If you operate your business as a sole proprietor, you’re allowed to reduce the amount of income tax you pay by taking deductions for the ordinary and necessary business expenses you incur. One expense that’s potentially deductible is the cost of clothing you purchase for the business. However, you shouldn’t assume that all clothing purchases are deductible or that if it’s deductible to one business owner that it’s deductible to all.
There are two requirements that you’ll need to satisfy before you can take a deduction for business clothing purchases. The first is that the expense be ordinary, which means that the clothing, as well as any other expense you deduct, is common and accepted in your particular industry. If it is, you’ll need to ensure that purchasing the clothing is necessary. This doesn’t mean that the clothing must be essential — it just needs to be helpful to your operations. The term “helpful” cannot be applied uniformly to all businesses, and it can really depend on what you view as beneficial to your business. For example, if you find that always wearing a shirt bearing your company’s logo has promotional value, it will satisfy the necessary requirement.
An exhaustive list of industries in which clothing purchases can be deductible doesn’t exist. As an example, two common types of deductible clothing include purchases of work boots and hard hats in the construction industry and uniforms that you wear in a restaurant or other business. And if you have employees or hire contractors, uniforms and special clothing you purchase for them are fully deductible in addition to the business clothing you purchase for yourself.
Certain types of businesses sometimes warrant purchasing a professional wardrobe. And despite the fact that you wouldn’t purchase the clothing if not for your business, it may still be considered a nondeductible personal purchase. As a general guideline, if the clothing is of the type that you can wear when you’re not running your business, the IRS takes the position that it’s for personal use and nondeductible. For example, the cost of purchasing five suits is nondeductible since the clothing can always serve a nonbusiness purpose. But if each of the suit jackets bears your company’s logo, the cost of the jackets becomes deductible.
As a sole proprietor, your business earnings and expenses are reported on a Schedule C or C-EZ attachment to your personal tax return. In the event you accrue deductible clothing costs during the year, you’ll notice that there isn’t a specific line in the “Expenses” section of the form. Instead, you include it on the “Other Expenses” line. However, you also need to list each type of clothing purchase in the “Other Expenses” section farther down the form.