105/ Ask A Lawyer: Can I Write Off My Clothes?
Taxable expenses, reporting obligations for gifts, and why Colonel Sanders is the OG influencer.
Thank you for reading In Moda Veritas’ inaugural Ask A Lawyer column! If you have a legal question regarding a fashion-related matter, please DM me for possible inclusion in a future column. If you’re a lawyer and would like to contribute to this column, please send me a DM as well — I’d love to chat!
The information provided herein is not intended to constitute legal or tax advice, and is instead for general informational purposes only. Readers should contact their lawyer or accountant to obtain advice with respect to any particular legal or taxation matter.
“Oh amazing, you get to write off your clothes!”
The first time I heard this in the early days as a stylist, my mind raced from the staggering potential. Could it be true? FREE CLOTHES?? I couldn’t have dreamed up a greater possible perk for my new career (which, ironically, I transitioned into from law).
Content creators, influencers, and yes, stylists are ultimately business owners, whether operating as sole proprietors or under another legal entity. As business owners, assessing what expenses are deductible is in the normal course, and so naturally, I had to explore it — or have it explained to me, as it happened to David Rose in this episode of Schitt’s Creek:
In summary, David’s argument is, “I have to look good if I’m representing my brand and therefore [x which helps me achieve that] is a legitimate business expense. I wouldn’t fault the uninitiated (e.g. like younger me) for applying a similar rationale to their business: “I’m a content creator/influencer/stylist. If I have bad style, what does that say about the legitimacy of my brand?”
It took a quick chat with my husband, a tax professional, to understand that the issue is not that simple — sadly for me, but thankfully for all the taxpayers out there.
Since it’s not professional to include your own husband as a source in your article, and even though Eugene Levy seems knowledgeable enough (as he says, the clothes aren’t free; “a write off is business expense used to reduce your taxable income”), I’ve asked two other IRL tax professionals to answer some of the questions you may have when it comes to taxable expenses and reporting obligations in the influencer sphere.
A big thank you to Brandon Siegal, principal of Toronto-based Siegal Tax Law for answering the following questions from the Canadian tax perspective, and to Anil Kalia, a partner at DLA Piper’s Pało Alto office to give the US interpretation:
If a content creator purchases a piece of clothing to feature in a video or blog, can they write it off as a taxable business expense?
What if the creator wore the clothing in their personal life? Is it still deductible?
What obligations do creators have to report gifts, products, or services received from brands?
Q: If a content creator purchases a piece of clothing to feature in a video or blog, can they write it off as a taxable business expense?
B.S.: There’s a chance. The usual rule for deducting an expense in Canada is whether the expense, in this case, clothing, was incurred for the purpose of earning income. If you can establish that the purchased clothing directly relates to income — such as advertising on a blog post or video, payments from the clothing company for advertising, referral revenue from purchase links, or if you resell the clothing after featuring it — then you can strongly argue that the clothing was a business expense.