Join #1 A.I. tax service for freelancers

Resources

⏳File 2023 taxes and minimize IRS late fees now!

Home › Tax Deduction › Office Supplies

Are Office Supplies Tax Deductible?

When you’re self-employed, you’re always on the hunt for a new deduction to claim. You probably already know about the big expense categories for taxes like vehicle mileage and health insurance premiums, but did you know that some small business supplies were deductible, too? So, if you were wondering whether that new ergonomic chair you bought for your home office can be written off or if all the pens, paper and printer ink you purchased for your business are considered legitimate deductions, you’re in luck as “office expenses” is an IRS business category. We’re answering important questions like are office expenses part of the home office deduction, is office furniture tax deductible and how to take the office supplies tax deduction.

Table of contents

Key takeaways...Read more

When are small business supplies tax deductible?...Read more

Are office supplies part of the home office deduction?...Read more

Office expenses vs office supplies...Read more

Is office furniture tax deductible?...Read more

Depreciating office furniture and equipment...Read more

Claiming the office supplies tax deduction...Read more

Office supplies in other IRS business expense categories...Read more

Key takeaways

The office supplies tax deduction includes both everyday office supplies and certain operational office expenses.
Office expenses can be reported on Schedule C or depreciated.
Office supplies have to be deducted from the year the expenses are incurred.

When are small business supplies tax deductible?

When it comes to office supplies, the IRS allows deductions for items that are ordinary and necessary for the operation of a business. This means that everyday items like pens, paper, ink cartridges, staplers and other essential supplies can typically be claimed as deductible expenses. These supplies are considered essential for running a business efficiently and are an important part of day-to-day operations. The main thing you want to keep in mind when deciding whether or not to take the office supplies tax deduction is the concept of ordinary and necessary expenses. Ordinary expenses are the regular costs that most businesses in your industry have, while necessary expenses are the ones that are needed and make sense for your business. So, if your supplies meet these conditions, you can definitely write them off.

Infographic entitled Examples Of Deductible Office Supplies listing costs that are claimed under the office expenses category on Schedule C.

You also don't have to maintain a detailed record of when you use these supplies. The IRS recognizes that office supplies are needed for everyday business activities, so you don’t have to track every single pen or sheet of paper you use. You don't have to perform a yearly stock check of your office supplies to qualify for these deductions either. This makes it easier for businesses that use these supplies regularly and might find inventory tracking time-consuming. These deductions also cannot affect your income. In other words, you can't go overboard and take so many deductions that your income appears significantly lower than it would be otherwise. Remember that you can only deduct the full cost of those supplies in the same year you bought them. But don’t buy a bunch of stationery during the Christmas sale and claim the entire stash as an expense for that year. There's no way you could put all those supplies to use within a few weeks, and the IRS knows this. So, make sure to hold onto your receipts. Apart from office expenses, there are other IRS business expense categories that self-employed individuals should know. If you use FlyFin, A.I. can find and categorize your business deductions, making saving on taxes a breeze. You can also get unlimited tax filing and preparation support from expert CPAs.

Infographic entitled Expense Categories For 1099 Taxes listing the various IRS business expenses categories for self-employed individuals.

Are office supplies part of the home office deduction?

If you're self-employed, you can usually write off your office expenses on Schedule C, whether you're working from the comfort of your home or not. This deduction includes all the stuff you need to keep your business running smoothly, basically, anything that's essential for your work. But if you meet a few conditions, you might also be eligible for the home office tax deduction. With this write-off, you can claim office supplies as a tax deduction, along with some related expenses and space you work from. Your home office has to be:

The main place you conduct your business
Used regularly for your business
Used exclusively for your business

There are two ways you can take the home office deduction – the regular method or the simplified method. The regular method involves calculating your actual home office expenses. It means figuring out the exact costs of using your space for work. This includes things like internet, phone, rent or mortgage interest, utilities and depreciation. And while it might require a bit more paperwork and calculation, it can be really beneficial if you have a lot of home office expenses. You’ll take this deduction on Form 8829. On the flip side, there's the simplified method. All you need to do is claim the deduction for your home office based on the square footage you use exclusively for business. It doesn't involve making a list of business deductions, which can be a relief if you're not a fan of sifting through receipts and bills. You will need to do some measuring, though. According to the latest rules in 2023, you’re allowed to deduct $5 per square footage of your home office (capped at 300 square feet). So, if your workspace is 150 square feet and your home is 850 feet, you can claim a $750 deduction. If you use the simplified method, you can take the deduction on Line 30 on Schedule C. Keep in mind that the IRS has a rule in place – your home office deduction cannot exceed your gross self-employment income. In other words, your home office deduction cannot push your income into the negative. For instance, let's say you have a 90-square-foot home office, and you're using the simplified method. Normally, you'd be entitled to deduct $450 (90 x $5). However, if your self-employment income for the year was only $400, you can't claim a deduction of $450, resulting in a $50 loss. Instead, your home office deduction is limited to the amount of your actual self-employment income, which, in this case, is $400.

