How to split receipts between business and personal use
You can split a single receipt or recurring bill between business and personal use, deducting the business share and excluding the personal share. If you are self-employed, a freelancer, or a small business owner, your expenses are rarely 100% business.
You use your smartphone for client calls during the day and family calls at night. You buy printer paper at Costco alongside household groceries. You drive your personal vehicle to meet a client before running personal errands.
You might worry that mixing business and personal items on one receipt invalidates the tax deduction, or that you must ask the cashier to ring up two separate transactions. Neither is true.
Under Internal Revenue Code § 162 in the United States, Australian Taxation Office (ATO) guidelines, and HMRC rules in the UK, you are legally entitled to apportion mixed-use expenses. You simply need an accurate, defensible method of apportionment and the records to back it up.
Scenario 1: Splitting a single mixed retail receipt
Imagine you visit Costco, Target, or Office Depot and buy:
- Printer paper and toner: $80.00 (business office supplies)
- Household groceries and coffee: $170.00 (personal non-deductible)
- Total receipt: $250.00
How to substantiate the deduction:
- Keep the itemized receipt: Bank or credit card statements may show
only
$250.00 to Costco. An itemized receipt makes it much easier to show which items were for the business. - Isolate the business line items: The business portion is $80.00. The non-deductible remainder is $170.00.
- Apportion sales tax / GST: Sales tax applies to the taxable business items.
- File under Schedule C Line 18 or 22: Enter the $80.00 deduction into your tax software (such as TurboTax) under Office Expense or Supplies.
In Bilbx, this is handled automatically via Claim Splitting: Bilbx’s AI extracts every line item, lets you mark the $80.00 as claimable, and preserves the complete receipt with an audit note explaining the split.
Scenario 2: Percentage allocation on recurring bills (Phone & Internet)
Unlike store purchases where individual items are separate, utility bills cannot be split line-by-line. Your mobile carrier charges a single monthly fee for voice and data.
Example: The $1,000 phone bill
If your annual mobile phone bills total $1,000.00, and you use the phone for both client communication and personal calls:
- 60% business use = $600.00 deductible on Schedule C Line 25 or Line 27a.
- 40% personal use = $400.00 non-deductible.
Supporting your percentage
Do not use an arbitrary percentage. Keep records that explain how you calculated the business proportion, such as bills, a usage log or other contemporaneous evidence. The records and acceptable method vary by jurisdiction and expense. Review the relevant tax authority guidance or discuss the approach with an accountant before using a percentage across a full year.
Scenario 3: Vehicle expenses (Logbook vs. Standard Mileage)
For self-employed taxpayers in the US using a personal car for business:
- Actual Expense Method: Keep all fuel, repair, insurance, and maintenance receipts, and record business and total miles so you can establish the business-use percentage (e.g. 70% business). The IRS asks for a contemporaneous mileage record under Treas. Reg. § 1.274-5(b)(6) - date, destination, business purpose and miles - not a fixed sample period. The 12-week logbook is the Australian method, not a US one; see the comparison table below. Bilbx applies your business-use rate to your actual vehicle receipts.
- Standard Mileage Method: Instead of fuel receipts, track total business miles driven (date, destination, business purpose) and multiply by the annual IRS standard mileage rate.
Summary of rules across jurisdictions
| Authority | Mixed Retail Receipts | Phone & Internet Bills | Vehicle Expenses |
|---|---|---|---|
| US (IRS) | Keep records showing the business expense and personal portion. | Keep records supporting a reasonable business-use percentage. | Follow the IRS rules for the actual-expense or standard-mileage method. |
| Australia (ATO) | Claim work-related items; must have proof of purchase showing item description. | 4-week representative diary (TR 2020/1) to establish business-use percentage. | 12-week logbook method (valid for 5 years) or cents-per-km method. |
| UK (HMRC) | Deduct items incurred "wholly and exclusively" for trade (BIM37000). | Apportion actual business calls or percentage of fixed broadband. | Actual vehicle expenses apportioned by business mileage, or simplified flat rate. |
Why automated substantiation matters
When tax season arrives, tax software like TurboTax, TaxAct, or your CPA will ask for single numbers: "What was your total office expense? What was your total utility expense?"
Your tax return should be supported by records that explain the calculation. If an authority reviews the claim, those records may be needed to substantiate it.
Capturing the receipt and recording the basis for an allocation when the details are fresh can make a later review much easier.
Sources
Ask about this guide
Got a question about your own receipt? Ask it, and get an answer from Bilbx's reviewed guides for the US.
General information, not tax or legal advice.
Common questions
Can you deduct part of a receipt on your taxes?
Yes. Under IRS IRC § 162, ATO rules, and HMRC guidance, you are legally entitled to deduct the business portion of a mixed receipt. You do not have to discard the entire expense or run two separate checkout transactions.
How do you calculate business-use percentage on a phone bill?
Keep records that support the percentage, such as itemized bills, a usage log, or a representative sample period. If 60% of your use is for business, you deduct 60% of your total phone bills ($600 on a $1,000 annual total). Note that the 4-week representative diary is an ATO rule for Australian taxpayers; the IRS sets no fixed sample length, requiring only that your method be reasonable and supported by records.
What is the best way to split a supermarket or retail store receipt?
Keep the complete itemized receipt. Mark the individual business supplies as claimable (for example, $80 for printer paper and ink) and exclude the personal items ($170 for groceries). Bilbx extracts each line item and calculates the claimable and personal portions automatically.
Every figure on this page is checked against the IRS's own guidance and linked in the sources above. Last checked . Thresholds change each tax year, so if you are reading this well after that date, confirm the current figures before you rely on them. Terms.
The tax rules behind this guide
The line each expense goes on
Schedule C (Form 1040), Part II
Schedule C: the line each expense goes on
The lines of Schedule C, as the IRS prints them, and the one Bilbx's Tax Lab adds each category's receipts up on.
Read the ruleRecords of business use
Mileage log, for its own year
Business use: the mileage log
The record the IRS accepts for the business share of a vehicle, and the year Bilbx's Tax Lab applies it for.
Read the ruleKeep reading
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ReadHow long do you need to keep receipts for the IRS?
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