Is coffee a business expense?  

Coffee can be considered a business expense if it’s for client meetings, team gatherings, or provided in the office. However, grabbing a coffee on your way to work is not a business expense.   

For instance, buying coffee for a client meeting at a café is likely deductible as a business expense. But that daily latte for yourself? Probably not. 

For a business expense to be considered tax-deductible, it must be classified as ordinary and necessary. This means that the expense is commonly associated with your industry and essential for running your business.

The IRS applies this standard when determining what qualifies as a write-off.

When it comes to tax deductions, coffee is typically categorized as a business meal. However, how business meals are treated for tax purposes has been a topic of ongoing discussion with the IRS.

Certain conditions, such as whether the coffee was purchased during a client meeting or for office use, can determine whether it qualifies for a deduction. Understanding these nuances is important to ensure compliance while maximizing deductions.

FAQs

What category is a coffee expense?

Coffee expenses typically fall under the meals and entertainment category for tax purposes. If the coffee is purchased for a business meeting, client interaction, or employee perks, it may qualify as a deductible business meal.

However, general office coffee provided for employees is often categorized as an office expense or office supplies.

Can I claim a coffee machine as a business expense?

Yes, if a coffee machine is used for business purposes, such as in an office, coworking space, or for employee use, it can be considered a business expense.

It may be categorized under office equipment or supplies and could be eligible for depreciation if its cost exceeds a certain threshold set by the IRS or local tax authorities.

Is coffee a variable expense?

Yes, coffee is generally considered a variable expense because its cost fluctuates based on usage and consumption. Unlike fixed expenses such as rent or salaries, coffee purchases can vary month to month depending on business needs, employee count, or meeting schedules.

Can you claim coffee for a home office?

Coffee for a home office is generally not tax-deductible unless it is purchased specifically for business-related purposes, such as meetings with clients or team members at your home office.

If coffee is for personal consumption, it is considered a personal expense and cannot be written off.

How is coffee classified?

Coffee expenses are classified based on their purpose:

• Business meals and entertainment if purchased for client meetings or networking.
• Office supplies or pantry expenses if provided for employees in an office setting.
• Non-deductible personal expense if purchased for personal use or a home office without direct business relevance.

What type of asset is a coffee machine?

A coffee machine is typically classified as a fixed asset if it meets the company’s capitalization threshold, meaning it is used long-term and not immediately expensed.

If the coffee machine is low-cost, it may be classified as an office expense instead of a capital asset.

How do you depreciate a coffee machine?

If a coffee machine qualifies as a fixed asset, it can be depreciated over its useful life. Most office equipment, including coffee machines, falls under the five-year depreciation category under the IRS’s Modified Accelerated Cost Recovery System (MACRS). The depreciation method used depends on local tax regulations, but businesses can often claim:

• Straight-line depreciation, dividing the cost evenly over five years.
• Accelerated depreciation, such as Section 179 deductions, allows the full or partial deduction in the year of purchase if it qualifies.