Clothing Exempt from Taxation.
Uniform expenses and allowances may be considered working-condition fringe benefits. The acquisition and maintenance of employee uniforms are tax-deductible or tax-exempt as ordinary and necessary business expenses if the uniforms are: (1) specifically required as a condition of employment; and (2) of a distinctive nature and not of a type that is adaptable to general or continued usage as ordinary clothing. It is important that both parts of the definition be met for the exemption to be allowed.
Non-taxable clothing also includes protective clothing. Protective clothing should follow the US office of Safety and Health Administration (OSHA) Code of Federal Regulations (CFR) (29 CFR 1910.132.d) with the employer making an assessment of the hazards of the workplace. In such an instance where protective clothing is purchased, the supervisor shall identify and justify the specific items of clothing that are required for the safety of the employee in performing the job. The clothing must serve as a matter of employee protection and safety under OSHA rules to qualify as exempt from taxation.
Departments often purchase low-cost clothing items for employees running summer camps or for orientation-type events. Any clothing purchases costing $100 or less per employee, per calendar year will be considered a de minimis fringe benefit and will thus be non-taxable to the employee.
Apparel allowances, or the value of merchandise credit provided to certain employees that allows them to acquire apparel and goods directly from an outside vendor, is a taxable fringe benefit.
Departments that require employees to wear uniforms, the cost of which is not excludable from income, can manage tax consequences in one of three ways: (1) they may purchase the uniforms for employees, directly or through reimbursement, impute the value of the clothing, and report the amounts to the Payroll Office to be included on the employees' Forms W-2; (2) departments may purchase the uniforms, impute the income, and pay the taxes for the employees by grossing up the cost of the benefit; or (3) they may allow employees to purchase and/or maintain their uniforms themselves, eliminating tax liability altogether. Should your department choose option 1 or 2, please use the Taxable Fringe Benefit Form to report taxable clothing benefits to the Payroll Office.
If any questions arise regarding the exclusion (or inclusion) of clothing in an employee's taxable wages, please contact the Payroll Office for a final determination. A chart to help determine if clothing purchased is considered taxable income can be found at http: http://www.unf.edu/uploadedFiles/anf/controllers/payroll/Clothing%20Exempt%20from%20Taxation.pdf.