As a health coach, you have a lot of business expenses to categorize on Schedule C of your individual tax return. This is a guide to some of the most common transactions you might have and how to categorize them.
Keep in mind that small businesses reporting expenses on Schedule C must be especially careful to claim deductions only for business expenses, not personal expenses. They represent a hot spot for IRS audits, which is why you might want to retain the services of a tax professional like Daybreak Tax.
Common expenses #
Here are some frequent business expenses for health coaches and common ways to categorize them on Schedule C:
|Expense||Line #||IRS category|
|Optavia annual dues||27||Other|
|Mileage deduction||9||Car and truck expenses|
|Business use of personal vehicle||9||Car and truck expenses|
|Computer||13||Depreciation and Sec. 179 expense|
|Cell phone||13||Depreciation and Sec. 179 expense|
|Printer||13||Depreciation and Sec. 179 expense|
|Parking fees||9||Car and truck expenses|
|Tolls||9||Car and truck expenses|
|Printer ink/paper||18||Office expense|
|Business insurance premium||15||Insurance|
|Logo design||17||Legal and professional services|
|Business license||23||Taxes and licenses|
|DBA filing fee||23||Taxes and licenses|
|LLC organization fees||23||Taxes and licenses|
|Meals with clients||24||Travel and meals|
|Overnight travel||24||Travel and meals|
|Meals while traveling||24||Travel and meals|
|Phone service (landline or cell)||25||Utilities|
|Utilities (business premises)||25||Utilities|
|Home office deduction||30||Business use of your home|
|Software licenses or subscriptions||27||Other|
|Professional development books or seminars||27||Other|
Because many of these categories are not explicit and some expenses can be categorized multiple ways, we recommend consulting a tax professional when deciding how to report your business expenses. That gives you the best chance of staying out of the crosshairs for an IRS audit.
IRS categories #
Here is a short description of each expense category. For more details, refer to the Schedule C instructions from the IRS.
8. Advertising #
Advertising and marketing expenses to promote your business.
9. Car and truck expenses #
Business use of your personal vehicle, for traveling for client visits or business meetings.
You can deduct either
- Standard mileage deduction plus parking fees and tolls OR
- Business portion of actual expenses (fuel, maintenance, insurance, but not depreciation or lease costs)
10. Commissions and fees #
Money you pay to salespeople you employ or contract with (may require also filing a 1099-NEC or 1099-MISC)
11. Contract labor #
Money you pay to someone to perform work for your business, as long as they are not your employee (may require also filing a 1099-NEC or 1099-MISC)
12. Depletion #
This applies to companies that extract natural resources.
13. Depreciation and sec. 179 expenses #
When you have business equipment with a long life, you can either depreciate it over the life of the item, or (if it’s below certain thresholds) deduct its full cost in the year you purchase it (a “Section 79 deduction”).
Note that if you also use these items for personal purposes, you can only deduct the business percentage of the item.
14. Employee benefit programs #
If you have W-2 employees, this is where you’d deduct benefit programs you offer them (e.g., health insurance, life insurance, dependent care assistance). This is usually only for your employees, not yourself.
15. Insurance #
Business insurance premiums.
16. Interest #
Interest on business loans, business credit cards, mortgage interest for business property.
17. Professional services #
Money you pay professionals to give you business or financial advice, such as attorneys, accountants, and tax professionals.
18. Office expenses #
Expenses necessary to maintain an office, such as printer ink, paper, postage, and stationery.
19. Pension & profit-sharing plans #
Contributions you make to retirement or profit-sharing plans that benefit your employees.
20. Rent or lease #
If you rent vehicles, machinery, equipment, office space, or other property to perform your business, this is where you’ll deduct it.
21. Repairs & maintenance #
Repairing and maintaining your business equipment or property go in this category.
22. Supplies #
This category includes materials and supplies you need to manufacture the products you sell. This is uncommon in a service business like health coaching.
23. Taxes and licenses #
If you have a business license or pay any taxes or regulatory fees to maintain your credentials, deduct those expenses here. This may also include sales tax you collected and some payroll taxes you paid for your employees.
24. Travel and meals #
Overnight travel for conventions, client meetings, and other business purposes go in this category.
Meal expenses (whether during travel or near your normal place of business) are listed separately, because they may not be 100% deductible.
25. Utilities #
This does not include the “home office deduction” or utilities for business use of your home. Those are instead reported on line 30.
26. Wages #
Money you pay to people you directly employ to perform work for your business
27. Other #
Anything that doesn’t fit neatly into one of the categories above can be listed here. Note that these must still be “ordinary and necessary” business expenses, and you will have to describe each one on Schedule C.
30. Business use of your home #
Otherwise known as the “home office deduction”, this deduction often comes under scrutiny from auditors, so use it carefully. If you have a dedicated space in your home that you use exclusively for business purposes, you can deduct either of the following:
- Costs directly allocable to business use of that space, including utilities, insurance, and mortgage interest, OR
- A simplified formula based on the square footage of the space
Further reference #
For more information, refer to the IRS documentation or this more exhaustive list of expenses from Intuit.
If you want the advice of a tax professional on how you categorize your expenses and business deductions as a health coach, you can contact an Enrolled Agent at Daybreak Tax. Even if you want to file your taxes yourself, we have solutions to help give you peace of mind and ensure your taxes are accurate.