“If I use it for business, I can write it off.”

Not exactly.

Before you start tagging everything in QuickBooks as “business expense,” here’s the test the IRS actually cares about.

Under IRC §162, a business expense generally has to be ordinary and necessary. Those two words do a lot of work.

Ordinary does not mean cheap

An ordinary expense is common and accepted in your line of business. For a real estate agent, that looks like:

• MLS fees
• Lockboxes
• Professional photography
• CRM software
• Advertising
• Business mileage
• A laptop used for the business

Any other agent would look at that list and nod.

Necessary does not mean required

It doesn’t mean “I couldn’t operate without it.” It means the expense is appropriate and helpful for the business.

So the better question isn’t “Did I use this for work?” It’s “Does this expense actually belong to the business?”

Where people start stretching

A laptop used for client work? Makes sense.

Professional headshots? Usually fine.

A gym membership because you need energy to sell homes? Much weaker.

Every outfit you wear to showings? Usually not, just because you wore it at work.

A luxury purchase because it “helps your image”? You’d need a real business connection, not just a story.

And paying for something from the business account doesn’t turn a personal expense into a business one. Mixing personal and business spending also makes your books messy, which makes everything harder to defend later.

My simple test

Would another person in your industry look at this expense and immediately understand why it belongs to the business?

If yes, you’re usually starting from a stronger position. If it takes five minutes to explain why a personal expense is “really marketing,” the argument gets weak fast.

Keep the paperwork

Even legitimate expenses need support:

• Receipts and invoices
• A mileage log (this is where agents get dinged most)
• A note on the business purpose
• Who was at the meal or event, and why

A deduction is much easier to defend when the paperwork matches the story.

A guide for agents

Cars, meals, clothing, home office, phones, client gifts, and travel all land in gray areas for agents. I put together a ​Real Estate Agent Tax Deduction Guide​ covering the ones I see most and how I think about each.

Keep it handy before year-end.

The bigger point

The goal isn’t to deduct everything. It’s to make sure legitimate expenses are captured, documented, and kept separate from personal spending.

That gives you a cleaner return, and a much easier conversation if anyone ever asks how you got there.

Best,

Waqas “Vic” Hussain, CPA
​Whitestone CPA​
Based in Chicago. Serving clients nationwide.

P.S. Deductions are only one piece of tax strategy. The bigger opportunities usually come from how your income, entity structure, retirement planning, real estate, and year-end decisions work together. If you want a second set of eyes on your setup before year-end, grab 30 minutes with me and I’ll walk through what I’d want reviewed in your situation.