If you're an entrepreneur or a freelancer who works from home, you've probably come across the idea of writing off your coffee expenses for meeting your clients for coffee.
But did you know you may be able to write off the coffee for your home office as well?
It's true—not in all cases. In fact, not in most cases.
Especially with the way many of us who work from home have been conducting business over the past couple years. (Not in-person, so much!)
But, if you have a home office and meet a couple of strict IRS requirements, you could be missing out on a deduction.
Note: Damnit, I'm a coffee snob not a tax professional. Nothing in this article is given as tax advice. I'm just trying to steer you in the right direction for where you may be able to deduct—depending on your situation.
In other words, consult an accountant or a tax professional if you don't know what you're doing. Because if you get audited for writing off a $1,029 bag of Panama Geisha beans—don’t blame me. I don't offer an "audit protection" service—well I do, but it's an add-on that'll cost you 7/8ths of your total refund—12/8ths, if you're self-employed. (That's a TurboTax joke, folks.)
Ready? Let's get into some of the nitty, and hopefully not-so-gritty, on how to write off your home office coffee on your taxes.
How to Write off Coffee for Your Home Office
Here's the thing:
If you're the only one who uses your home office (i.e. no other staff uses it) and you don't use your office for holding client meetings, it's not deductible.
Now, on the other hand...
If your home office is set up to meet with clients, coffee can become "fair game."
Coffee (and coffee equipment) is a deductible business expense in a regular (non-home) office because it's used by your clients and/or your staff.
If you're holding meetings in your home office and providing coffee for clients, the IRS seems to be okay with you deducting it as an expense.
But you have to actually be physically meeting with clients for this.
Don't try to write off a Delonghi espresso maker in the corner of your office if you only meet with clients on Zoom, or you may end up “having some explaining to do." And I don't mean to Ricky Ricardo. I mean to Uncle Sam.
And he's much less forgiving than Desi Arnaz. Trust me, I used to watch a lot of Nick at Nite.
How to Not Write off Coffee for Your Home Office
So again, you can't simply write off coffee you drink by yourself at your desk.
While it would certainly be great and merciful of The Tax Man to recognize that coffee is essential to business, helps generate additional business, and is pretty much a utility like Internet access for entrepreneurs and freelancers—He doesn’t recognize that. Not at all.
Some Extra Tips:
Keep track of your coffee expenses throughout the year. This means saving receipts for any coffee purchases, whether they’re paper receipts or emailed receipts from your online coffee purchases. Also, track how much you spend on filters and other supplies.
Besides the formal limits on deduction amounts, there are some soft limits to think about when you’re deducting business expenses. What I mean is, depending on the nature and size of your business, you don't want to have excessive expenses. For example, you might raise some eyebrows by writing off $5,000 for coffee-related expenses if your eBay reselling business generated $6,000 in revenue.
Just use common sense and don't try to do anything dishonest, and you'll be fine.
Coffee is a necessary part of doing business for a lot of freelancers and entrepreneurs who work from home, so hopefully this article has been helpful in showing you how some of you might be able to potentially save some money—or get a bigger refund—come tax time.
Again, I'm not a tax professional, so check with one (or an accountant) before you go writing off a year's worth of Zambian Peaberry, with "Jake said it was ok" in the description box.
And with that, I'm off to deduct another cup of coffee from my French Press.
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FAQs
If you're working from home, you don't get to deduct your at home office coffee. However, if your home office is set up so clients are able to come over, you can deduct your coffee expenses. Even though drivers are working, they are not allowed to deduct the coffee they purchase while they're on the job.
Can I buy coffee as a business expense? ›
Yes and no. Buying clients a coffee or a drink or lunch won't be tax deductible sadly. It can be a business expense, so you can whack out the business card, but you'll get no tax relief on it.
Is office coffee 50% deductible? ›
The following types of expenses are 50% deductible:
Meals provided for the convenience of the employer (such as meals for occasional employee overtime) Water, coffee, and snacks at the office. Meals included in charitable sports packages.