Infographic entitled Home Office Deduction showing two methods of deducting small business supplies.

A lot of self-employed individuals may be hesitant to claim this deduction in fear of getting audited, but as long as you have good records (including photographs of your space), there’s nothing standing in your way. Taking the home office deduction is also an easy way to reduce your estimated tax payments. The lower your taxable income, the less you have to pay. An estimated tax calculator can help you figure out whether your tax liability is going to be over $1,000. Making these payments on time can also help avoid audit risks and tax penalties.

Office expenses vs office supplies

It’s important that you can separate between office expenses and supplies as they can affect your self-employment taxes differently. Think of office supplies as the everyday items you need to keep your office running smoothly – all the little things that get used up pretty quickly. They're like the tools of your trade, and you buy them regularly to keep things ticking. Office expenses are the ongoing costs of having an office, like the rent or mortgage for the space, utilities to keep the lights on, property taxes and janitorial services. Essentially, office expenses are the things you pay to keep your workspace up and running, but they don't get used up or replaced as often as supplies. Some examples of office expenses include:

Rent or lease payments
Utilities
Internet and phone services
Cleaning and janitorial services
Maintenance and repairs
Furniture and fixtures
Equipment (Computers, printers, copiers)
Decorating and interior design costs
Postage and Shipping Costs
Safety equipment (fire extinguishers)
Software
Cloud storage services
Website maintenance fees

If you’re a small business, office supplies can be deducted under the “office expenses” category of Schedule C. However, certain office expenses, especially physical assets like equipment or furniture, need to be depreciated. We’ll discuss depreciation in the next section.

Infographic entitled Office Expenses vs Supplies differentiating office costs deducted on Schedule C.

Is office furniture tax deductible?

Office furniture and equipment can be ordinary and necessary for your business, so they can be deductible, just not like regular office supplies. Expenses like desks, printers, computers and filing cabinets are considered to be capital assets and have to be depreciated. You should report the depreciation deduction on Form 4562.

Depreciating office furniture and equipment

So, is office furniture an asset? Yes, and there are a few ways they can be depreciated. In many instances, the most common method for depreciating your office furniture and equipment is through the Modified Accelerated Cost Recovery System (MACRS). If you’re using the MACRS, you’ll recover the value of your assets by claiming a more substantial deduction during the initial years. However, it's important to note that the office furniture and equipment you buy might be eligible for a full deduction in the year of purchase if it meets the requirements for the Section 179 deduction. To qualify for the Section 179 deduction, your asset needs to be bought and put to use in the same year. So, if you’re a freelance writer who bought a fancy new desk and started using it right away, you can write off the entire cost of your desk in the same year. In 2023, the IRS allows taxpayers to deduct either your business's net income or up to $1,160,000, whichever of the two is smaller, for qualifying assets. Keep in mind that this deduction won't work for assets you don't actually own. Some examples of office furniture and equipment that can be depreciated are:

Bookshelves
Desks
Chairs
Printers
Filing cabinets
Projectors
Safes
Computers

Depreciating office expenses can be complicated, so you should always get professional tax help to avoid making any errors on your returns.

Claiming the office supplies tax deduction

If you want to claim deductions for office supplies and equipment on your tax return, it's important to establish that these expenses qualify as "ordinary and necessary" for your business and are not personal ones. Personal expenses are different from business expenses, and they aren't eligible for 1099 deductions. For example, if you use your office computer and printer to create invitations for your holiday party, these costs are considered personal and should not be included in your list of business deductions. Additionally, certain office equipment falls into the category of "listed property," meaning they can be used for business and personal purposes. Say your business purchases a paper shredder that you use for both work and personal documents. You’ll have to maintain records that show exactly how much of its usage was for business, as that’s all you can deduct. You also have to prove that you used it for your business more than 50% of the time. As of 2023, the IRS also no longer classifies cell phones, laptops and printers as "listed property."

Office supplies in other IRS business expense categories

Office supplies aren’t just limited to Line 18 (Office expenses) on Schedule C. They can also be claimed under Part III (Cost of Goods Sold) or Part V (Other Expenses). Supplies used in your warehouse or for shipping generally differ from those in your office. Supplies and materials used in creating and delivering products are part of the "cost of goods sold" (COGS) on your tax return. Part V on Schedule C accounts for the changes in your inventory during the year and all expenses related to producing and shipping products to customers. Usually, COGS are made up of two types– supplies that physically become part of the item you sell and are included in your inventory calculation or supplies used for shipping products (labels, packaging materials, packing tape). On the other hand, office supplies can also be claimed as startup costs by a new business. When you're in the early stages of setting up your business, and splurging on office supplies, equipment, computers, and software, these costs can be tax deductions. Typically, startup costs need to be depreciated over time, but you can deduct up to $5,000 for startup expenses and another $5,000 for organizational expenses during your first year in business.

Mortgage Interest Tax Deduction

The mortgage interest deduction can be claimed by homeowners who itemize their expenses. You could claim the mortgage interest tax credit if you’re in a lower tax bracket.