I'm a sole proprietor and pay personal expenses out of my business bank account. Should I include the money used for personal expenses as part of my business income? Can I write these expenses off?

As a sole proprietor, you should include the money used to pay personal expenses from your business bank account as part of your business income when your business earned it. This is because the funds used for personal expenses are considered withdrawals from the business, and thus, they must be accounted for as part of the business's gross income.

However, you cannot write off these personal expenses as business expenses. According to the IRS guidelines, business expenses must be both ordinary and necessary to be deductible. Ordinary expenses are those that are common and accepted in your field of business, while necessary expenses are those that are helpful and appropriate for your business. Personal expenses do not meet these criteria and therefore cannot be deducted as business expenses.

To summarize:

1. Include in Business Income: The money used for personal expenses should be included in your business income.
2. No Deduction for Personal Expenses: Personal expenses cannot be written off as business expenses because they are not ordinary and necessary costs of carrying on your trade or business.

Sources:
Publication 583 (1/2021)
Rev. Rul. 92-29
§ 162. Trade or business expenses
Publication 535 (2022)
PLR 9234009
Publication 334 (2023)