A common question among business owners and professionals is whether they can write off clothing and laundry expenses. The rules are specific and often misunderstood, but with proper understanding, you might be able to save on taxes through strategic clothing deductions.
The IRS allows deductions for work-related clothing and laundry expenses under certain conditions. According to IRS Publication 529, you must meet all three of the following criteria to qualify:
This is the easiest of the three tests to meet. The requirement does not need to be imposed by an employer. For instance, wearing a specific type or color of clothing for branding purposes can qualify. A famous example involves a self-employed dairy salesman who wore a green hat, shirt, and trousers with his logo. The court allowed the deduction because it was essential for his job.
You need to meet one of these qualifications to satisfy the second requirement. “Distinctive” means the clothing must include a business logo or indicate the business in some way. “Protective” includes items like hard hats, safety gloves, and steel-toed shoes. A salesman who wore a tailor-made uniform with a company logo passed this test, although deductions for non-uniform items like shoes and raincoats were disallowed.
This test is subjective. Even if clothing is suitable for everyday wear, if it’s not something an average person would wear outside of work, it might qualify. The key is to ensure the clothing is primarily used for work purposes. For example, a dental office manager successfully deducted her uniform expenses because they were not suitable for everyday wear.
Highly specialized clothing such as costumes, wigs, and even makeup or skincare products can be deductible if they are suitable only for professional use. This is particularly relevant for qualified performing artists, defined as those performing services in the arts for at least two employers during the tax year.
There are two main ways to deduct laundry expenses:
Qualifying Work-Related Clothing: If your clothing meets the criteria for being deductible, the associated laundry or dry cleaning expenses are also deductible.
Business Travel: If you incur laundry expenses while traveling for business, these expenses are deductible.
By understanding and meeting the IRS criteria, you can potentially write off clothing and laundry expenses, reducing your taxable income. Always review these expenses with your tax advisor to ensure you qualify for valid deductions. This strategic approach can help you save on taxes and better manage your business expenses.
