What expense category is New Printer Expenses?

For virtually any business, a printer is essential office equipment. When purchasing a new printer, accountants and Small to Medium-sized Business (SMB) owners need to determine how to properly account for this expenditure. Is it a simple office expense, or is it an asset that needs to be capitalized and depreciated over time? The answer impacts your financial statements and tax deductions.

This article will guide you through classifying new printer expenses, highlighting important considerations, providing examples, detailing the tax implications according to IRS guidelines, and explaining how Fyle can help streamline the tracking of these purchases.

New Printer Expenses Category

When a business acquires a new printer, the expense doesn't always fall into a simple "expense" category for immediate deduction. The treatment depends primarily on its cost and useful life:

Capital Asset (Office Equipment)

Most business-grade printers have a useful life of more than one year. If the cost of the printer exceeds a certain threshold (as defined by your company's accounting policy or IRS de minimis safe harbor rules), it is generally treated as a capital asset. The cost of a capital asset is not deducted entirely in the year of purchase; instead, it is recovered over time through depreciation. Printers typically fall under "Office Machinery" or "Computer Peripheral Equipment," which are categories of tangible personal property.

Office Supplies or Minor Equipment Expense

If the printer is very inexpensive and its cost falls below the de minimis safe harbor threshold elected by the business, or if it has a very short useful life (less than a year, which is uncommon for printers), it might be expensed immediately. For example, IRS Publication 535 mentions that amounts spent for tools used in your business are deductible expenses if they have a life expectancy of less than 1 year or they cost $200 or less per item or invoice (unless uniform capitalization rules apply).

Some Important Considerations While Classifying New Printer Expenses

Cost and Useful Life

• Printers are generally expected to last more than one year, satisfying one condition for being a capital asset.
• The purchase price is a key determinant. More expensive, feature-rich office printers are more likely to be capitalized, while very cheap, basic printers might be expensed, especially under a de minimis safe harbor election.

De Minimis Safe Harbor Election

The IRS allows businesses to elect a de minimis safe harbor to deduct small-dollar purchases of tangible property that would otherwise need to be capitalized.

• If you have an Applicable Financial Statement (AFS), you can expense items costing up to $5,000 per invoice (or per item as substantiated by the invoice).
• If you do not have an AFS, the threshold is $2,500 per item or invoice.
• To use this safe harbor, you must treat these amounts as an expense on your books and records according to a written accounting procedure established at the beginning of the year. The election is made annually by attaching a statement to your timely filed tax return.

Section 179 Deduction

If the printer is capitalized, your business may elect to treat the cost of qualifying property, like a new printer (which is tangible personal property), as an expense in the year it is placed in service, rather than depreciating it over several years. There are dollar limits on the total amount you can deduct under Section 179 each year ($1,220,000 for 2024, reduced if total qualifying property purchases exceed $3,050,000 for 2024).

Special Depreciation Allowance (Bonus Depreciation)

Businesses may also be able to take an additional first-year depreciation deduction for qualified property. For property acquired after September 27, 2017, and placed in service in 2024, the bonus depreciation rate is 60%. This is taken after any Section 179 deduction but before regular MACRS depreciation.

MACRS Depreciation

If the printer is capitalized and not fully expensed under Section 179 or bonus depreciation, the remaining cost is depreciated using the Modified Accelerated Cost Recovery System (MACRS). Office machinery, which includes printers, is generally classified as 5-year or 7-year property under MACRS. (Refer to IRS Publication 946, Appendix B for specific asset classes).

Associated Costs

When capitalizing a new printer, its cost basis generally includes the invoice price, sales tax, and any freight or installation charges. Initial supplies purchased with the printer (like a starter toner cartridge or a ream of paper) are typically expensed as supplies.

Recordkeeping

For any new printer, especially if capitalized, detailed records are essential. According to the IRS, documents for assets should show when and how you acquired it, purchase price, cost of improvements, Section 179 deduction taken, depreciation deductions, casualty losses, how it was used, and details of its disposition if applicable. This includes purchase invoices, canceled checks, or other proof of payment.

