Section 162

Section 162 of the Internal Revenue Code (26 U.S.C. §162) is the foundational statute that authorizes the deduction of business expenses on Schedule C. The operative language is brief and load-bearing: “There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.”

The two-part test

The Supreme Court in Welch v. Helvering (1933) established that “ordinary” and “necessary” are two separate tests, both of which must be satisfied:

Ordinary. The expense must be common and accepted in your line of work. Not whether you personally consider it normal — whether other OnlyFans creators (and the broader content-creator economy) would typically incur it. Cameras and lighting are ordinary; a Maserati you film next to is not.

Necessary. The expense must be appropriate and helpful for your business operations. The IRS doesn’t require indispensability — just that the expense serves a defensible business purpose. Hiring a professional photographer for a content shoot is necessary; hiring a personal chef because you mention food in content occasionally is not.

Why the test matters operationally

For every line on your Schedule C, the audit-defense question is: “Can you explain in one sentence, to an IRS auditor, how this expense serves your business under both standards?” If the explanation requires three sentences of context, the deduction is weak. If it requires you to justify why it’s not really personal use, the deduction won’t survive review.

The practical test for creators evaluating an expense: would another creator at your level in your niche typically incur this expense (ordinary), and does it directly serve your business operation (necessary)? Both yes → deduct. Either no → don’t.

The complete deduction taxonomy under Section 162 for OnlyFans creators is in the Schedule C deductions guide.