Can I Write This Off?

Can freelancers deduct can i write off chatgpt as a business expense?

TL;DR

Freelancers can generally deduct the cost of using ChatGPT as a business expense if it is used for business purposes, such as generating content or assisting with client communications. However, personal use is not deductible.

Detailed Answer

The cost of using ChatGPT can be deducted as a business expense if it is ordinary and necessary for your trade or business. For example, if a freelance writer uses ChatGPT to draft articles or a consultant uses it to generate client reports, these are considered business uses. Personal use, such as casual conversation or non-business-related inquiries, is not deductible. It's important to allocate the cost between business and personal use if applicable. If ChatGPT is used exclusively for business, the full cost may be deductible. However, if used for both personal and business purposes, only the business portion is deductible.

Where to Put It on the Tax Form

Schedule C, Line 27a for 'Other Expenses'.

Real World Example

A freelance graphic designer subscribes to ChatGPT for $20 per month to help generate creative ideas for client projects. The designer uses it exclusively for business, so the full $240 annual cost is deductible on Schedule C as an 'Other Expense'.

Calculation Required

A calculation is required for this deduction.

If ChatGPT is used for both personal and business purposes, calculate the percentage of business use by dividing the time or usage spent on business activities by the total time or usage. Multiply this percentage by the total cost to determine the deductible amount.

Audit Risk & Documentation Tips

Audit risk is moderate. To defend this deduction, keep detailed records of how ChatGPT is used for business purposes, including logs of interactions, business-related outputs, and any relevant client communications. Save receipts or invoices showing the subscription cost and maintain a clear separation of business and personal use.

IRS Reference

IRS Publication 535, Business Expenses; IRC §162.

Relevant Industries

FreelancersConsultantsWritersContent Creators

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

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