Job openings in the U.S. are at an all-time high. As the latest crop of first-time workers get hired, they need a business wardrobe. The universal question is — Can I deduct my wardrobe costs?
Since you need to wear clothing anyway, there is no deduction for that. But what about uniforms?
Some companies or jobs require you to wear uniforms. Often, when they do, they buy them for you. If not, you may deduct the cost of your uniforms. In all cases, you may deduct the cost of laundering or dry cleaning the uniforms.
What about alterations to the uniforms? Remember Ponch on “CHiPs”? Frank Poncherello was famous for tailoring his uniforms. Certainly, the alterations are deductible, as well.
But there are two catches to taking uniform deductions.
- If you wear the uniforms outside of work, the costs aren't deductible.
- You have to itemize to claim the deduction. There are so many obstacles in the way of using the deduction, that you probably won’t get any benefit from the cost.
Wearing uniforms outside of work
Let’s start with the conditions under which clothing may be deducted:
For the cost of clothing to be deductible as an ordinary and necessary business expense, (1) the clothing must be required or essential in the taxpayer’s employment, (2) the clothing cannot be suitable for general or personal wear, and (3) the clothing cannot be so worn.
There is one particular concept that people find hard to understand. They buy especially nice clothing for work and deliberately wear that clothing only to work, nowhere else. That doesn’t make it deductible.
Take the case of Hynes v. Commissioner from 1980. John B. Hynes, Jr, was a newscaster at WCVB-TV. He bought an on-air wardrobe, which he never wore anywhere else. He claimed deductions for his wardrobe, laundry and dry cleaning, among other costs. The IRS disallowed all these deductions.
Taking his case to the tax court, Haynes contended that he was entitled to deduct the expense of his business wardrobe because he was restricted in his selection of colors and patterns of such clothes and because he didn't wear the clothes when he wasn't at the station on camera.
The tax court pointed out that the fact that Haynes chose not to wear his business clothes when he was away from the station doesn't mean that such clothes weren't suitable for his private and personal wear. Indeed, most people do not wear their business clothes at home.
Over 20 years after Hynes, Anietra Y. Hamper tried to deduct her on-air wardrobe. She was an anchor for morning and noon news programs at WBNS, Channel 10. Hamper deducted wardrobe expenses for these purchases: lounge wear, a robe, sportswear, active wear, and evening wear, among other garments. What really got smiles, and the attention of the tax court and the media, were her deductions for her lingerie and underwear. Unlike Hynes, whose deductions were modest (less than $2,500 over four years), Hamper claimed unreimbursed employee business expenses of $20,713, $18,604, $22,602 and $21,759, for 2005 through 2008.
You’re starting to understand the concept. Whether you choose to wear upscale clothing away from work or not, the costs aren't deductible.
What kind of clothing is deductible?
Specialized clothing designed for a specific purpose or venue is deductible. That includes uniforms, on-stage wardrobes, specialized work shoes, garments that aren't practical to wear away from work.
For instance, cement workers whose garments and gloves are permeated with cement and other materials won't be wearing those clothes for general use. In fact, they might not even be able to clean some of their clothing and must discard them after use.
What kind of uniforms are deductible?
Military and reservist uniforms — which are often not permitted to be worn off-duty. Nursing and medical garb are meant to be used only at work. Flight attendants, mail carriers, school bus drivers, UPS drivers, firefighters, police officers, and all others whose jobs require specific attire — often with the company’s logo prominently displayed.
Even when the deduction is allowable, there are still several obstacles to using the uniform deduction.
- Your uniform costs and other employee business expenses are reduced by 2% of your adjusted gross income (AGI — found at the bottom line on page 1 of your long Form 1040).
- You need to be able to itemize. That means your total deductions on Schedule A must exceed your standard deduction, which is $6,100 ($6,200 in 2015) for single and married filing separately, $12,200 ($12,400 in 2015) for married filing jointly, $8,950 ($9,100) for head of household.
- When your AGI is high, your itemized deductions may get phased out.
In other words, for many uniform wearers, this entire discussion may be a total waste of time.
What if you’re self-employed?
Ah…when you’re self-employed, design the uniform to prominently identify your company. That way, you can wear it everywhere and advertise your company. Perhaps you can deduct it as an advertising expense? In addition, if you have a good, intriguing logo, it can be a conversation starter. Your outfit can be more than just a way to get more than clients — you might even attract dates.
This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2014 Dow Jones & Co. Inc. All rights reserved.