How Much in Clothing Costs Can You Deduct from Taxes?
A commonly asked question for many freelancers or small business owners that are often in the spotlight is “How much in clothing costs can you deduct from taxes?”. Many entrepreneurs view their wardrobe as a vital part of their business’s success, especially for those in the fashion industry or other industries where appearances matter.
Social media has brought ease to creating and sharing videos. These videos often serve as marketing material for your business or freelancing services. In these videos, it’s important to look professional and often invest money in your outfit.
Similarly, public appearances to cultivate your brand’s image often require special attention to your clothing. For example, if you are a musician doing multiple concerts a week, your outfit is simply part of your brand. When it comes to taxes for independent contractors, it brings us to a very important question:
Which Clothing Purchases are Deductible?
Unfortunately, the IRS doesn’t have much flexibility around deducting clothing costs. Under the IRS’s guidelines, wardrobe costs are not deductible unless it is a required uniform to perform your job duties. Essentially, you can write off clothes for work. However, this uniform must not be acceptable for everyday use, AKA it can’t be considered “street clothes”. Let’s go through 3 examples:
If you are a doctor buying a pair of scrubs, that is treated as your uniform. Most likely, that pair of scrubs will not ever be deemed to be “street clothes”. Therefore, you can deduct the cost of the scrubs.
On the other hand, if you are a musician buying a new pair of jeans for your upcoming concert, those jeans cannot be treated as a tax deduction since you will likely be wearing them outside of work purposes.
If you are a PR consultant and you need a suit for an award ceremony, that suit is NOT tax deductible because you can wear it outside of the specific ceremony. However, read on for some potential other tax deductions.
What About Renting Clothes?
This is where the lines get a bit more blurry. With renting clothes, you are able to have a time stamped receipt that shows when you picked up your rental and returned it. This will allow you to have better documentation to substantiate your tax deduction.
Using the example above, if the PR consultant rents the suit on Saturday morning and returns it on Sunday, he or she can make a case that their suit was only worn to the business award ceremony on Saturday night.
Keep in mind, a requirement for all tax-deductible expenses is that they are “ordinary and necessary”, AKA NOT extravagant. So renting that designer suit may be disallowed if you already have 10 other suits in your closet.
A new trend is a clothing rental subscription, where you pay a fixed monthly fee for a certain amount of monthly rentals. Rent the Runway and Le Tote are branding their memberships as a great way for young professionals and business owners to have modern wardrobe for a reasonable price.
However, most items you’ll be renting using your membership will be considered “street clothes” and not a work necessity. Therefore, my recommendation is to bypass using your rental clothing membership as a tax deduction.
During my research and time spent as a tax practitioner, I have not come across any IRS-issued guidance on renting clothing. That being said, if you are going to deduct any rented clothing, documentation is key!
What About Dry Cleaning?
Good question! If you are able to deduct the attire, you are also able to deduct any cost of maintaining that uniform or work-specific outfit. These maintenance costs could include dry cleaning, shoe polishing, or necessary alterations.
However, make sure that your expenses for maintenance are “ordinary and necessary” per the IRS’s requirements for business deductions. For example, don’t dry clean T-Shirts that are machine washable and claim a tax deduction.
What About Branded Clothing?
Any branded clothing with your company’s logo could be claimed as a tax deduction if it’s used as promotional material or a required uniform for your employees. If used for marketing purposes, branded clothing could be a great way to get your business’s name out there, while also getting a tax deduction. Win-win!
Is Makeup Deductible?
If you are a professional freelance makeup artist, your makeup purchases are tax deductible because they are being used in your day-to-day business operations, essentially part of your Cost of Goods Sold or Cost of Services.
However, if you are a performing artist or another on-stage individual, you can only deduct makeup that is exclusively used for your job. While difficult to prove, a good way to substantiate your claim is to keep receipts for taxes (or other eligible records) showing the purchase and leave notes on these receipts with the business purpose of the makeup.
With keeping using any receipts, make sure to digitize them and store them securely in the cloud so you don’t have to worry about retaining paper. It’s the 21st century, my friend!
Your Image Matters
As a freelancer, independent contractor, or small business owner, we know that your brand’s image matters. Likely, you are the head of your business’s brand or your personal brand. While the way you present yourself matters, it’s important to tread lightly when it comes to deducting clothing costs.
When in doubt, consult a tax professional on your individual situation for more specific guidance. Also, consider using Keeper Tax to track your 1099 expenses to save money this tax season.