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Coffee, ovhd/office expense?

zkb245's picture

I know this has probably been covered in the forusms somewhere, A lot of companies provide coffee to their employees in the office, So is my coffee at my home office an office  expense?

Try it!  I'm guessing that it (post #198187, reply #1 of 9)

Try it!  I'm guessing that it could be deducted if the coffemaker is in the office, along with the coffee and whatnot you doctor it with.  I wouldn't try deducting whiskey if that is your flavoring of choice though. 

First question would be:  Do (post #198187, reply #2 of 9)

First question would be:  Do you have a home office you're deducting?  The rules for this are fairly strict.

Second question:  How badly do you want the tax man looking at your home office deduction?


Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed.  --Herman Melville

Yes to the office. Just (post #198187, reply #3 of 9)

Yes to the office. Just wondering if anybody had done it like the big companies out there.  Good point about drawing excess attention from the tax man.  Office depot/Max does carry it in the company sales catalogs.

I am a degreed accountant, (post #198187, reply #4 of 9)

I am a degreed accountant, MBA and a professional tax preparer to boot.  You haven't given enough information to define the topic.  If your home office is used exclusively for you and/or your wife to do paperwork for the business then the answer is probably not.  If you and your wife enter into business discussions in the office frequently over coffee then it COULD be deductible and it may depend on how you are structured.  Are you an employee of the business that receives a w-2 (in other words incorporated).

 

What you are talking about is a meal expense.   You can't deduct meal expenses for your lunch and supper so why should you be able to deduct your coffee?  On the other hand, if you take your employees out to lunch as a reward or other legitimate business purpose such as discussing the current job it CAN be deductible.  So, coffee in your home office MIGHT be deductible if you and your employees all use it or you and your wife as owners drink it while discussing business but it could also be disallowed by an auditor.  Does it pass the reasonable and necessary test?

Now lets get away from the legal side and talk about the practical reality.  How much are we talking about?  If you expect to deduct a $5 starbucks every day at $25 / week x 52 weeks you stand a 99% chance of getting busted IF you get audited.  On the other hand if you spend $120/year on off the shelf folgers with filters and creamer, then I doubt they would  even bother with it.  Besides, even if they kick it, your exposure is minimal.  If you are in the 15% tax bracket plus your SS at 12.x% , you are only hanging out there for 27.x% of 120.

You are the one that is responsible for your return.  You don't have to prove to you accountant or tax preparer that you have a valid expense.  You simply tell him you had x dollars in supplies.  SHOULD you get audited and SHOULD the auditor as you to reconstruct that item, THEN AND ONLY THEN would you have to provide documentation of that expense and ONLY if he asks would you then have to tell him the how when where and why it is a valid expense.  

Your answers to those questions should they ever come would be that you supplied coffee for your home office that is used regularly for meetings with clients, subs, employees and business discussions with your wife.  If you still disallows it, you can then roll over and say "You got me.  You finally caught the "tater"."  The other thing to think about is auditors are human and they like to win so if they win on something small like this they may not keep digging if most everything else looks golden.

When you are in an audit, it isn't always about what is right or what is legal.  Sometimes it comes down to which one is going to go the extra mile to be right.

 

Besides, if you're going to (post #198187, reply #5 of 9)

Besides, if you're going to emulate one of those companies that provides beverages for their employees, you should emulate one that provides beer.


Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed.  --Herman Melville

Interesting perspective into (post #198187, reply #6 of 9)

Interesting perspective into the hows and whys of audit. I get what you are saying about the end coming down to who is willing to go the furthest to be right, human nature. I guess moving the coffee maker to the shop would be key in an audit situation. I see how the lines are vague and obscured. I am not trying to push limits, just curious if it was a normal thing for others in similar positions = small business/ single owner just a few employees/part time ics. The shop space is dedicated to work only but the coffiee is in the house. Thanks all for the input. Dan, I figured the keg in the shed wouldn't fly... but its available for after work socializing.

Well here is some more free (post #198187, reply #7 of 9)

Well here is some more free tax advice.  Keep a good mileage log in your cars.  Thats the one they are going to bust you on.  I would be willing to bet 99.9% of you guys will claim your truck is used 100% for business use.  You do know that what you are saying is that you have never hauled your wifes latest antique find home.  You have never taken your truck hunting.  You don't ever haul your boat or travel trailer with it.

Very easy to bust you for this.  I am an agent and pull your name for an audit.  I see 100% business use.  If I pay you a visit and see you have a boat and your wife is driving a Kia without a trailer hitch.....BUSTED.  

Better to give up a little to avid the hassel.

But heres another thing you can do legally.  If you want to take a weekend trip, say to Atlanta or Orlando to get out of the muck in the Northeast,  its perfectly legal to deduct your airfare and hotel (and your wife's if she materially participates in the business) if you find a big home and garden and/or design show to go to.  Just document that you actually went with some pictures, brochures registration etc.  Don't push it and try to deduct your whole trip meals etc and Disney tickets but do get the big ticket stuff off of your dime and on theirs.

I live 2 hours north east of St. Louis so my wife likes to go their to shop.  I can legally declare that mileage as business mileage if I stop and look for tile or other items like that.  Just document it in your log book.  If my wife and I are going out to dinner and I stop at Homer Depot to buy something for a job, that business mileage for the whole trip not just the portion to get to home depot.

The best thing to do though is keep a written log.  I would document personal use in my business truck (because it would be easier than documenting all business use) and I would document business use of my other vehicles.  Give up a few miles on the truck and gain a bunch on your other vehicles and you will be more auidt proff than just claiming 100% on your truck.