Is coffee an office expense or supply? ›
Office supplies are short-term items that have to be refilled or replaced. Inline Accounting advises that, depending on the type of business, they include printer ink, toner, coffee, staples, pens, water and stationery, including paper invoices.
Is coffee machine for home office tax deductible? ›
If the coffee machine is used solely for business purposes and is placed in a shared office space, it can be considered a legitimate claim. However, if the machine is used for personal consumption at home, even while working remotely, it would not be eligible for a tax deduction.
Is coffee under income tax? ›
As per Section 33AB of the Income Tax Act, 1961, if you are running a business that deals with the manufacturing or cultivation of tea, coffee, or rubber, you are eligible for tax deduction, provided you deposit a certain amount in the specified account as mentioned under section 33AB.
Can I deduct my meals if I am self employed? ›
If you're a sole proprietor, you can deduct ordinary and necessary business meals and entertainment expenses. However, these expenses must be directly related to or associated with your business. If you're an employee, you can deduct these only to the extent your employer doesn't reimburse you.
Is office coffee 100% deductible? ›
De minimis fringe benefits like in-office coffee and snacks do not fall into the meal category, however, they are also 50% deductible.
What qualifies as deductible for home office? ›
The home office deduction, calculated on Form 8829, is available to both homeowners and renters. There are certain expenses taxpayers can deduct. These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
What can you claim for home office expenses? ›
Deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs.
Situation #1: A business owner picks up a cup of coffee on the commute to work. Let's start with the question we posed at the beginning of the article: is that Starbucks run a write-off? Raffensperger says no. If you run through the drive-thru for your morning caffeine fix, it's a personal expense and isn't deductible.
Can I claim my cell phone as a business expense? ›
You can qualify for a cell phone tax deduction from cell phone charges incurred when the mobile phone is being used exclusively for business. There is not an IRS cell phone deduction for self employed people, exclusively. However, you can also deduct additional business expenses that you incur.
Can I write off energy drinks? ›
Sales of sports energy drinks, as a product category, are nontaxable without regard to wording such as "carbohydrate" or "energy," which may appear on their label. The products are little more than sugar and water and not supplemental or adjunct items to remedy gross dietary deficiencies or gross mineral depletion.
Can I claim utility bills on my taxes? ›
You can deduct a portion of your home-related expenses, including utilities, if you use your home office exclusively for self-employment or business use. This is true whether you're a homeowner or a renter. However, you cannot deduct these expenses if you are an employee who works from home.
Can a w2 employee deduct home office expenses? ›
The Tax Cuts and Jobs Act eliminated the home office deduction for employees from 2018-2025. The Tax Cuts and Jobs Act also eliminated other unreimbursed employment-related expenses. The deduction remains available if you're self-employed or a small business owner using part of your home for business activities.
Is a fridge a business expense? ›
Yes, a refrigerator can be a business asset…if it is used primarily or solely for business. Keeping bottled water, lunches and snack for office personnel, etc. is actually a very necessary expense even for a home-office. However, you cannot call the regular family fridge a business asset.
Can groceries be a business expense? ›
Business Expenses: If you own a business that involves food, such as a restaurant, catering service, or bakery, the cost of groceries used for business purposes can be considered a legitimate business expense. In such cases, keeping grocery receipts can help you substantiate these expenses when claiming tax deductions.
Can you write off food as a business expense? ›
The deduction for unreimbursed non-entertainment-related business meals is generally subject to a 50% limitation. You generally can't deduct meal expenses unless you (or your employee) are present at the furnishing of the food or beverages and such expense is not lavish or extravagant under the circ*mstances.
Can I use my business account to buy food? ›
Grocery Shopping for Home: While it may be tempting to utilize a business credit card for grocery shopping, it is best to avoid this practice. Groceries for personal use should always be paid for using personal funds.
Can I buy a coffee machine for my business? ›
Yes, you can buy a coffee machine as a business expense, as long as it's for work use. Purchasing a business coffee machine can come under your capital expenditure, while renting or leasing would fall under your operating expenses.
