If you subscribe to apps to manage your business income, expenses, and taxes, you can usually take a tax deduction.
Can you deduct You Need A Budget?
You Need A Budget isn’t always deductible because it’s mainly a personal finance tool. You can’t deduct apps you use for personal finance.
If you only use it to manage your business accounts, then it becomes 100% deductible as a business expense. If you use it for both business and personal reasons, you need to figure out what percentage you use it for business and deduct that percentage of the cost.
Can you deduct Quicken?
Quicken is also mainly a personal finance tool, but it also has business accounting tools. Since it has different price tiers based on what features you need, the best way to figure out your deduction is probably to deduct the price difference between the tier with business tools and the tier without business tools.
If you only use Quicken to manage your business accounts and don’t use it for personal reasons, you can deduct the full cost.
Can you deduct tax filing software?
Tax filing software also depends on business versus personal use. You can deduct the costs related to your business taxes but not your personal tax issues.
Many tax filing software providers include most personal tax issues in their free tier, and you only need to pay to upgrade if you have business taxes. In that case, you can fairly deduct the full cost of the software.
You might also want to just go ahead and use tax filing software that’s free for everyone including independent contractors, freelancers, and small businesses.
Can you deduct mileage tracking apps?
If you subscribe to paid mileage tracking apps like QuickBooks Self-Employed or Everlance, those are usually going to be fully deductible. Even though it also tracks your personal miles, you usually don’t need a mileage app to track personal miles.
The reason the app tracks personal miles is that it can only tell that you’re driving, not why you’re driving. So entering miles as personal is really to help figure out your business deductions. Since the app is then entirely for business, it’s entirely deductible.
Can you deduct accounting and bookkeeping software?
If you use accounting and bookkeeping software like QuickBooks, Freshbooks, Bonsai, or other platforms, you can usually deduct it in full. These are business apps designed to manage your business finances.
If you also use them to manage your personal money, then you might need to only take a partial deduction since you’re not using it 100% for business.
Can you deduct invoicing and payment apps?
If you use invoicing and payment apps, you can deduct both subscription fees and payment processing fees. Those are also ordinary and necessary business expenses.
Again, if you do use those apps to collect personal funds, the fees related to personal transactions wouldn’t be deductible.
Can you deduct other types of apps?
If you subscribe to other types of apps, they may be deductible. The key questions are:
- Do you need it to help manage your business?
- Do you use it 100% for business or can you calculate what percent you use it for business?
For all deductions, don’t forget to save your receipts and keep notes showing why it was a business expense.