This transcript was generated from the episode audio and may contain minor errors.
[Music]
Hey friends, welcome to Side Hustle School. It's Chris Guillebeau, hot on the heels of a question and answer episode a few days ago about suing telemarketers. Got another interesting idea for you. This one may be a little bit more commonly known, but nevertheless, quite important if you're planning to run a side hustle or a small business this year. The caller wants to know, can you deduct clothing costs and haircuts from your taxes?
All those fancy clothes you buy, or maybe you don't buy any fancy clothes, but all those clothes you buy, you buy clothes at some point, right? Well, listen, I'm no tax advisor. We'll be clear about that. But it's also absolutely true that there are some creative and perfectly legal deductions for small business owners. So if you have a side hustle, or even if you're starting one and it doesn't have revenue yet, you might be able to save a lot of money on some of those deductions.
So let's listen to this caller's question. Can I deduct clothes and haircuts from my taxes? Who wouldn't want to do that? All right, stay tuned. [Music]
Hey, this is Shelby.
I found John a friend's recommendation and have been enjoying the show. Is it true that I can deduct my wardrobe for my taxes? This is my dream. I'm making a course that requires to present in professional attire, and I'll start filming more videos if it allows me to do more shopping. What about haircuts or a blow-off if I do it right before filming?
Also, while we're on the subject, are there any other common tax deductions for side hustlers? Thanks so much. [Music]
Well, here's a short and good answer. Hopefully an answer you're gonna like. The answer is yes, at least maybe, okay?
Yes, maybe. Again, I'm not a tax advisor, but as long as they are what's called necessary and ordinary business expenses, then this is exactly the kind of thing that you wanna save those receipts for and hand them over to your accountant or whoever's working on your taxes. You just gotta keep it reasonable, but if you're filming an online course and you need a special outfit for that, that's understandable. So what does it mean necessary and ordinary business expenses? Well, it's mostly a common sense thing.
Among other things, it means if you earn $5,000 a year from speaking, like as a professional speaker, you probably can't get away with deducting $100,000 of clothes. That's just a little excessive, right? The expenses must be common and accepted in your line of work. That's another kind of requirement. And they must be helpful and appropriate for your business.
But if you listen to that and you hear all those words, you're like, well, what do they actually mean? I mean, it's a judgment call, basically common, accepted, helpful, appropriate, necessary, ordinary. So essentially what it means is as long as you're not doing something that's totally crazy, it's gonna be fine. Most professionals agree that if your appearance is part of your business in some way, you can take reasonable deductions for the expenses required to maintain it. Now let's see, what else did our caller ask?
Any other common tax deductions? Let's see, office supplies, the cost or partial cost of a home office, educational expenses. If you're, I think our caller was teaching an online course, if you ever pay for online courses or any other educational expenses, those are quite likely deductible. There also could be a lot more, right? So the thing is, saving on taxes most likely isn't your only motivation to start a business or side hustle, but it can definitely be a nice bonus.
So keep those receipts, hang on to things, definitely talk to somebody as you get closer to preparing the taxes and good luck. All right, thank you listeners. Thanks for tuning in today, sidehustleschool.com/questions. You have a question or comment, we'll continue to feature them throughout the entire year. New episode every day, it's all completely free.
My name is Chris Guillebeau, this is Side Hustle School. [Music]
From the Onward Project.
