Can I Expense Clothing?
In this post we’ll walk you through clothing purchases that can and can’t be deducted as a business expense to help you get the most out of your next tax filing.
Deducting Clothing: The Rules
In order for an item of clothing to qualify as a business expense it needs to meet certain IRS requirements. Like all deductible expenses, the item needs to be ordinary and necessary for your business dealings. The clothing 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 may be deducted as miscellaneous deduction 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 their employer, and it must be ordinary and necessary to complete their job.
Let’s look at some specific examples of work attire that can and can’t be deducted:
1. Protective Clothing
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 safety boots and hard hats.
2. 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.
Musicians and entertainers can deduct the cost of theatrical clothing and accessories as long as they’re not appropriate for everyday wear. This seems simple enough, but deciding what is “suitable” for everyday can be challenging.
4. Professional Attire
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 typical enough to not wear it when you’re not on the job.
5. 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.
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.