I own a small business and work out of my home. Sometimes I like to work out of a coffee shop for a few hours here and there.

Can I expense the coffee that I buy at a coffee shop?

  • What is this use of "expense" as a verb?!? – curiousdannii Oct 20 '15 at 8:51
  • @curiousdannii - it's a dictionary usage, and quite common in the U.S. – feetwet Oct 20 '15 at 14:16
  • @feetwet I'm sure it is, but I don't think I've ever heard it before. It's completely unnatural in AusEng. :) – curiousdannii Oct 20 '15 at 14:23
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    @feetwet You would use the verb deduct instead "Can I deduct a trip to a coffee shop?" – curiousdannii Oct 20 '15 at 22:33
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    @curiousdannii - That's also frequently used here, probably more than "expense." And, I think, makes more sense. – feetwet Oct 20 '15 at 22:54

For U.S. companies and proprietors: No. In general you can only deduct food costs for necessary business travel, and then it is subject to either published "per diem" rates or a "50% limit".

Start your adventure reading at the IRS, Publication 463, here!

Amusingly, if you have a separate office, you can fully deduct the cost of "refreshments" (which includes coffee) in that office as a "business supply."

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    Can you expense an employee's coffee at the shop? – Viktor Oct 19 '15 at 21:29
  • @Viktor - Yes, if you are having a "business meeting" there. Same linked section of Pub 463 covers that scenario. – feetwet Oct 19 '15 at 21:56

In Australia, you can claim the GST and a tax deduction for coffee you buy for clients, suppliers, etc. but not for owners or employees. They must either pay for it themselves or, if the company does, it is not tax deductible. Alternatively, it can be treated as a fringe benefit; fringe benefits over $100 per year per employee must have fringe benefits tax paid and are then deductible for GST and income tax.

In addition, if the employee (owner) is staying away from home overnight; they may claim meal (and accommodation, transport etc.) either at cost (subject to limits that increase with your base salary) or on a per diem rate set by the ATO based on the location.

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