My financial advisor told me I can claim my meals, mileage, haircuts and...?

Question

and clothing on my taxes for my work. I am employed, not an independant contractor. I go to the location in my town twice a week, and travel 66 miles 3 days a week to another town. I don't stay over night though. My FA told me that I can claim my meals, and haircuts and clothing costs as an expense for tax deductions. I thought you could only claim meals if you stay overnight? Can I really claim my haircuts and clothing? I don't have a uniform, just a business casual dress code, and neat, kept appearance. Can someone clarify this for me? I already knew I can claim the mileage, but the other things threw me off.

Answer 1

Are you an insurance agent, or a traveling salesperson? The IRS recognizes that in some occupations, money must be spent in order to perform the work according to normal expectations and standards. A police officer can deduct the cost of his haircuts, for example. In other occupations, other expenses are normal and deductible. If your company sends you 66 miles away to another location, then it's possible the mileage is deductible.

There is a class of worker called a statutory employee. This class includes officers of a charity, some insurance agents, some traveling salespeople, some delivery drivers, and some home workers. Statutory employees are paid on a w-2, and they report their gross income, and work related expenses on schedule C. They are treated as employees regarding Social Security and Medicare, so they are not subject to self employment tax.

http://www.irs.gov/charities/article/0,,id=131138,00.html
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

On Form 2106, expenses you could deduct would be those that exceed any per diem amount given to you by your company.

I would give your financial adviser the benefit of the doubt. It's very possible that he is right about the deductions. Travel expenses, meals, haircuts could be allowable expenses. Generally, you can deduct 50% of the unereimbursed cost of meals while traveling away from home on business.

Double check about the clothes. Usually, casual clothes and shoes that are suitable for every day wear off the job are not deductible.

In any event, it doesn't hurt to keep track of all your expenses so you can sort it all out at the end of the year. Keep a log of your expenses for each trip, or each week, or month, and keep your receipts organized. Even if some expenses are not deductions, it's good to have the records, and keep track of your budget.

Good Luck

Answer 2

Get a new financial advisor, or hope their advice on financial matters is more accurate than their advice on tax matters. The person is way off base on the tax advice.

If your clothing for the job is a uniform, not suitable for wear outside of work (whether you actually wear the clothing other places or not) could be deductible to the extent that it exceeds 2% of your income. Uniforms would be for example shirts that have the company name on the back. Your regular business casual clothes - no way can you deduct them.

As for mileage, if that's your regular place of business, no, it would be considered commuting - so that might not even be deductible, certainly not the days you go to whatever is your regular place of business, and if that's your standard schedule, they would both possibly be considered as regular place of business. At least one of them would be, so you definitely can't deduct ALL of your mileage for all 5 days a week - you don't really give enough info as to this travel to the "other town" to give a real good answer on that - like how far away is it, is this just temporary or your permanent job duty....

And haircuts - not a chance - and meals (I assume you're talking about your lunches?) no.

Answer 3

No you can not claim your clothing, haircuts, meals and mileage. You can only claim meals and traveling allowances if you are traveling temporarily to a different location. You can only claim mileage if you work from home and temorarily go to another location to work. If you only work 3 days a week, you can not claim mileage. I suggest you check with a tax professional about your specific situation. You may have left out some details here that allows you to claim those things.

Answer 4

No, in your case, you can't deduct haircuts and clothing. You can't even claim the mileage.

You can't claim mileage from your home to your office and back to your home. So for a location is town you can't claim. For 3 days a week to another town, you still can't claim unless you are required to go first to your office in town and then from that town office you go to office in other town. Then you can deduct mileage from first office to second office. If you follow same rule for the return journey, then you can deduct some mileage.

Another important point to note: You can deduct any employee business related expenses only if you itemize your deductions and these deductions are subject to 2% AGI limit.

Answer 5

that is some of the worst financial advice I have ever heard. UNless its a sure thing, which i doubt cause there is no such thing as a sure thing. If your rate on the home equity is say 8% then you need at least an 8% return on you invest just to break even, IF you get like a 12% return then your only making 4% return which is about the same as investing in a long term cd, question is it the return on investment worth the risk, in most cases if your paying interest and having to get a loan to invest its not worth it because the interest cost is too high and thus your rate of return has to be too high to cover the cost. The risk reward is just not worth it. I dont know of any investment that is gauranteed to return that high of a return. I guess if you really like the stock or investment and think it can beat the interest cost and its risk reward is worth it then go ahead and do it. But dont do it just cause your dumb financial advisor told you to do it, thats just bad advice and you may want to report him to the SEC, cause advisors should not be advising like that.

Answer 6

Financial Advisors give notoriously bad tax advice (not as bad as Real Estate Agents but bad none the less).

Haircuts and normal clothing are never deductible. Even for military personnel, where haircuts are required, they are not deductible.

Unreimbursed meals with a client (or potential client) are deductible but not meals on your own. We all have to eat.

Answer 7

No. If the clothign can be worn for any other purpose (meaning its not a uniform) it CANNOT be deducted. Meals cannot be deducted unless they were for a business purpose like taking a client out. Haircuts- absolutely, certainly not. This guy is dead wrong and is setting you up for a major problem. I'd find a new advisor as fast as I could run out his door.

Answer 8

You should read this, and then you should fire your "Financial Advisor"...

http://www.irs.gov/publications/p463/index.html

And if you are EMPLOYED, you cannot "claim" your travel expenses either, unless you are driving to the other town for work-related training! ( http://www.irs.gov/faqs/faq3-2.html )

Think about it, if you could really claim mileage as an employee, every truck driver who isn't an independent operator would probably be paying NO taxes!

Answer 9

u have two choices, look forward to an IRS audit or change ur "financial adviser".
hair cuts and clothing claims are RED flags for audits in ur case. mileage Might be decutable. Meals are RED flags for u .
get a better 'fa'

Answer 10

That sound fishy. I can see mileage, and MAYBE meals, but haircut and clothing are real stretches, unless you can prove they are required for your position, which it sounds like they are not. Talk to a tax accountant rather than your FA.