Our clients ask us all the time:
Can I deduct my haircut from my taxes?
I just bought some new clothes for my job; can those be deducted?
What about new makeup that I bought to look better at work?
These questions make sense! Especially because we primarily work with online entrepreneurs who make most of their money while looking great. You might even be having the same sort of questions if you’re in a similar position. So, let’s talk about it.
Personal appearance expenses are any expenses that enhance your appearance for an extended period of time. Think of haircuts, makeup, body enhancements, etc. Since these expenses are inherently just personal expenses, they are typically NOT tax deductible regardless of whether or not it is for your business. There are specific situations, however, where criteria can be met and they can be deducted.
The US Tax Court has ruled that even in cases of public personalities, these everyday personal expenses are not deductible (i.e. haircuts, makeup products, gym memberships, etc.). If these expenses benefit you outside of your business in any way at all, the court rules it to be non-deductible.
That being said, there are certain questions you can ask yourself to determine if there is still a chance for these expenses to be deductible.
- Is it essential for your business and supplied by a professional? The answer must be yes.
- Is it suitable for everyday use? The answer must be no.
- Will it continue to benefit you outside of work? The answer must be no.
For example, a television news anchor could not deduct makeup purchased from Nordstrom’s and other drugstores because it is suitable for everyday wear. Many women purchase makeup and beauty products therefore the tax court was unable to determine the actual business use. But, if a makeup artist comes the day of a photoshoot and the taxpayer cannot take the makeup home or use it in his/her personal life, then that can be deducted.
If you decide to deduct any expenses that meet those three criteria, then precise documentation is critical. Keep detailed receipts, contracts, clear proof that all 3 of the above questions can be answered accurately, and a direct line of income increase because of the expense. If you end up in a situation where you have to explain your case, you will want every piece of documentation to back up your deduction.
CPA On Fire is an online accounting firm for online entrepreneurs. We have extensive knowledge on working with entrepreneurs who have businesses in the ecommerce, coaching, and other online business communities. If you are looking for a highly qualified and experienced accountant, schedule a free Financial Review with us. We will show you what we can do for your business to help you grow exponentially.