AIRBNB HOST / LANDLORD
Joseph is a property owner who rents out the guest bedroom in his primary residence through Airbnb. Last year Joseph spent $300 on miscellaneous office supplies he used in connection with his rental including ink for his printer, folders, pens and paper. Even though Joseph doesn't have a dedicated office or take the home office deduction, he could still deduct the $300 of office expenses on line 19 of his Schedule E since he incurred these costs operating his rental.
AUTHOR / SPEAKER
Chloe is a freelance writer who drafts blog posts and articles from a dedicated work space in her basem*nt. Each month Chloe spends approximately $45 on legal pads, post-it notes, binding clips, white out and fancy pens. At the end of the year Chloe could deduct the cost of all of these supplies as office expenses on line 18 of her Schedule C.
PHOTOGRAPHER
Austin is a professional photographer who rents a studio downtown where he photographs his clients and edits his pictures. When Austin moved into the space he purchased $4,000 of camera equipment, a $500 desk, $300 chair, two $500 rugs, a $15 lamp and $125 of miscellaneous office supplies. When Austin prepares his taxes, he would want to classify his camera equipment, desk, chair and rugs ($5,800) as assets and depreciate these items. He could deduct the $140 he spent on office supplies and his lamp as office expenses on his Schedule C.
PROFESSIONAL SERVICES
Cindy is an independent insurance broker who works from a coworking space. Cindy constantly sends proposals, settlements and thank you notes out to her clients. Last year Cindy spent $2,000 on postage. Since these costs were necessary to Cindy's business she can deduct them as office expenses on line 18 of her Schedule C.
REAL ESTATE AGENT
Daniella is a real estate agent who has a qualifying home office. Last year, $500 of her home operating costs could be attributed to her office. She also spent $600 on ink, paper, folders, pencils, paper clips, a paper shredder and a calculator. Daniella notified her accountant she wanted to deduct $1,100 for her home office ($500+$600). Luckily for Daniella, her CPA has an eye for detail and notified her that she would need to deduct the $600 spent on miscellaneous office supplies separately as an office expense, rather than include them as part of her home office deduction.
WHAT TO KNOW ABOUT DEDUCTING OFFICE EXPENSES
- The IRS defines office expenses as office supplies and postage. Accordingly, a number of different items you purchase could be considered qualifying office expenses. Note that office expenses do not include rent, utilities, payroll or other operating costs.
- If you purchase certain furniture, equipment or electronics for your office you should ask your tax advisor if you should capitalize and depreciate these assets or deduct them as office expenses or other expenses. Outside of "standard" office supplies (pens, paper, etc.), typically, only low value furniture, equipment or electronics could be considered office supplies (i.e. wireless mouse, USB storage device, trash bin, etc.).
- You do not need to rent office space or have a qualifying office to deduct office expenses. For example, an uber driver could deduct postage costs for sending proof of insurance as an office expense.
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