Examples of New Printer Expenses

The primary expense is the purchase price of the new printer itself. Other associated costs that become part of the printer's cost (if capitalized) or are expensed alongside it include:

• The printer's invoice price.
• Sales tax paid on the printer.
• Shipping and delivery charges to receive the printer.
• Installation or setup fees, if applicable and material.

It's important to distinguish these acquisition costs from ongoing operational costs like toner cartridges, paper, and routine maintenance/repairs, which are typically categorized as "Office Supplies" or "Repairs and Maintenance" and expensed as incurred.

Tax Implications of New Printer Expenses

Expensing

• If the printer's cost is below the de minimis safe harbor threshold (and the business has elected to use it), the full cost can be deducted as an operating expense in the year it is placed in service.
• For very low-cost items that might be seen as supplies (e.g., a printer costing under $200 with a short functional life for the business), these could also be expensed.

Capitalizing and Depreciating 

If the printer is treated as a capital asset:

• Section 179 Deduction: The business can elect to deduct all or part of the printer's cost (up to the annual limit) in the year it is placed in service. This is reported on Form 4562.
• Special Depreciation Allowance (Bonus Depreciation): After any Section 179 deduction, the business can typically claim bonus depreciation on the remaining basis of new (and certain used) printers. For 2024, the rate is 60%. This is also reported on Form 4562.
• MACRS Depreciation: Any remaining basis after Section 179 and bonus depreciation is depreciated over the printer's recovery period (e.g., 5 or 7 years for office machinery) using MACRS rules (GDS or ADS, specific convention and method). This is calculated and reported on Form 4562.

Timing

Depreciation (or expensing under Section 179/Bonus/De Minimis) begins when the printer is "placed in service," meaning it is ready and available for its intended use in the business.

Recordkeeping for Tax Audits

The IRS requires robust documentation for asset purchases, including invoices, proof of payment, and records detailing the depreciation method used and amounts claimed annually.

How Fyle Can Automate Expense Tracking for New Printer Expenses

Effectively tracking the purchase of a new printer and its related documentation is important, whether it's expensed immediately or capitalized. Fyle can help streamline this process:

Capturing Purchase Documentation

• Real-Time Card Feeds: If the new printer is purchased using a corporate credit card linked to Fyle, the transaction data is captured instantly, providing an immediate record of the expenditure.
• Invoice and Receipt Management: The purchase invoice and receipt for the new printer can be easily submitted to Fyle (e.g., forwarded from email or snapped via the mobile app) and automatically attached to the corresponding transaction. This ensures all necessary documentation for tax and warranty purposes is centrally stored and accessible.

Categorization for Accountant Review

Employees can categorize the printer purchase within Fyle. Accountants can then review these expenses and make the final determination on whether to expense it immediately (e.g., under "Office Equipment" or "Supplies" if de minimis) or flag it for capitalization in the accounting system.

Seamless Accounting Integration 

Fyle integrates with major accounting platforms like QuickBooks Online, QuickBooks Desktop, Sage Intacct, Xero, and NetSuite.

• If the printer is expensed, Fyle can export the categorized expense directly.
• If the printer needs to be capitalized, the transaction details and invoice from Fyle provide the accountant with the necessary information to set up the asset and its depreciation schedule in the accounting software's fixed asset module.

Tracking Related Supplies

While the printer itself might be a one-time purchase or capitalized asset, ongoing costs for toner, paper, and minor repairs are regular expenses. Fyle excels at tracking these recurring supply purchases, making it easy to monitor and manage these operational costs.

Spend Visibility

Fyle’s dashboards provide visibility into spending on office equipment and supplies, helping businesses budget and control these costs effectively.

By using Fyle, businesses can ensure that the purchase of a new printer is properly documented and the information is readily available for accountants to make the correct classification and tax treatment decisions, while also simplifying the ongoing tracking of related supply expenses.