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Tax Court Tailors Outcome to Fit Clothes Deduction

After a nurse bought clothing for work at a clinic at her own expense
and deducted it from her taxes, she wound up in front of the Tax Court
to ensure the purchase was a legitimate business-related tax
deduction. In this case, she prevailed. Ken Berry offers the details

Under prior law, an individual could deduct the unreimbursed cost of
clothing or uniforms used for business that wasn’t suitable for
everyday wear. In a new case, Romana, TC Summary Opinion 2022-9,
6/16/22, the Tax Court allowed a nurse to deduct the cost and upkeep
of scrub-like clothing that she purchased for herself.

This was an aggressive approach by the taxpayer that resulted in a
somewhat surprising tax victory.

Background: Prior to 2018, an individual itemizer could deduct the
cost of qualified miscellaneous expenses to the extent that the total
exceeded 2 percent of adjusted gross income (AGI) for the year. For
example, if you had an AGI of $100,000 and incurred $3,000 in
miscellaneous expenses, your deduction was limited to $1,000. If you
had only $1,500 in miscellaneous expenses, no deduction was allowed.

However, the Tax Cuts and Jobs Act (TCJA) suspended the deduction for
miscellaneous expenses from 2018 through 2025. So, even if you qualify
under the regular rules, you can’t deduct any miscellaneous expenses
in 2022. The deduction is scheduled to be reinstated in 2026.

For our purposes, the list of miscellaneous expenses encompasses
employee business expenses, like office supplies and tools, that you
pay for out of your own pocket. It also includes work attire that (1)
is required to be worn as a condition of your employment and (2) is
not suitable for everyday wear.

Facts of the new case: While she was at work in a plastic surgery
clinic, a nurse wore clothing that resembled scrubs. She had purchased
the clothing at her own expense at local department stores. In the
operating room, she was required to wear scrubs provided by the
clinic. Depending on the operating schedule for the day, she changed
back and forth between her scrub-like clothing and the
employer-provided operating room scrubs.

In 2017, the nurse also purchased, at her own expense, a white lab
coat with embroidering on it. She bought it as part of a bulk purchase
that included similar items fellow staff members bought. The lab coat
cost approximately $45, and the nurse had it dry and cleaned multiple
times during the year. Otherwise, the costs of her work clothing can’t
be precisely determined.

Tax result: The nurse was required to dress professionally and
comfortably for her job. To do so, she purchased shirts and pants at
department stores and an embroidered lab coat. Because the clothing
resembled scrubs, the Tax Court determined that it wasn’t adaptable to
general use as ordinary clothing outside of her employment.

Accordingly, the costs of the clothing and dry cleaning are
deductible. Using its best estimate, the Tax Court allowed an overall
deductible amount of $500 for the scrub-like clothing and lab coat.

Caveat: The Tax Court was more lenient than it has been in numerous
prior cases. Notably, it allowed a deduction for “scrub-like” clothing
that could easily have been characterized as being suitable for
everyday wear. Keep this in mind for future situations involving your

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