Want to deduct business clothing? Well, it ain’t easy. The Tax Court has decided another case in an unfavorable fashion concerning a tax deduction for clothing for a Ralph Lauren salesman. In Barnes v. Commissioner, TC Memo 2016-79, Mr. Barnes began working as a salesman for Ralph Lauren in 2010. According to the Court: “Ralph Lauren designs, markets, and distributes, among other products, men’s apparel, such as polo shirts, casual shirts, T-shirts and sweatshirts, sweaters, dress shirts, suits and sports coats, and pants, all of which are suitable for general or personal wear. Ralph Lauren required all employees who worked in corporate sales positions to wear Ralph Lauren apparel while representing the company. Consequently, Mr. Barnes purchased Ralph Lauren shirts, pants, ties, and suits, the costs of which he deducted as unreimbursed employee expenses” on his personal tax return.
The Court pointed out that a taxpayer generally cannot deduct personal, living, or family expenses. However, the Tax Code allows a deduction for all ordinary and necessary expenses paid or incurred in carrying on any activity that constitutes a trade or business. An individual may be in the trade or business of being an employee. At this point, it seemed like a good outcome was about to come for Mr. Barnes. You would be wrong!
The Court established three criteria for the cost of clothing to be deductible as an ordinary and necessary business expense:
(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.
Mr. Barnes was required to wear Ralph Lauren clothing while representing the company. Ralph Lauren clothing, however, is suitable for general or personal wear. Thus, according to the Court: “Mr. Barnes’ costs to acquire and maintain his Ralph Lauren clothing is not deductible.”
TAX TIP: Unfortunately, your normal everyday business clothing fails this tax test. It doesn’t matter whether or not you wear your work clothes away from work. The clothing must not be suitable for regular wear. Here are some possibilities:
- Business logo wear clothing
- Protective Clothing for work that is inherently dangerous, such as construction, steam fitting and oil field work. Deductible protective clothing can include hard hats, construction boots, fire-retardant outerwear and any other article of clothing that protects against the common health hazards of your profession.
- Special Uniforms- such as airline flight attendants, fast-food and other retail employees, firefighters, health care workers, law enforcement, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.).
- Musicians and entertainers- can deduct theatrical clothing not suitable for everyday wear.