The first year that I prepare a tax return for a client, it isn't unusual for me to get a lot of receipts for deductions for clothing related to their job or business. Many times, I have to be the bearer of the bad news that the cost of most of the clothing is not tax deductible. The types of clothing that are tax deductible are very limited and I use what I call the "Department Store Rules" as general guidelines to determine what is and is not deductible. My "Department Store Rules" are 1.) Can you buy something similar to your potentially deductible clothing item in a department store? 2.) Would most people feel comfortable wearing this item of clothing into a department store? If the answer to either question is "Yes", chances are that the cost of the clothing is NOT deductible. So on the "NOT deductible list would be items such as:
Sports bras
Muck boots
Favorite polar fleece jacket even if that jacket is manufactured only by an equestrian clothier
Extra warm coat you wear when you are giving lessons, teaching a clinic, judging, etc.
You get the idea.
So what is deductible?
Protective/Safety Clothing: hard hats, riding boots, chaps, riding gloves, protective vests and any other type of protective clothing not suitable for everyday wear.
Show Clothing: breeches, top hat, hunt jacket, etc IF the showing is a business expense (e.g. you are showing your clients' horses, sale horses, etc) AND the item of clothing is not suitable for everyday wear (e.g. your lucky show socks, the T shirt you wear under your show coat ...).
Something you can do to expand this rather narrow window of what is deductible very slightly is to have some of your regular business-use clothes embroidered with your logo or otherwise use them as a marketing device. For a trainer who frequently coaches at horse shows, you could have your baseball cap and jacket embroidered with your business logo and the cost of the clothing and the embroidery would normally be deductible. Don't go over the top on this idea and have everything in your closet embroidered or the IRS could disallow all of the deductions. Weigh the cost of the tax savings you gain by getting the deduction and the possible marketing benefits against the cost of the embroidering to see if the idea works for you.
Remember that for any expense to be deductible it must be a business-related expense, ordinary (common and accepted in your type of business), necessary (helpful and appropriate to your business) and you must have documentation (receipts) that you actually incurred the expense.
So on your next trip to the tack shop, remember my "Department Store" Rules and you'll know how much of your purchase should be tax deductible.
Sports bras
Muck boots
Favorite polar fleece jacket even if that jacket is manufactured only by an equestrian clothier
Extra warm coat you wear when you are giving lessons, teaching a clinic, judging, etc.
You get the idea.
So what is deductible?
Protective/Safety Clothing: hard hats, riding boots, chaps, riding gloves, protective vests and any other type of protective clothing not suitable for everyday wear.
Show Clothing: breeches, top hat, hunt jacket, etc IF the showing is a business expense (e.g. you are showing your clients' horses, sale horses, etc) AND the item of clothing is not suitable for everyday wear (e.g. your lucky show socks, the T shirt you wear under your show coat ...).
Something you can do to expand this rather narrow window of what is deductible very slightly is to have some of your regular business-use clothes embroidered with your logo or otherwise use them as a marketing device. For a trainer who frequently coaches at horse shows, you could have your baseball cap and jacket embroidered with your business logo and the cost of the clothing and the embroidery would normally be deductible. Don't go over the top on this idea and have everything in your closet embroidered or the IRS could disallow all of the deductions. Weigh the cost of the tax savings you gain by getting the deduction and the possible marketing benefits against the cost of the embroidering to see if the idea works for you.
Remember that for any expense to be deductible it must be a business-related expense, ordinary (common and accepted in your type of business), necessary (helpful and appropriate to your business) and you must have documentation (receipts) that you actually incurred the expense.
So on your next trip to the tack shop, remember my "Department Store" Rules and you'll know how much of your purchase should be tax deductible.