What expense category is Safety Equipment and Training Costs?

Ensuring a safe workplace is a fundamental responsibility for any business owner. The costs associated with providing safety equipment and training for employees are not just essential for preventing accidents—they are also ordinary and necessary business expenses that are deductible for tax purposes.

However, the IRS requires that these costs be categorized correctly based on their nature. Safety equipment that has a long-term use is treated differently from disposable supplies or training sessions. This guide will clarify how to classify these expenses according to IRS rules, ensuring your business remains compliant with the relevant regulations.

Safety Equipment and Training Costs Category

There is no single expense category for all safety-related costs. You must break them down by the items you purchased.

1. Safety Equipment (Capital Asset): Durable equipment that is expected to last more than one year is a capital expenditure. As explained in IRS Publication 946, you cannot deduct the entire cost in the year you buy it. Instead, it must be capitalized and depreciated over its useful life.
2. Safety Supplies (Current Expense): Items that are consumed and used within one year are considered supplies. IRS Publication 535 allows you to deduct the cost of materials and supplies as a current business expense.
3. Safety Training (Current Expense): The costs of training your employees are generally deductible as an ordinary business expense in the year you pay or incur them.

Important Considerations When Classifying Safety Costs

The most critical distinction is whether an item is a depreciable asset or a currently deductible expense.

Durable Equipment vs. Consumable Supplies

• Equipment (Depreciate): This includes items with a useful life that extends substantially beyond the year they are placed in service. Examples include safety harnesses, emergency eyewash stations, or specialized machinery guards. You may be able to deduct the cost of qualifying equipment in the first year using the Section 179 deduction.
• Supplies (Deduct Now): This includes items that are used up quickly. Examples include disposable gloves, hard hats, safety glasses, first-aid kit refills, and high-visibility vests.

Employee Training Costs

The costs of providing safety training to your employees are deductible. IRS Publication 334 notes that you can generally deduct the pay you give your employees, which includes the cost of education and training. This covers expenses for safety certification courses, workshops, and other required training programs.

Tax Implications and Recordkeeping

The reporting for safety costs depends entirely on their classification.

How to Report the Costs

For a sole proprietor filing a Schedule C (Form 1040):

• Depreciation: The annual depreciation deduction for safety equipment is calculated on Form 4562 and carried to Line 13 of Schedule C.
• Supplies: The cost of safety supplies is deducted on Line 22, Supplies.
• Training: The cost of safety training courses is deducted under Line 27a, Other Expenses, with a description such as Safety Training.

What Records to Keep

You must maintain detailed records to substantiate all safety-related expenses. This includes:

• Invoices for equipment purchases and training sessions.
• Receipts for all safety supplies.
• Proof of payment, such as canceled checks or credit card statements.

How Fyle Can Automate Tracking for Safety Expenses

Fyle helps you accurately capture and categorize all your safety-related expenses, from one-time equipment purchases to recurring supply orders.

• Capture All Purchases: Instantly capture receipts for safety supplies or equipment invoices from vendors using the Fyle mobile app.
• Track Training Costs: Have training providers email invoices directly to Fyle for automatic and accurate data capture.
• Categorize for Correct Tax Treatment: Code expenses as Supplies for current deduction or as fixed assets for depreciation.
• Automate Your Accounting: Sync all categorized safety expenses to the correct GL account in QuickBooks, Xero, NetSuite, or Sage Intacct.