Usual supplies, décor are deductible office expenses

My partner and I have decided to move our business out of my basement and into a little office building. We'll be hiring a secretary/assistant person as well. Aside from the absolutely necessary expenses like office supplies, waste baskets, and so on, we will be purchasing some things that in some circles could be considered luxuries, in that they are not absolutely necessary for the success of our jobs.  

For example, we want to plant some flowers outside the building, we will need a doormat, we'd like a couple of pictures for the walls and a vase of flowers for the assistant's desk. We also want some new desk chairs (the ones we have now are pretty uncomfortable), and name signs for our desktops. Are all of these expenses deductible as business expenses, or are we crossing the line for unnecessary expenditures? C.T. - via e-mail.

Generally speaking, the IRS is not in the business of deciding what constitutes a luxury item and what is a required business expense. The items you describe do not seem to be out of the ordinary - they are things you see in most offices and would certainly qualify as deductible expenses.  

The official definition of a deductible business expense is something that is ordinary and necessary for your business. An ordinary expense is the cost of items that are typically found in your field of business.  

Although one could argue that a vase of flowers on the assistant's desk is not an expense that is related to getting a job done, it is certainly something that is ordinarily seen when you walk in an office and would not raise an eyebrow at the IRS. Who knows, there might even be a vase of flowers or two somewhere in the IRS offices!  

The IRS defines a necessary expense as one that is appropriate and helpful for your business. They also say that an expense does not have to be indispensable to be considered necessary. The expenses you describe may well not be indispensable - you could probably accomplish your job without having a few pictures on the walls. But an attractively appointed office - especially one where you might bring clients - is probably helpful to making your business a success.  

Keep in mind that small expenditures are deductible in the year in which you make the purchase. Large, costly items must be depreciated over a longer period of time.

More on the Tax Rebates

The IRS is busily sending out letters informing taxpayers of the amount and mailing date for the impending tax rebates. A reader writes, "I did not receive the letter that every one of my friends received. Does this mean I will not get a rebate?"

First of all, remember we're relying on the U.S. Post Office to dispatch these letters. Give them time - sometimes the Post Office can get a letter from one coast to the other in a matter of hours - other times it seems to take two weeks. If you have read the rules for who qualifies for a rebate and you are certain that you qualify, the letter is of little significance. More important is the envelope containing the check.  

What's more, even if your check somehow slipped through the cracks and you don't receive a rebate this fall, you can depend on receiving the rebate next year when you file you income tax return.  

The bottom line is, if you are entitled to the tax rebate, you will indeed receive it.