How to Write Off Work Clothes for Tax Purposes
When one of our clients asks us, "Can you write off clothes for work on my tax return?", the quick answer is, “Maybe.” The Internal Revenue Service (IRS) does allow certain individuals and businesses to claim work clothing as legitimate deductible expenses on their tax returns, but not everyone. So let's explore who can benefit from these deductions with some practical examples to illustrate how they work in different scenarios.
Who Can Write Off Work Clothes?
The IRS permits both self-employed individuals and businesses to claim certain types of business clothing as legitimate business expenses.
Self-Employed. Individuals who are self-employed, such as freelancers, independent contractors, or gig workers, have the opportunity to deduct the cost of their work attire and related clothing expenses.
Businesses. A business could potentially qualify for a tax deduction related to business attire in various scenarios, including:
Furnishing clothing to their employees
Providing a clothing allowance for specific clothing items
Reimbursing their employees for work clothing purchases
Seeking guidance from a tax expert to gain clarity on when clothing expenses qualify for tax deductions as business expenses is just one of the benefits of hiring a tax professional.
Who Can't Write Off Work Clothes?
Standard W-2 employees will find themselves bearing the costs of any required uniforms and work clothing as they are no longer entitled to work-clothing write-offs. The option to write them off as a miscellaneous deduction, subject to a 2% of Adjusted Gross Income threshold, was discontinued in 2018 through the Tax Cuts and Jobs Act of 2017 (TCJA).
Now, as an employee, your best approach is to negotiate reimbursement for these out-of-pocket clothing expenses with your employer. Not only will this reduce your out-of-pocket costs but the reimbursement (in some cases) could remain tax-free.
Requirements for Writing Off Clothes for Work
The IRS mandates that business expenses eligible for deduction must meet the criteria of being both ordinary and necessary. "Ordinary" signifies that the expenses are typical within your specific industry, while "necessary" implies that these costs are relevant and beneficial to your business operations.
So, in the context of uniforms and specific business attire, for them to qualify for deductions, they should be commonly worn in similar businesses and play a necessary role in business operations, whether for safety or identification purposes.
If that requirement is met, you can write off work clothing if it also meets both of the following requirements.
1. You Are Required to Wear It
To qualify as tax-deductible work clothing, the attire you're claiming must be required by the company. This means it should be part of a dress code or a necessary uniform to perform your work duties safely and/or effectively.
2. It's Not Suitable for Everyday Wear
The IRS distinguishes between clothing suitable for everyday use and specialized work attire. To be tax-deductible, the clothing must not be something you would typically wear outside of work.
For example, a business suit you wear to the office daily is not deductible because you could wear it out to dinner once you are off the clock. However, protective gear like safety boots or hard hats meets this IRS criteria of not being everyday clothing.
Examples of Work Attire that Count as Business Expenses
When it comes to work attire that qualifies as a business expense, here are some common examples:
Protective Clothing. The IRS permits deductions for protective clothing utilized across a wide spectrum of industries, including but not limited to construction, fishing, chemical plants, and oil fields, where employees often face occupational hazards.
This category of deductible items encompasses essential safety gear such as hard hats, protective work gloves, safety boots, safety glasses, and specialized clothing designed to safeguard individuals against extreme temperatures and exposure to hazardous materials.
Costumes. Musicians, actors, and other performers who require theatrical costumes can also often write off the cost of these outfits as long as they're not suitable for everyday wear.
Uniforms and Work-Related Clothing. You can claim business deductions for the acquisition of work uniforms and work clothing that are mandated by the company and not suitable for regular, everyday wear, for example, a reflective vest for a construction worker. However, certain types of work clothing, like plain white dress shirts or khaki pants, do not have distinctive features that qualify them for a business deduction.
Note: The IRS authorizes deductions for military uniforms, but this applies exclusively to reservists who are prohibited from wearing their uniform while off duty.
Promotional Clothing. If the clothing is used to promote your company, then it's eligible for tax deductions. So, for example, if you had your company logo embroidered on to polo shirts for your team to wear at a trade show, the expenses related to the shirts and embroidering would be tax-deductible.
Rented Clothing. What if you opt to rent your work clothes instead of making a purchase? The good news is that rented clothing can still potentially qualify for a tax deduction, as long as it meets the same criteria outlined above. For instance, if you rent safety gear for a job, it can be eligible just as if you had bought it.
Repairs, Laundry, and Dry Cleaning: Are They Also Deductible?
If your clothing indeed qualifies as a business expense, you have the additional benefit of being able to deduct the costs of maintaining it. This includes dry cleaning expenses, laundry expenses, alteration costs, and repair costs.
It's important to ensure that your maintenance expenses align with the IRS standards of being ordinary and necessary. Essentially, this means you can't claim expenses for dry-cleaning items that are typically machine-washable.
Practical Examples
Work clothing is one of the top tax deductions for construction workers. So we’ll use this industry to explore some practical examples of how to take deductions for work clothes.
Construction Company
Let's say you're a small business owner of a construction company located in Jacksonville, Florida, and you've recently invested in specialized work clothes for your seven employees to protect them from potential hazards on your job sites. Each worker was given a hard hat, a high-visibility vest, and a pair of durable work gloves. You also gave each employee an allowance so they could purchase one pair of quality steel-toed safety boots to be used at your job sites.
Since the hard hat, vest, and gloves are a necessary part of your employees' safety and are not suitable for everyday wear, they fall within the IRS guidelines for tax-deductible expenses and qualify for tax write-offs. Furthermore, the allowance given to each employee for their safety boots also qualifies for a tax write-off as the boots meet the same criteria.
Independent Contractor in the Construction Trade
Imagine you're an independent contractor in the construction industry. This year, you had to make a couple of essential purchases including a high-quality pair of safety glasses, a sturdy pair of safety boots, five plain blue T-shirts, and two pairs of jeans all to be worn at your job sites.
Since you are self-employed, the safety glasses and safety boots are considered necessary for the operation of your business, ensuring your safety on job sites. Furthermore, since they aren't suitable for everyday use, you can include these expenses under your business deductions. However, the T-shirts and jeans do not meet the IRS criteria as they are normal everyday clothing and could be used as such.
Tax Professionals Can Help You Maximize Your Deductions
Navigating the realm of tax deductions for work attire requires careful consideration. Self-employed individuals and businesses can seize valuable opportunities to deduct legitimate expenses to reduce their tax liability by deducting work clothing and safety gear.
However, for those in less favorable tax situations, it's prudent to explore negotiation options with employers or consult a small business tax professional for personalized guidance and strategies to make the most of available deductions and ensure compliance with tax laws.
