Many self-employed individuals and small businesses rent self-storage units. It can be included in your tax deductions if your situation passes the parameters covered under the Internal Revenue Service guidelines. If you sort this out from the get-go, renting a storage space will not only provide extra space for your business but also help reduce operating expenses.

What Does the IRS Say About Storage Expense Tax Deductions?

According to IRS guidelines, a business expense can be deductible if it’s deemed “both ordinary and necessary.” The government agency defines an ordinary expense as “one that is common and accepted in your industry,” and a necessary expense as “one that is helpful and appropriate for your trade or business.” So if you’re renting a storage unit to store stock, equipment, or other supplies for your business, you can write it off within the rent expense category. 

How Do You Claim Self-Storage on Taxes?

Here’s where you include storage expenses depending on your tax category:

• Sole proprietors and single-member LLCs: Schedule C—Line 20B

• Partnerships and multiple-member LLCs: Form 1065—Line 13

• C-Corporations: Form 1120—Line 16

• S-Corporations: Include on Form 1120S—Line 11

It’s not uncommon for small business owners and self-employed individuals to use storage units for personal and business purposes. If this is the case, you’ll have to identify the unit’s percentage for business and personal uses. Only the portion used for business is tax-deductible.

For instance, if your storage expense costs $100 but you’re using 70% of the space for business and the other 30% for personal uses, you can only write off $70. If you’re unsure how to go about it, it’s best to consult a trusted accountant. 

When business owners throughout Texas, Arizona, and Colorado need self-storage, they turn to Advantage Storage in Flower Mound, TX. For two decades now, the facility has offered climate-controlled self-storage units and month-to-month leases, assisting over 35,000 customers annually. Call (972) 212-5225 or visit their website for more information about their services.