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From The Mailbag: Are Military Uniforms Tax Deductible?

Are Military Uniforms Tax Deductible?I recently received an email asking whether military uniforms are tax-deductible on federal income tax returns.  There's a lot of bad information out there about whether military members can deduct their uniform costs on their tax return.  The situations are pretty limited, and even if you can, you're not likely to see a huge tax benefit.

There are three tests that need to be met for you to have any tax benefit from military uniform costs:

It Must Meet Specific Rules

There's a pretty limited scope of what uniforms can be deducted.  Generally speaking, if you can wear it to perform a civilian activity without getting in trouble, it's not deductible.  From the IRS Publication 529, Miscellaneous Deductions:
Military uniforms. You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses.

If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive.

If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. However, you can deduct the cost of insignia, shoulder boards, and related items.

I've highlighted in red the parts of this that I think are most important.  For clarification, the part that talks about fatigue uniforms refers to any uniform that your branch or local commander has deemed may not ever be worn off base.  If you have a uniform that falls into this category, you know what it is.  If you would get in trouble if you wore it home and stopped to pump gas on the way, that is the type of uniform they're talking about.

You may deduct insignia, corps devices, epaulets, aiguillettes, and swords.

It Has To Exceed 2% Of Your AGI

If you have deductible uniform expenses, they are limited to the amount of expenses that exceed 2% of your Adjusted Gross Income (AGI).   For example, if your AGI is $30,000 for the tax year, your deductible uniform expenses would have to be more than $600.  If you had $700 in deductible uniform expenses, you could deduct $100.

It Has To Push Your Itemized Deductions Over The Amount of Your Standard Deduction

Uniform costs are deducted as a job expense on line 21 of Schedule A.  Schedule A is the form for itemizing your deductions.  Other things that are included on this form include state and local taxes, real estate taxes, interest on the mortgage on your primary home, and charitable contributions.  In order to have any benefit, your total itemized deductions must exceed the standard deduction.  For 2016, the standard deductions are:
Single $6,300
Married Filing Jointly $12,600
Married Filing Separately $6,300
Head of Household $9,300
If your total itemized deductions are less than the amount of your standard deduction, there is no tax benefit.

When you put these three tests together, there are nearly no circumstances in which uniforms are going to be deductible to the point of having any impact on your total tax liability.  If your income is low enough that your uniform expenses exceed 2% of your AGI, then you probably don't have any tax liability from which to deduct the cost.  If your income is high enough that you owe taxes, then the 2% of your AGI is likely to be more than the deductible part of the uniform costs.  With all the smoke and mirrors of how the income tax return is structured, even if it appears that you are saving money by deducting your uniforms, it often isn't making any difference in the number at the bottom of the return.

Kate's Bottom Line:  For 99.99% of the military members out there, saving receipts and filling out extra paperwork is not going to result in an income tax savings.  The only people who might benefit from this deduction would be people, usually reservists, who meet the following criteria:

  1. have exceptionally high deductible uniform costs one year
  2. itemize their deductions and exceed the standard deduction when they itemized
  3. have a low adjusted gross income (AGI)
  4. have a tax liability after the regular exemptions, deductions, and non-refundable credits are calculated.
If you want to save the receipts and do the paperwork, go ahead.  I would love to hear if it actually saves anyone any taxes.

For more information about deducting military job-related expenses, see:

Deducting Military Job Related Expenses

Can I Deduct My Uniform Costs on My Income Tax Return?

More Questions About Deductible Expenses

Tax Considerations For Reservists

EXAMPLE:  I'm sure many of you will find my example confusing, but I'm including it for the small percentage of readers who find it helpful.

Let's say you did have a deductible uniform (that you could not wear off base) that cost $500.  (I'm making this up for the example.)  Then let's say that you are male, have been in the military more than 3 years, and you are in the Air Force.  Your yearly clothing allowance would be $388.80 per year.  Take the $500 of actual deductible cost, subtract the yearly clothing allowance, and you will come up with $111.20.

You then take that number and compare it with 2% of your adjusted gross income.  To really stretch this example as far as possible, let's say you were deployed to a tax-free combat zone for the entire year and therefore your AGI was $0.  With an AGI of $0, you could put that $111.20 on your 1040 Schedule A, Itemized Deductions.

You would take that $111.20 and add it to the rest of your itemized deductions (usually only mortgage interest, taxes and charitable deductions) and then see if the entire total was more than your standard deduction (2011 rates:  single, $5,800; married filing jointly, $11,600.)   Let's then imagine that you were already over the standard deduction and so you are adding the entire deductible part of this uniform to your itemized deductions, resulting in an addition $111.20 deduction from your AGI before you get to the calculation of the taxes.

It wouldn't really matter, because you would be deducting from an AGI of $0 and there are no negative numbers permitted before you get to the tax calculation line of the return.  Zero minus anything still equals zero up until a certain point in tax calculation, so you haven't benefited at all.

This post contains information a previous post, Can I Deduct My Uniform Costs On My Income Tax Return?

Other great tax-related content:

Wait For Tax Statements Before You File

How To Read Your W-2

2016 Military Tax Statements Release Dates

What Is Income Tax Withholding and Why You Want To Get It Right

How To Report Tricare on Your Tax Return

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