If your company provides a uniform allowance to its employees, some or all of that allowance may be excluded from the employee's taxable income. The tax treatment depends on the method of reimbursing employees for their uniform expenses and the amount of the allowance or reimbursement for the year.
Excluded Income
A uniform allowance may be excluded from taxable income if the uniform is required as a condition of the job. The uniform must also be intended solely for work and cannot have any use away from the job site, such as a pilot's or police officer's uniform. However, the amount of the allowance must be reasonable when compared to the actual uniform costs. If the IRS deems it to be excessive, the employee will be required to include the difference in his taxable income.
Uniform Maintenance
The employee may also be required to pay for uniform cleaning or tailoring during the tax year. If your company does not reimburse these costs, the employee may include them in his job-related deductions. Cleaning allowances from the employer may be excluded from taxable income if the uniform meets the requirements listed above.
Deductible Expenses
If the employer allowance is not enough to cover the cost of purchasing the required uniform, the employee may deduct the nonreimbursed costs as a job-related expense. This deduction is included in the miscellaneous expenses on Schedule A. Only expenses that exceed 2 percent of the employee's adjusted gross income are deductible.