Employees who are required to wear a specific uniform to work may qualify for a deduction at tax time as an unreimbursed employee expense. However, as the next situation proves, the required clothing must not be suitable for wear outside of the workplace.
Ralph Lauren Corporation sells, markets, and designs a wide range of men’s clothing – from polo shirts and t-shirts to dress shirts and sport coats – both casual and formal. A salesman for the Ralph Lauren Corporation was required by the company to represent the brand by wearing Ralph Lauren apparel while at work.
Due to this requirement, the taxpayer bought a range of Ralph Lauren attire including shirts, pants, suits and ties, and considered this purchase to fit under the category of unreimbursed employee expenses. He deducted the amount spent on work clothes on a Schedule A of Form 1040, however the IRS did not accept the deduction. Their reason: the clothing is considered a nondeductible personal expense as per IRC section 262. Taxpayers are not able to deduct costs related to basic living, personal expenses, and family.
In section 162 (a) of the IRC, taxpayers generally can deduct ordinary and necessary costs paid or incurred in relation to employment, trade, or business activities. As an employee, any costs that are ordinary or necessary to work, which you were not reimbursed for, may be deductible under IRC section 162.
In most situations, clothing expenses can’t be deducted, which includes maintenance and cleaning of uniforms, even if the clothing is worn while working. There are three different qualifications clothing costs must meet to be considered ordinary and necessary, and therefore deductible:
- The clothing is required for the taxpayer to maintain employment
- The clothing can’t be worn as personal wear
- The clothing isn’t suitable to be worn as personal wear or general streetwear
Even though the taxpayer is required to wear the specific clothing to work, it is still considered suitable for general streetwear. Because of this, the taxpayer was not able to deduct his expenses for the clothing he purchased.