Handyman Tax Deductions: What Can You Write Off?

As a self-employed handyman, understanding tax deductions is part of managing your business finances. A business expense is a cost incurred in the course of running your trade. These deductions reduce your taxable income, which is the figure used to calculate the amount of tax you owe. This distinction is important; deductions lower your income subject to tax, rather than directly reducing your final tax payment dollar-for-dollar.

Key Tax Deductions for Handymen

Tools and Equipment

For a handyman, tools are a primary expense. The tax treatment of these items depends on their cost and useful life. Smaller hand tools like hammers, measuring tapes, and saws can be fully deducted in the year they are purchased as business supplies. Larger, more expensive pieces of equipment, such as a high-end table saw or generator, are considered assets and must be capitalized. This means you recover the cost over several years through depreciation, a process of allocating the asset’s cost over its useful life.

Materials and Supplies

The costs of materials and supplies used directly for specific jobs are deductible. This includes items like paint, lumber, screws, drywall, and caulk that are incorporated into a client’s project. You can also deduct general supplies necessary for your operations, such as shop rags, cleaning agents, and disposable safety gear.

Insurance

Insurance premiums for your business are deductible. This includes general liability insurance, which protects you from third-party claims of injury or property damage. You can also deduct premiums for property insurance that covers your business tools and equipment against theft or damage. If you have a vehicle used for business, the portion of your auto insurance premium attributable to business use is also a valid deduction.

Marketing and Advertising

Expenses incurred to promote your handyman services are fully deductible. These costs can range from traditional methods like printing business cards, flyers, and yard signs to modern digital strategies. Deductible advertising expenses include the costs of creating and hosting a business website, running online pay-per-click ads, or listing your services on professional directories.

Licenses, Fees, and Subscriptions

The costs associated with maintaining your legal and professional status are deductible. This includes fees paid to state or local governments for business registration and contractor licenses, which can cost up to $400 depending on the jurisdiction. You can also deduct subscriptions to trade publications or professional journals. Bank fees on your business checking account are another deductible expense.

Communication

If you use your personal cell phone and internet for your business, you can deduct the business-use percentage of these bills. You must determine what portion of your usage is for business activities, such as contacting clients or ordering supplies, versus personal use. For this reason, some business owners maintain a separate phone line and internet service to allow for a 100% deduction of those costs.

Deducting Business Vehicle Expenses

Standard Mileage Rate

One method for deducting vehicle expenses is the standard mileage rate set by the IRS. For the 2025 tax year, the rate is 70 cents per mile driven for business purposes. To calculate your deduction, you multiply your total business miles for the year by this rate. This rate accounts for the costs of operating a vehicle, but parking fees and tolls incurred during business travel can be deducted separately.

Actual Expense Method

The actual expense method involves tracking and deducting the specific costs of operating your vehicle for business. To use this method, you must determine the business-use percentage of your vehicle by dividing business miles by total miles driven. You can then deduct that percentage of your total vehicle expenses, which include:

• Gasoline
• Oil changes
• Tires
• Repairs
• Insurance
• Registration fees
• Depreciation

Regardless of the method you choose, the IRS requires a contemporaneous mileage log to substantiate your vehicle expense deduction. This log must document each business trip, including the date, the purpose of the trip, and the starting and ending odometer readings to prove the business use of your vehicle.

Claiming the Home Office Deduction

The Regular and Exclusive Use Test

To claim a deduction for a home office, you must meet the “regular and exclusive use” test. This means you must use a specific area of your home solely for conducting business on a regular basis. For example, a spare room where you exclusively handle invoicing and scheduling would qualify. A kitchen table used for both business paperwork and family meals would not meet the exclusive use requirement. The space does not need to be a full room, as a clearly defined area can also qualify.

Calculation Methods

There are two ways to calculate the home office deduction. The simplified method allows you to deduct a standard rate of $5 per square foot for up to 300 square feet of office space, for a maximum deduction of $1,500. The regular method involves calculating the percentage of your home used for business. You then apply this percentage to your total direct and indirect home expenses, like mortgage interest, rent, and utilities. Direct expenses are costs that apply only to the office space, such as a repair.

Essential Record Keeping for Tax Time

You should keep all receipts, whether digital or physical, for any business-related purchase. Bank and credit card statements are also important, and it is a good practice to highlight business expenses on them for easy identification. Keeping copies of paid invoices and contracts helps to create a complete financial picture of your business activities.

For a record to be useful for tax purposes, it must contain specific information. Each record should clearly show the date of the transaction, the amount paid, and the name of the vendor or payee. It is also a good practice to add a note describing the business purpose of the expense, especially if it is not obvious from the receipt itself.

How to Report Your Deductions

As a self-employed individual, you will report your business income and expenses on Schedule C (Form 1040), Profit or Loss from Business. The totals for your various expense categories are entered on specific lines of this form. For instance, advertising costs are entered on Line 8, while car and truck expenses go on Line 9.

The cost of materials incorporated into a client’s project is reported as “Cost of Goods Sold” in Part III of Schedule C, while general business supplies are entered on Line 22. Other expenses, such as business insurance and license fees, have their own designated lines in Part II of the form.

If you are claiming the home office deduction, you will first complete Form 8829, Expenses for Business Use of Your Home. The final deduction amount calculated on Form 8829 is then transferred to Line 30 of your Schedule C.