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Deducting Business Attire, Real Estate Agents & Small Business Owners

Sure, real estate agents and business owners should dress their best when meeting clients or attending business functions.  They want to make a good impression and solidify their brand.  Some professionals, such as attorneys, may be required to wear suits in the courtroom.  And many ministers sport three-piece ensembles when addressing their congregations.  Individuals who work outside purchase gloves and coats when temperatures plummet.  Those in the asphalt business have their work clothing ruined regularly.  And, if you’ve ever worked in the flooring industry, you know how quickly the knees of jeans unravel.

Deduction Fallacy:  Many business owners believe their business attire is deductible.  Sure, they’re deductible - until an auditor denies the expense.  The sad fact is that most work clothing is not a tax write-off.  Those who test this fact nearly always lose during an audit.  Those who protest in Tax Court lose by a wide margin.  Why?  Because a lawyer’s $2,000 Armani suit is no more a business expense than a $200 suit worn to a wedding or a funeral.  Work jeans are just as fashionable in Walmart as they are on the job site.

Most Clothing Not Deductible: Only clothing required to be worn by your employer (which we do not cover in this article) or governing authority and is NOT suitable for everyday wear are deductible as a business expense.

The term “everyday” wear also includes special events such as weddings, parties, funerals, and other special occasions.  As a result, most clothing that you can wear in nonbusiness situations is not deductible as a business expense, even if required.  Are you required to purchase a suit, shirt, and pants of a particular style and color?  It’s not deductible.  What about less fashionable attire, like coveralls and overalls? Not deductible.  

That’s the general rule - attire one can wear outside the workplace is not deductible.  But, there are two exceptions: Safety Gear and Uniforms.

Safety Gear

Clothing that qualifies as protective equipment are deductible for tax purposes.  A few common examples are steel-toed boots worn on construction sites, work gloves, safety goggles, and hard hats.  Reflective vests worn by those working on or near roadways are safety gear.  Scrubs, masks, and face shields used in the medical field (and everyone else due to COVID-19) are also safety gear.

Real Estate Agents do not need a lot of safety gear to complete their jobs.  Those selling new houses and homes under construction can deduct the construction gear mentioned above.  An agent selling vacant land and wooded lots in certain regions could also expense a pair of Kevlar-lined boots to prevent snakebite.

Uniforms and the Logo Rescue

Uniforms required for one’s job are deductible by the self-employed (not until 2024 for employees due to the Tax Cut and Jobs Act of 2017).  A perfect example of a deductible uniform is a police uniform.  The position requires this attire.  It lets the public immediately recognize the individual’s status.  And it is not easily worn while off duty without people thinking they’re on duty.  Both the uniform and care of the uniform are deductible.  

In many other industries, finding an example of a deductible uniform is problematic.  But there is a silver lining – the business logo’s power to transform a typical piece of clothing into a deductible business uniform.

The Powerful Business Logo:  Adding a distinctive, attention-grabbing logo to your business attire serves several functions.  First, it makes for great advertising – your business name and emblem go where you or your employees travel.  As long the individual wearing it is acting appropriately, your clothing plants some helpful marketing seeds.  Second, it transforms clothing into a uniform – a consistent reminder of whom the wearer represents.  And finally, it transforms non-deductible clothes into tax-saving tools!

But, Don’t Get Too Excited:  Turning business-ware into uniforms might be an excellent way to promote your business and expense some clothing.  But, the tax-savings does not happen without some effort and expense.  Although there are few explicit requirements for uniform creation, here are some common-sense items to consider:

  • Make the Logo Prominent:  Make sure the logo is large enough to be noticed by the general public.  Merely embroidering your initials in small letters on your dress shirts’ breast pocket probably won’t fly.   But, a business-card sized area that includes the title of “Realtor” under your first and last name might be highly effective and deductible.
  • Make the Logo Permanent: Attaching a pin, name tag, a sticker, or anything removable to a shirt does not make it a uniform.  
  • Be Consistent: This suggestion is about marketing and tax.  Remember – uniforms are consistent.  They have a similar theme; a consistent color and style.  Tagging all items in your wardrobe with a logo for a deduction makes little business sense, and an auditor might point this out.  Best to pick out a consistent fashion message and color scheme.
  • Uniforms Cost Money: The attire you purchase for your uniform will cost money.  The design of your logo (if you hire a professional) costs money.  And, affixing the logo to clothes costs money.  Spending $25 extra dollars to save $10 in tax makes little sense – UNLESS it is an investment that generates more than $25 in new business and tax savings. 
  • Think “Above the Waist:” Unless you have a super-creative uniform, shoes and pants are difficult to brand with a logo tastefully.  No logo means no deduction.  Limit your uniform to shirts, jackets, hats, and similar items.  Also, be careful when purchasing these branded items for giveaways.  There are limitations.   Check out our article, Deducting Promotional Items and Gifts, for more information. 
  • Be Reasonable:  If there’s one phrase I preach when taking tax deductions, it’s this: “Be Reasonable.”  Make sure your clothing choice matches your market and clientele.  Your expenses must be ordinary, necessary, and not extravagant under the circumstances.  A collection of $150 silk blouses might make sense for a realtor selling million-dollar homes. But it may not fly if most of your clients are first-time homebuyers, and a nice polo or dress shirt would work just fine.

Deducting Your Uniform

For Real Estate Agents and business owners who are sole proprietors, uniforms get deducted as an Other Expense on Schedule C, Profit Or Loss From Business.  The cost of cleaning and alterations are also part of the expense.   For more information on Other Expenses, please read our article, ironically entitled Other Expenses.

One could argue that uniforms are purchased to promote business, making it an advertising expense.  That makes sense.  But they’re still deducted as an Other Expense.  Why? I believe it’s because the IRS wants the outlay to be easy to spot and investigate (that’s a rumor).  So, be reasonable!

At this point, you're probably thinking "I need professional help." You're right!

Here are three steps you can take if you are serious about minimizing your taxes:

  1. Download our FREE Real Estate Agent Tax Organizer. It assists in cutting an agent’s highest cost - taxes.
  2. Purchase the 2024 Real Estate Agent Tax-Cut Library on Amazon. Your ultimate guide to reducing taxes, maximizing deductions, and staying IRS-compliant. This 232-page resource by Brett Hersh, a seasoned IRS Enrolled Agent, is packed with practical advice tailored specifically for real estate agents.
  3. Enroll in our video training course, the Comprehensive Real Estate Agent Tax-Cut Library. This searchable video library is the preeminent authority for real estate agents who are serious about cutting their tax due.

The Comprehensive Real Estate Agent Tax-Cut Library covers everything a real estate agent needs to know to maximize and substantiate every possible deduction real estate agents can take on their business tax return including;

  • Over eight hours of video-based tax information, this library covers everything you need to know to cut your most significant expense: taxes!
  • The library covers all deductions on Schedule C including a line-by-line explanation of every deduction as it applies to a Real Estate Agent.
  • Tax-cutting strategies to help you make the most of each possible business deduction. Simple yet efficient and effective bookkeeping techniques that make the best use of your time while ensuring you never miss a single deduction.
  • Recordkeeping techniques to audit-proof every deduction you take so you have what you need to substantiate your deduction should the IRS come knocking.
  • Special emphasis on the following deductions common to real estate agents: Auto & Home Office (160+ Minutes), Business Meals (30+ Minutes), and Business Travel (53+ minutes).
  • Searchable database, allowing you to find valuable information on specific deductions quickly.

Ideal for:

  • New realtors who want to start off right
  • Veteran realtors looking to optimize their tax strategy
  • Part-time agents who juggle multiple income sources

All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.

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