17 Tax Write-Offs for AI Trainers
NAICS business codeYour NAICS business code is a six-digit string of numbers that shows the type of work your business does. NAICS stands for North American Industry Classification System. When you do your taxes, you'll enter it in Box B of your Schedule C.541990
If you get paid to rate chatbot answers, write prompts, grade code, or label data on platforms like Outlier, DataAnnotation, Mercor, or Handshake AI, you're an AI trainer. (You might also call yourself a data annotator, AI tutor, or AI rater. Same rules.) In the IRS's eyes, that makes you an independent contractor running a small business.
That means nobody withholds taxes from your payouts, and you owe self-employment tax on top of income tax. The good news: the laptop, headset, Wi-Fi, and subscriptions you use for the work are tax write-offs.
Read Keeper's guide for AI training and data annotation taxes.
If you buy a phone or laptop and use it for work, it's partially deductible โ in proportion to how much you use it for business. The device itself is depreciated on Box 13 (or expensed under Section 179); your monthly service plan belongs on Box 27b, and accessories on Box 22.
If you use a headset for hands-free calls with customers, make sure to write it off.
If you use your phone for work (who doesn't?), then a part of your phone bill is tax-deductible.
A paid ChatGPT, Claude, or Gemini plan you use to compare outputs, test prompts, or check your work on tasks is a write-off. If you also use it personally, deduct only the business share.
Writing tools like Grammarly and Hemingway are tax-deductible. So are word processors like Scrivener and transcription software for interviews.
Software you use for invoicing, tracking expenses, creating timesheets, and so on is deductible.
Cloud storage and backup for your work files is a write-off.
Educational courses and certifications to enhance your skills are considered tax write-offs.
This covers training that maintains or improves skills for the work you already do. Courses that qualify you for a new trade or profession are not deductible.
Keeping up with the latest trends and techniques with books and courses can be written off.
This covers training that maintains or improves skills for the work you already do. Courses that qualify you for a new trade or profession are not deductible.
The cut Stripe, PayPal, Square or your invoicing platform takes on each payment is a write-off.
If you pay an accountant to track your income and expenses, you can deduct their fee.
If you work from home ...
Most AI training work happens at a desk at home. If you have a space you use regularly and only for task work, you can deduct a share of your rent or mortgage interest, utilities, and Wi-Fi with the home office deduction. The simplified method is $5 per square foot, up to 300 square feet.
A desk, chairs, lamps, and other home office necessities are all tax write-offs. Anything over about $2,500 gets depreciated on Form 4562 instead of written off all at once.
Repairs just for your home office are 100% deductible. Repairs to the rest of your home count too, prorated by your business-use percentage on Form 8829.
Gotta keep the lights on in your home office! A portion of your electricity bill counts.
Whether it's rental or homeowners insurance, you can write off a portion through your home office deduction.
It'd be hard to work in an office without running water, huh? Your water bill counts.
You need internet to do your job! If you claim a home office, deduct it prorated on Form 8829 along with your other utilities. Internet you pay for on the road, purely for work, is 100% deductible.
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