17 Tax Write-Offs for AI Trainers

NAICS business code541990

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.

Phone, laptop, accessories

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.

Where to write it off: Schedule C, Box 13
Headset

If you use a headset for hands-free calls with customers, make sure to write it off.

Where to write it off: Schedule C, Box 18
Phone bill

If you use your phone for work (who doesn't?), then a part of your phone bill is tax-deductible.

Where to write it off: Schedule C, Box 27b
AI model subscriptions

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.

Where to write it off: Schedule C, Box 18
Writing software

Writing tools like Grammarly and Hemingway are tax-deductible. So are word processors like Scrivener and transcription software for interviews.

Where to write it off: Schedule C, Box 18
Productivity software

Software you use for invoicing, tracking expenses, creating timesheets, and so on is deductible.

Where to write it off: Schedule C, Box 18
Cloud storage & backup

Cloud storage and backup for your work files is a write-off.

Where to write it off: Schedule C, Box 18
Courses & certifications

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.

Where to write it off: Schedule C, Box 27b
Books & courses

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.

Where to write it off: Schedule C, Box 27b
Payment processing fees

The cut Stripe, PayPal, Square or your invoicing platform takes on each payment is a write-off.

Where to write it off: Schedule C, Box 27b
Accountant fees

If you pay an accountant to track your income and expenses, you can deduct their fee.

Where to write it off: Schedule C, Box 17

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.

Home office furniture

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.

Where to write it off: Schedule C, Box 18
Property repairs

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.

Where to write it off: Schedule C, Box 21
Power bill

Gotta keep the lights on in your home office! A portion of your electricity bill counts.

Where to write it off: Form 8829
Property insurance

Whether it's rental or homeowners insurance, you can write off a portion through your home office deduction.

Where to write it off: Form 8829
Water bill

It'd be hard to work in an office without running water, huh? Your water bill counts.

Where to write it off: Form 8829
Wi-Fi bill

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.

Where to write it off: Schedule C, Box 25

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