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Work-related “uniform:” Does this include wardrobe costs?

| May 3, 2016 | Tax Controversies

The general answer is no. How broad in the definition of uniform?

A recent tax court case offers guidance. Forbes summarized the facts of the case. An employee worked for a clothing company. He was required to wear company-branded clothing whenever representing his employer. Clothing costs over the year were substantial, so he claimed then as work-related and deducted them on his taxes.

 

3 Factor test

A clothing deduction is a red flag for an audit. In this case, the IRS found that the taxpayer was not entitled to the deduction. The tax court agreed.

As is common in tax law, there is a multi-part test. The tax court has developed the test over the years. Before claiming a tax deduction, consider:

  • Was the clothing required for your employment?
  • Can you wear the clothing outside of work?
  • Do you wear the clothing when not on the clock?

While you may answer “yes” to the first question, the second one is more difficult. A polo shirt can be worn anywhere. Suiting can be worn to Rotary meetings or other functions outside of work.

Higher tax bill when a deduction is not allowed

Be careful with deductions. Trying to stretch the definition of uniform can lead to closer IRS scrutiny. This deduction is intended for those who may work in a factory or a bakery and are required to contribute to uniform costs.

When a deduction is not allowed it results in a larger tax bill. It will usually also include penalties and interest on the unpaid balance. Seeking assistance when communicating with the IRS can help you resolving the issue in a timely manner.

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