Most people know the IRS generally doesn’t let you take a tax deduction for dry cleaning your clothes.
But if you are lucky enough to travel frequently on business, then the IRS gives you an opportunity to claim a tax deduction for dry cleaning as a travel expense.
Case in point. A client of ours travels frequently for business on behalf of his company.
My client lives full time in New York, where his business is headquartered, but regularly travels to his company’s California office, where he spends at least one week a month.
The IRS defines a travel expense as the ordinary and necessary expenses of traveling away from home for your business, profession, or job.
The IRS considers you to be traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day’s work, and you need to get sleep or rest to meet the demands of your work while away.
Generally, your tax home is the entire city or general area where your main place of business or work is located. In our client’s case, that’s New York City.
At Gedeon Law & CPA, we are always looking for ways to help our clients convert as much of their expenses to a legitimate business deduction in order to maximize their tax deductions.
After studying the IRS publications, we discovered that the IRS actually lets you take a tax deduction for getting your dry cleaning done out of town. In fact, the IRS specifically lists it as an example of a deductible travel expense while away from home.
In our client’s case, since his job requires him to travel away from his home in NYC for “substantially longer” than an ordinary day’s work, then he can deduct the costs of dry cleaning his suits while he is in California on business. Better yet, he can take this deduction even if he could wear the clothing for another purpose.
As we regularly remind our clients, if you incur travel expenses on behalf of your business, you don’t want to deduct those expenses personally as an employee business expenses because it will be subject to the 2 percent adjusted gross income cut and it won’t be deductible for alternative minimum tax purposes.
Therefore, as we instructed our client, he needs to submit his dry cleaning bill, along with his other travel expenses, to his corporation for a tax free reimbursement to him and a business deduction to his corporation.
Traveling on business can have its perks. So the next time you need to get that suit dry cleaned, why not take advantage of getting it done out of town. While it may not make your local dry cleaner happy, it will help reduce your taxes, which should make you happy.