If you're self-employed as a contractor — plumber, electrician, roofer, handyman, lawn care, painter, or any other trade — you file taxes on Schedule C of your federal tax return. That form asks you to list your business income and deduct your business expenses.
The problem most contractors run into: they don't track their expenses throughout the year, so come tax time they're digging through bank statements, receipts in a shoebox, and text message records trying to reconstruct nine months of spending. It's stressful, time-consuming, and they almost certainly miss deductions they were entitled to.
This guide covers how to track expenses the right way — organized by Schedule C category — so tax season is a one-hour exercise instead of a three-day emergency.
Why Schedule C categories matter
When you log an expense, it's not enough to just write down the amount. The IRS wants expenses grouped by category on Schedule C. Your accountant needs to know whether a $400 purchase was vehicle-related, a tool, a material, or a phone bill — because each goes on a different line of the form.
If you log expenses with the right category from the start, your accountant can prepare your return in minutes. If you hand them a list of raw numbers, they're doing extra work — and billing you for it.
The Schedule C categories that matter most for contractors
| Category | Schedule C Line | What goes here |
|---|---|---|
| Vehicle & Mileage | Line 9 | Gas, oil changes, repairs, insurance on business vehicle. Or standard mileage rate ($0.67/mile in 2024). Driving to and from job sites, supply runs, client meetings. |
| Materials & Supplies | Line 22 | Lumber, pipe, wire, paint, fasteners, concrete — anything you buy and install or use on a job. Also consumables like caulk, tape, drill bits. |
| Subcontractors | Line 11 | Payments to other contractors you hire to help on jobs. Note: if you pay anyone more than $600 in a year, you're required to send them a 1099-NEC. |
| Tools & Equipment | Line 22 / Section 179 | Hand tools, power tools, ladders, safety gear. Larger equipment purchases may qualify for Section 179 full deduction in the year purchased. |
| Phone & Internet | Line 25 | Business portion of your cell phone bill. If you use your phone 80% for business, deduct 80% of the bill. Internet if used for business. |
| Insurance | Line 15 | General liability insurance, commercial auto, tools & equipment insurance. Not health insurance (that's a separate deduction). |
| Office & Admin | Line 18 | Software subscriptions, invoicing apps, accounting tools, business cards, postage, office supplies. |
| Advertising | Line 8 | Website hosting, Google Ads, yard signs, business cards used for marketing, Nextdoor or Yelp ads. |
| Meals (50%) | Line 24b | Business meals with clients or subcontractors. Only 50% is deductible. Must have a business purpose. |
| Other Expenses | Line 48 | Anything legitimate that doesn't fit above — dump fees, parking for job sites, permits, licensing fees. |
The right way to track expenses throughout the year
1. Log every expense the same day you spend it
This is the single most important habit. Every time you buy materials, fill up the truck, or pay a sub, log it immediately. Trying to remember purchases from two months ago is how you miss deductions. A 30-second entry on your phone is all it takes.
2. Photograph every receipt
The IRS requires you to be able to substantiate your deductions. A bank statement showing "$84 at Home Depot" isn't enough — you need to prove it was materials, not a personal purchase. Take a photo of every receipt on the spot and attach it to the expense record.
3. Tag expenses to the job
Beyond the IRS categories, knowing which job each expense belongs to helps you understand your actual job profitability. A job that pays $3,000 but costs $2,400 in materials and subcontractor fees is a lot different from what it looks like on paper. Tracking per-job expenses makes you a better estimator over time.
4. Track mileage separately
Vehicle deductions are one of the biggest for most contractors. You can deduct actual vehicle expenses OR use the standard mileage rate. Either way, you need a log of business miles — destination, purpose, and distance. Apps like MileIQ or just a note in your phone work. Some business management apps have this built in.
Quarterly estimated taxes — don't skip this
As a self-employed contractor, the IRS expects you to pay taxes quarterly — not just in April. The due dates are generally:
- Q1 (Jan–Mar): due April 15
- Q2 (Apr–Jun): due June 15
- Q3 (Jul–Sep): due September 15
- Q4 (Oct–Dec): due January 15 of the following year
If you don't pay quarterly, you'll owe a penalty on top of the tax bill in April. A rough rule of thumb: set aside 25–30% of every payment you receive into a separate savings account. When quarterly estimates are due, pay from that account.
What to give your accountant at year end
If you've tracked properly throughout the year, giving your accountant everything they need takes about an hour:
- Total revenue for the year (your invoices paid)
- Expenses broken down by Schedule C category
- Total business miles driven
- Any asset purchases over $2,500 (for depreciation or Section 179)
- Names and SSNs of any subcontractors paid over $600 (for 1099s)
If your expenses are in a Google Sheet or spreadsheet, you can share it directly. No exports, no screenshots, no digging.
AEDEXBOOKS tracks expenses by Schedule C category — built in
Log expenses from your phone, attach receipt photos, and tag them to jobs. Every category maps to Schedule C. Share your Google Sheet directly with your accountant at year end.
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