Can I Write This Off?

Is can i write off chatgpt as a business expense a valid tax write-off?

TL;DR

Yes, you can generally deduct the cost of ChatGPT as a business expense if it is used for business purposes, such as generating content or assisting with customer inquiries. However, the deduction is only valid if the expense is ordinary and necessary for your trade or business.

Detailed Answer

ChatGPT can be deducted as a business expense if it is used primarily for business-related activities. For example, if a freelance writer uses ChatGPT to help draft articles or a consultant uses it to generate reports, these are considered ordinary and necessary expenses. However, if ChatGPT is used for personal purposes, such as casual conversation or entertainment, the expense is not deductible. It's important to allocate the cost between business and personal use if applicable. The IRS requires that the expense be both ordinary (common and accepted in your field) and necessary (helpful and appropriate for your business).

Where to Put It on the Tax Form

Schedule C, Line 27a (Other expenses)

Real World Example

A freelance graphic designer subscribes to ChatGPT for $20 per month to assist with client communications and project brainstorming. Since the tool is used exclusively for business purposes, the designer deducts the full $240 annual cost on Schedule C, Line 27a.

Calculation Required

A calculation is required for this deduction.

If ChatGPT is used for both business and personal purposes, you must calculate the business-use percentage. For example, if 70% of the usage is for business, you can deduct 70% of the total cost. Keep a log of usage to substantiate this allocation.

Audit Risk & Documentation Tips

The audit risk is moderate. Keep detailed records of how ChatGPT is used for business, including logs of usage, business communications, and any relevant projects. Save receipts or invoices for the subscription. If allocating between business and personal use, maintain a usage log to justify the percentage claimed.

IRS Reference

IRC §162, IRS Publication 535

Relevant Industries

FreelancersConsultantsContent CreatorsMarketing Professionals

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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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