Infidelity investigations rack up expenses fast—fuel, surveillance equipment, meals during stakeouts, and subscription services all drain cash flow without clear visibility. If you're running this operation solo or with a small team, sloppy expense tracking means you're leaving deductible costs on the table and flying blind on job profitability. Here's how to lock down your finances and run a tighter operation.
The Mileage Category: Your Biggest Hidden Deduction
Surveillance work is built on road time. You're driving to client meetings, staking out locations, following subjects across town—sometimes across multiple counties. The IRS mileage rate for 2024 is 67 cents per mile for business use. Over a year, a PI who logs 15,000 investigation miles ($10,050 in deductions) often misses hundreds or thousands because they eyeball it instead of tracking it.
Use a dedicated app—Stride Health, MileIQ, or even a simple Google Sheet—where you log start/end odometer readings, location, and case reference. Don't batch entries at tax time; that's when accuracy crumbles. Log each trip the day it happens. If you've got team members, require them to submit weekly mileage summaries tied to specific cases.
One more thing: personal-to-business commute miles don't count. Your drive from home to your first job site counts, but your home to your office doesn't. Be precise here—audits on infidelity investigations are rare, but expense padding raises flags fast.
Meals and Surveillance Stakeouts
Long surveillance shifts mean you're buying coffee at 11 p.m., fast food at 2 a.m., and sandwiches during lunch observation hours. These are legitimate business expenses. The catch: meals are only 50% deductible unless you have specific rules (travel overnight, for example, can bump certain meal costs to 75%).
Track meal expenses by case. A simple phone photo of the receipt with case name and date works. Typical investigation job might run $40–80 in meals over a 48-hour surveillance period. On a 10-case month, that's $400–800 in meal deductions (worth $200–400 in tax savings, depending on your bracket).
Keep receipts organized in folders—one folder per month. The IRS doesn't need itemized detail ("bacon, egg, cheese"), but you should be able to prove the date, amount, and that it was during a work day. Spreadsheet beats chaos.
Tech, Software, and Subscriptions
Your tech stack isn't optional—it's your toolkit. Consider:
- VPN services ($4–15/month): Protects client data, enables secure research
- Case management software ($50–300/month): Tracks timelines, evidence, client communication
- Photography/video equipment upgrades ($200–3,000+): Cameras, lenses, stabilizers
- Phone/internet business lines ($50–150/month): Essential for client separation
- Background check and database subscriptions ($30–200/month): Skip-tracing, asset lookups
- GPS tracking devices (one-time $100–400): Legally defensible when client owns the vehicle
These are 100% deductible. Keep a spreadsheet of subscriptions with start date, monthly cost, and vendor. Annual cleanup catches forgotten trials or services you killed but still pay for. Many PI firms waste $50–150/year on orphaned tools.
For hardware like cameras or recorders, you'll depreciate them (MACRS depreciation) rather than deduct them in full. A $800 camera gets written off over 5 years, roughly $160/year. Your accountant handles the math, but you need to document the purchase date and business use.
Organizing It All
Set up a simple system:
- Folder structure: Year > Expense Category (Mileage, Meals, Tech, Equipment, Office)
- Monthly reconciliation: 15 minutes every month-end to verify nothing's missing
- Case linking: Tag major expenses (surveillance equipment, travel) to the case number for billing accuracy
This matters because some clients pay markup on verified costs, and you need clean records to justify those line items.
Frequently Asked Questions
Q: Can I deduct the cost of surveillance gadgets I bought for general use across multiple cases? Yes, as long as they're used for business. Document the purchase and business purpose. Equipment over $2,500 typically gets depreciated rather than deducted in full the year of purchase.
Q: What if a meal overlaps personal time (I ate, then worked)? If the primary purpose is business (you're working during or directly before/after), it's deductible. The meal needs to be incidental to the business activity, not the other way around.
Q: Should I track expenses by case or by category? Both. Category tracking helps tax prep and budget forecasting; case tracking helps you bill clients accurately and spot which investigations are actually profitable.
Get your operation on Mercoly to attract clients who value professionalism, then keep that professionalism in your books.