Attention men and women in uniform! That uniform may be deductible

August, 19 2014 by Carol Thompson, EA

All too often, bad information is passed around between friends about tax deductions, and as the IRS and tax professionals continue to say, “If it sounds too good to be true, it probably is!” On that note, let’s talk about business deductions for members of the military. The same rules apply for active duty personnel and reservists.

UNIFORMS: If you wear your uniform to “work,” and wear it home, go to the bank, the doctor, and the grocery store, it probably isn’t deductible. The only deductible uniforms are those prohibited for off-duty use by military regulations. If you cannot wear your BDU’s off-base, you can deduct the cost, cleaning, and upkeep of those uniforms – less the nontaxable uniform allowance or reimbursement included in income.

Example: If you are sitting in front of a tax professional in your BDU’s, and the office is not on base, you probably can’t deduct them.  

Example: Dress Blues that are allowed to be worn off-duty are not deductible.

INSIGNIA: Required items to be worn on or with uniforms are deductible as employee business expenses, subject to the 2% of AGI cap.

Example: Insignia of rank, corps devices, epaulets, aiguillettes, and swords. The shoulder boards and gold stripes for Dress Blues are deductible.

DUES FOR PROFESSIONAL SOCIETIES: Dues paid to an organization that is directly related to a trade or business are deductible.

Example: Doctors may belong to the American Medical Association; a military Electrical Engineer may belong to the American Society of Electrical Engineers.

Not Deductible: Dues to the Officers Club or NCO club. These are a social activity and not a business expense.

COMPUTERS: This is a heavily debated expense for all employees. In IRS Publication 529, Miscellaneous Deductions, it says that you can deduct a home computer if it is used to produce income for your employer. Two conditions must be met:

1. The computer must be used for the convenience of your employer, and
2. It must be required as a condition of your employment, which means that you cannot perform your duties without the computer. The use of the property must be required for the employee to perform his or her duties properly.

Example: You work as an engineer on the base. You cannot complete all of your assignments within your normal work day, so you take some home and work on your home computer. Since you are not under orders to take work home, the computer is not deductible.

The bottom line – in order for a computer (or cell phone, or tablet) to be deductible, you need orders from your Command that you must have a computer at home so you may conduct military business. Generally, this is not the case. If someone has to have specific equipment to conduct business for the military, that equipment would be provided. If circumstances are such that a home computer is required by the Command, any personal use must be logged. Only the business portion of the computer will be allowed.

TIP: Armed Forces members must fill out a reimbursement voucher for expenses they are entitled to or no deduction will be allowed.

For More Information: Search "employer's convenience and condition of employment" at IRS.gov. See additional information in these IRS pubs:

• Publication 529, Employee Business Expense
• Publication 946, How To Depreciate Property