How to Deduct the Cost of Work Clothing
Heads up: this article is only relevant for U.S. businesses.
Clothing is one of the more contested tax deductions, and it tends to get rejected a lot. But this doesn’t mean you should avoid deducting work-related clothing expenses on your tax return altogether.
Here’s an overview of the clothing purchases that can and can’t be deducted as a business expense.
Deducting Work Clothing: The Rules
For an item of clothing to qualify as a business expense, it needs to meet certain IRS criteria. Like all deductible expenses, the item needs to be ordinary and necessary for your business operations. The attire should be in line with industry standards (ordinary) and it should be essential in order to run the business (necessary). Clothing expenses that meet these rules can be claimed as miscellaneous deductions on Schedule A (Form 1040).
If you require employees to purchase certain items of clothing for work, then the same rule applies; if they are going to expense the cost on their own personal tax return, the item needs to be required attire by you, their employer, and it must be ordinary and necessary to complete their job.
Here are some examples of work attire that can be deducted:
If you are running a business that requires protective clothing, you can deduct the cost of these items. For example, if you own a construction company, you can deduct the cost of purchases such as hard hats and safety boots.
Uniforms and Work Clothes
While protective clothing is distinctive as work attire, many types of uniforms and other work clothes aren’t as obvious. In order to deduct the cost of uniforms or work clothes, the item needs to be distinctive and not appropriate for everyday wear. For instance, a polo branded with your company logo would be deductible, while khaki pants wouldn’t be (even if they are a part of the company uniform) since they can easily be worn outside of the business.
Musicians and entertainers can deduct the cost of theatrical clothing and accessories as long as they’re not suitable for everyday wear. This seems simple enough, but deciding what is “suitable” for everyday can be challenging. Entrepreneur.com pointed out a Las Vegas showgirl who was audited after claiming the cost of her costumes. She was told her costumes weren’t tax deductible as she could wear the outfits outside of performances. To prove them wrong, she came to the audit dressed in one of the costumes in question, was unable to sit down due to the outfit’s shape, and won. If you’re going to deduct the cost of a costume, be sure that it isn’t clothing that could be reasonably worn outside of performances.
This is the category that people find most confusing. It may seem like you should be able to deduct the cost of a suit you bought for a conference, but unfortunately suits aren’t at all deductible. Professional clothes such as suits or work dresses can be worn to events outside of the business, therefore you can’t deduct the cost. It’s not important whether you would wear the item outside of work, it just matters that it’s not distinctive enough to not wear it when you’re not on the job.
Promotional Attire for Your Employees
Clothing that promotes your business is deductible as a promotional expense. This includes the cost of the clothing itself, and the cost of adding your business logo to the item. You can claim this promotional cost as a miscellaneous deduction on your tax return.
So, Can You Deduct Your Clothing Expenses?
The basics of this deduction are fairly straightforward. If the uniform or clothing could be worn outside of work, you shouldn’t claim it as a tax deduction.
However, the line between what clothes can and can’t be deducted can get a little blurry, so let’s look at a few examples.
The General Contractor
If you’re running a business that includes on-site visits in a field such as construction, you’ll need to invest in both protective clothing and business attire. If you purchase hard hats, boots, or gloves for yourself or your employees, you can deduct the costs. However, professional clothes or more general pieces purchased for client meetings aren’t going to be deductible, because you could wear them outside of work.
The Online Personality
If you produce video content online (tutorial videos, an online news broadcast, reviews), you likely invest in clothes to wear in front of the camera. Unfortunately, this type of clothing expense can’t be claimed; your outfits are suitable for wearing off camera as well. There was a similar case with a TV news anchor where she tried to deduct clothing costs, because the clothes she purchased followed guidelines set by her employer, the news channel. However, because the clothes were suitable for general wear, they were disqualified from being tax deductible. The lesson: even if you have a specific on-set wardrobe, it’s not a good idea to turn it into a tax break.
The Trade Show Attendee
Attending a trade show is one way to get exposure for your business and to find new customers. If you’re taking your team to a trade show or conference and you decide to create t-shirts emblazoned with your logo for everyone to wear, you’ll be able to deduct the cost of producing these t-shirts as a promotional expense. However, requiring everyone to wear a certain pair of shoes (and purchasing them for the team) won’t make for a deductible expense.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.