Many small business owners who deduct expenses for work clothes and uniforms on their taxes may want to look a bit closer at the tax rules. It turns out that many entrepreneurs choose to write off expenses that may not actually be tax-deductible at all, including clothing.
So are your business' work clothes and/or uniforms tax-deductible expenses? Here are some general guidelines:
Emily Farrar of TaxAlli.com quips that while your Armani suit may be a fabulous way to impress clients, this doesn't automatically make it a business expense that you can deduct from your taxes. While there are many ordinary and necessary expenses that small business owners may be able to easily write off, it may be a little more difficult with work clothes.
Part of the problem is that the IRS doesn't want you to write off any work clothes that are essentially just nicer versions of your street clothes. You may be able to write off work clothes only if they are "not suitable for everyday use." That means that just about any office's "work clothes" would not be considered a business expense.
However, if you have special gear that you wear specifically for work (such as insulated boots, Kevlar gloves, safety goggles, etc.) that you have not been reimbursed for, those may be opportune costs to write off.
The IRS guidance on work clothes and uniforms is much the same: If uniforms are required for work and not suitable for everyday use, they're likely tax-deductible.
"Suitable for everyday use" is not exactly a common-sense term when it comes to sartorial choices, but here are some tips for knowing when a uniform is tax-deductible:
- Employers must require wearing the uniform at work;
- Uniforms which double as protective clothing required in a hazardous work environment are likely deductible; and
- Uniforms with company logos or emblems may be not suitable for everyday use.
The more restrictions a small business places on the condition of a uniform and its exclusive use at work, the more likely it is to be considered a deduction. Small businesses should also remember that time spent putting on a required uniform (even changing into scrubs) is likely time that employees need to be compensated for.
Small business owners should take these tax-deduction tips to heart and consult with a tax attorney to clear up any ambiguities.
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