, and unpaid work done by oneself or family members. For individuals, deductions can be taken either as a standard deduction or by itemizing specific deductible expenses if those exceed the standard amount. Overall, tax-deductible expenses reduce taxable income, thus lowering tax liability.