When tax season rolls around, all self-employed folks try to minimize how much they'll pay Uncle Sam. You may be a bit worried too after you calculate your 1099 taxes and figure out how much money you'll owe.
Can you add haircuts to your list of tax deductions for the year? In fact, yes you can. It is uncommon but it is possible. In this article, we'll break down the circumstances where you can claim a haircut tax deduction for your particular job. Let's first dive into some of the IRS's rules in regards to personal expenses to necessary business costs.
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Tax Deductions For Business Versus Personal Expenses
The IRS does not let you deduct personal expenses from your taxes. The Court states, expenses such as haircuts, makeup, clothes, manicures, grooming, teeth whitening, hair care, manicures, and other cosmetic surgery are not deductible. However, there are exceptions.
You cannot deduct clothes such as jeans because you can wear those pants for everyday "personal" wear. On the other hand, if you are a circus performer freelancer who needs a specific costume to perform your job or work, then you can deduct your clothing. Models, actresses, theater performers who need specific clothing, not usable for everyday wear, could claim this clothing tax deduction.
The same goes for haircuts.
Claiming A Haircut Tax Deduction
If your line of work requires you to have a unique hairdo to perform your work, then you can deduct the cost of a haircut. U.S tax courts ruled in Hynes v. Commissioner, you cannot deduct the costs incurred for maintaining a nice appearance. For example, a news reporter who has to maintain a professional appearance on air cannot deduct the cost of a haircut or other cosmetic expenses.
Although they are related to your job or business, these costs are widely personal expenses.
For a business expense to be included as a tax deduction, you'd need to prove it was "ordinary" and "necessary" for your business. Let's quickly go over what that means exactly for U.S. tax laws.
Ordinary And Necessary Deductible Expenses
For an expense to be considered "ordinary" if it is commonly accepted in your business or trade. A "necessary" expense is one that is helpful and appropriate for your trade or business. Travel expenses, consultancy fees, internet bills, state taxes, and staff compensation are all examples of this.
Work clothing would only qualify as a deduction if it is in line with industry standards and is necessary to run your business.
On his hit reality show, "The Apprentice", The Times reported that Trump's business wrote off $70,000 of the cost paid to hairstyling/haircuts from their taxes. On top of that, Trump deducted at least $95,464 for the makeup and hairstylist for Ivanka Trump. Trump claiming these deductions and lowering his taxable income stirred a lot of controversies because folks questioned the legitimacy of this.
Trump's tax records were closely monitored during his presidency. In addition to his deduction of $70,000, Trump's business wrote off over $2.2 million in property taxes on his New York estate.
U.S Tax Court Case
There's one instance where a judge decided in a U.S. tax court case over if clothing expenses were deductible. A West Virginia welder challenged the court's decision to not be able to deduct the cost of steel-toed boots and overalls. The court judge saw that the welder was wearing the exact clothing he was seeking to deduct in the courtroom. The judge merely asked, "are you at work?" and the ruling was upheld.
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The Low-Down On Tax Deductions For Appearances
If you try to deduct personal expenses from your taxes and you get caught by the IRS in an audit, you run the risk of paying penalties along with interest. Most returns are audited if the system catches too many red flags. It could trigger a deeper look into your deductions by an auditor.
In order to avoid paying fees and interest, simply ask yourself: if you would still take on the expense if there was bo job? Is the expense useful for your professional career? Although the lines may seem blurry for when business expenses related to appearances, in fact, count as a work-related expense, we'll provide some more examples to clear them up.
There has been an outpour of OnlyFans content creators in recent years. Since their business relies on photoshoots and producing content related to their appearance, the make-up they use for photoshoots counts as tax-deductible expenses.
You cannot deduct makeup used for daily wear. The rules around a makeup deduction and expenses related to products for improved appearances are very stringent.
If you are a stage performer, you can write off makeup used for stage or photoshoots, but again, not if you wear the same makeup outside of work. Purchases for makeup should be bought from a professional supplier and not a drug store. A TV production company with makeup folks could deduct the cost of makeup.
Once again, the cost of a hairstylist can only count as a tax deduction if the hairdo is business-related. Meaning, you need a certain look to perform your work or job. It has to be strictly for work. For example, if you need a certain hairstyle for stage or photo shoots, then
Body Oils & Skin Products
The IRS generally does not allow you to deduct the cost of body enhancements.
However, there are exceptions. A good example of this would be a bodybuilder or model trying to take a tax deduction for body oils. The merchandise to improve the appearance of the skin may qualify as a tax-deductible expense.
Between 1999 and 2001, a Wisconsin bodybuilder deducted over $14,000 for the expense of three body oils that boosted his career. The deduction was permitted as a business expense by the Court since the oils were largely advertised in bodybuilding magazines and not offered to the general public.
Athletes cannot deduct the cost of nutritional or dietary supplements to improve performance. This is because the benefits are inherently personal. The benefits are personal as well as professional. However, they can deduct the cost of fitness trainers or coaches as a work-related business expense.
The overwhelming majority of the time, you cannot claim the cost of cosmetic surgery as a tax deduction. However, in extreme circumstances, changes to your appearance may indeed qualify. For instance, in 1994 the Court allowed an exception in the case of Cynthia S. Hess. She was a self-employed exotic dancer in Fort Wayne, Indiana. She was able to claim the cost of breast augmentation surgery as it was a requirement for her profession and it made her more successful. The surgery was deemed unsuitable for day-to-day use. Hess could claim the deduction based on the grounds of her reducing her breast once her stage career was over.
This is a commonly rejected write-off. In order for clothing to qualify as a write-off, the work attire would need to be essential to run your business and in line with industry standards. A new suit or nice dress would not count as a tax deduction. Clothing expenses that may qualify are protective uniforms and costumes. The general rules for attire purchases are if it is suitable for everyday wear, then you cannot deduct the expenses.
Prepare For Tax Season
We hope this article cleared the lines between personal and business expenses. Don't try to be sneaky and deduct personal expenses from your tax return to stay away from paying taxes. If you get caught, the IRS will make you pay harsh penalties.
Personal maintenance expenses such as skin care, hair salon, and other body maintenance expenses are not deductible. When a taxpayer has a job or freelance business that requires them to buy makeup, hair supplies, contact lens or similar items, these can be deducted as business expenses if they meet the following requirements:
They are not suitable for everyday use
The purchases can be shown to be used primarily for business use
If you don't meet the qualifications of those two rules, the chances are, the expense is probably personal and is not deductible. Also, if a taxpayer claims a large deduction in a category more than the average person in a profession, it may trigger an IRS tax audit.
To sum it up, the IRS can approve tax deductions on maintaining or changing your personal appearance in certain circumstances and professionals. However, the rules for deducting the costs of those makeup and hair cut tax deduction are very strict.
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If you have any questions in regards to IRS tax laws, if haircuts count as a tax-deductible expense, or filing your tax returns, we always recommend you seek tax advice from a professional accountant. An accountant's service can help you stay compliant under the constantly changing tax laws. This post is to be used for informational purposes and is NOT legal advice.