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Is can i write off chatgpt as a business expense a business expense?

TL;DR

ChatGPT can be deductible as a business expense if it is used for business purposes, such as generating content or automating customer service. Personal use is not deductible.

Detailed Answer

To deduct ChatGPT as a business expense, it must be used primarily for business purposes. For example, if a freelance writer uses ChatGPT to generate article ideas or content, the cost can be deducted. However, if the tool is used for personal entertainment or non-business-related tasks, those costs are not deductible. It's important to determine the percentage of business versus personal use. If the tool is used 70% for business and 30% for personal use, only 70% of the cost is deductible. This aligns with the general IRS rule that expenses must be both ordinary and necessary for the business.

Where to Put It on the Tax Form

Schedule C, Line 27a

Real World Example

A freelance marketing consultant subscribes to ChatGPT for $20 per month to assist in drafting marketing emails and client proposals. They determine that 80% of the use is for business purposes, so they deduct $192 ($20 x 12 months x 80%) on their Schedule C.

Calculation Required

A calculation is required for this deduction.

Calculate the deductible amount by determining the percentage of business use. Multiply the total cost by this percentage. For example, if the annual subscription cost is $240 and 80% is for business use, the deductible amount is $192.

Audit Risk & Documentation Tips

Moderate audit risk. Keep detailed records of how ChatGPT is used for business, including logs or notes of business activities it assisted with. Save receipts or invoices for the subscription. Document the method used to determine the business-use percentage.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersConsultantsContent CreatorsSmall Business Owners

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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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