Now when I think of Halloween, I look forward to seeing all of the different costumes that people wear. Some are very extravagant and I am sure pricey. And for some they would like to know how that can be deductible. Since costumes fall under the category of clothing or uniforms, you need to be aware of what the tax law requires.

The tax law requires the following three elements for clothing useful only in the business environment to be deductible:

1. The clothing is required or essential in the taxpayer’s employment;

2. The clothing is not suitable for general or personal wear; and

3. The clothing is not so worn for general or personal wear.

If these three requirements are satisfied, not only is the cost of the closing deductible but also its upkeep.

Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.). Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.

Work Clothes Of Painters And Welders

But let’s say that you are a painter and you are required by your union to wear on the job a white cap, white shirt or white jacket, white bib overalls, and standard work shoes and there is nothing on any of the clothes that indicate the company this you work for. You would think this to be deductible but the IRS would say no because the clothes are not distinctive. Similarly, blue work clothes worn by a welder are not deductible even if the foreman requires them. However, required protective clothing like safety boots, safety glasses, hard hats, and work gloves are deductible. Likewise, just by adding the company’s logo on the clothing will make it deductible even if it can be worn outside the scope of employment because you are advertising your company. In that case you are a walking billboard.

Military Uniforms

We have a large military presence here in San Diego County so we are asked many times what rules apply for military uniforms? You generally cannot deduct uniforms if you are on full-time active duty in the armed forces. However, reservists can deduct the unreimbursed cost of uniforms if military regulations restrict wearing it except on duty. Still, you must reduce your deduction by any nontaxable allowance you receive. If local military rules don’t allow wearing fatigues off duty, you can deduct the amount by which your uniform cost exceeds your uniform allowance.

“Business Attire”

Given today’s dot.com and casual era environment, people are not coming to work as dressed up as they used to. So could lawyers and others argue their suits are just like uniforms and therefore ought to be tax deductible? No. Where business clothes are suitable for general wear, there’s no deduction even if these particular clothes would not have been purchased but for the employment.

Is Being On TV Any Different?

While these tax rules are pretty circumscribed, they are also intensively factual. Someone is always pushing the tax envelope. Such was the case with an Ohio TV news anchor, Anietra Y. Hamper. She was claiming approximately $20,000 a year in 2005, 2006, 2007 and 2008 in clothing expense that included not only what she wore for each broadcast but also lounge wear, a robe, sportswear, lingerie, thong underwear, an Ohio State jersey, jewelry, running shoes, dry cleaning, business gifts, cable TV, contact lenses, cosmetics, gym memberships, haircuts, Internet access, self-defense classes, and her subscriptions to Cosmo, Glamour, Newsweek, and Nickelodeon. Her argument was that as a TV anchor she was required to maintain a specified appearance described in the Women’s Wardrobe Guidelines. These guidelines say the “ideal in selecting an outfit for on-air use should be the selection of ‘standard business wear’, typical of that which one might wear on any business day in a normal office setting anywhere in the USA”. The IRS and U.S. Tax Court did not agree stating that where business clothes are suitable for general wear, there’s no deduction even if these particular clothes would not have been purchased but for the employment. For this TV anchor, that was no help. She claimed the requirement to dress conservatively made the clothing unsuitable for everyday, and that’s how she treated it. She wore the business clothing only at work and even kept it separate from her personal clothing. Not only did the IRS and Tax Court deny her wardrobe deductions, they added penalties.

And Finally A Winner!

There is one group that in the history of tax law prevailed in getting their costumes deducted – that was the Swedish disco group ABBA! According to ABBA: The Official Photo Book, released to commemorate the 40th anniversary of the group career-making Eurovision victory for Waterloo, the Swedish foursome adopted their outlandish dressing style in order to ensure they could deduct the cost of their costumes under Swedish tax code. Like U.S. tax law, Swedish laws allowed work wear to be tax deductible so long as it was demonstrably apparel that couldn’t be worn on the street – which, with its garish coloring and liberal use of sparkle, ABBA’s certainly was.

Original Post By:  Jeffrey Kahn