As a business owner or employee (or if you’re both), it’s important to maximize your deductions. An often under-utilized write-off is the amount spent on clothing and laundry. That’s right – if you meet three requirements, your clothing and laundry expenses are fully-deductible!
What are the three items you need to prove?
- The clothing is required or essential for your job
- The clothing is distinctive or protective
- The clothes are not suitable for everyday wear outside of work
If you are an employee, what if the clothing was provided to you by your employer?
This is important – if the clothing meets the three criteria discussed in this article, then the clothing is considered a tax-free working condition fringe benefit.
If it doesn’t meet the criteria above? Then the clothes are treated as taxable compensation.