What Can a Hair Stylist Write Off on Taxes?

For self-employed hair stylists, understanding eligible tax deductions can significantly reduce taxable income.

General Rules for Business Expenses

To qualify as a tax deduction, an expense must be both “ordinary” and “necessary” for the hair stylist’s trade or business. An “ordinary” expense is one that is common and accepted in the hair styling industry. This does not imply the expense must be habitual; it simply means it is a normal or customary cost incurred by businesses in this field.

A “necessary” expense is defined as one that is helpful and appropriate for the business. It does not have to be indispensable to be considered necessary, but it must be reasonable to expect business benefits to result from the expense. It is crucial to distinguish between business and personal expenses, as only costs directly related to business operations are deductible. Expenses that serve a dual purpose, benefiting both personal and business life, must be allocated appropriately, with only the business portion being eligible for deduction.

Common Deductions for Hair Stylists

Hair stylists incur various costs directly related to their profession. Supplies and products, such as hair care products, dyes, shampoos, conditioners, and styling products, are deductible. Tools and equipment, including shears, clippers, curling irons, blow dryers, salon chairs, and capes, are deductible. If equipment has a useful life of more than one year, its cost may need to be depreciated over time rather than expensed all at once.

For stylists who operate from a salon, rent and utilities for their booth or leased space are deductible. This includes costs such as electricity, water, and internet services directly attributable to the business. Stylists using a portion of their home exclusively and regularly for business, such as a dedicated styling area or office, might qualify for the home office deduction. This deduction covers a percentage of housing costs like rent, mortgage interest, utilities, and insurance based on the business use of the home.

Investing in professional development is deductible. Costs for professional education and training, including courses, seminars, and workshops that maintain or improve skills needed in the current profession, are deductible. However, education that qualifies a stylist for a new trade or business, or meets minimum educational requirements for entry into the profession, typically does not qualify.

Expenses for business cards, website development, social media advertisements, and other promotional materials are deductible. Professional liability insurance and other business insurance premiums are deductible. Professional fees paid for services such as accounting, legal advice, or tax preparation are deductible.

Vehicle expenses are deductible if the stylist uses a personal vehicle for business purposes, such as traveling to clients, supply stores, or educational events. Stylists can choose between deducting actual expenses (including gas, oil, repairs, and insurance) or using the standard mileage rate. Parking fees and tolls incurred for business travel are deductible. Business travel costs, such as lodging and meals incurred when attending out-of-town industry events or training, are deductible.

Essential Documentation and Record-Keeping

Maintaining thorough and accurate records is essential for substantiating business expenses. The Internal Revenue Service (IRS) requires proof of expenses to validate deductions, placing the burden of proof on the taxpayer. Without proper documentation, deductions may be denied.

Documentation includes receipts, invoices, canceled checks, and bank or credit card statements for all business-related transactions. For vehicle expenses, a detailed mileage log documenting dates, destinations, purposes, and miles driven for each business trip is needed for the standard mileage rate. Digital scanning and accounting software are useful for organizing and storing records. These records should be kept for at least three years from the date the tax return was filed or due, whichever is later.

How to Claim Your Deductions

Self-employed hair stylists, typically operating as sole proprietors, report their business income and expenses on IRS Form 1040, Schedule C, “Profit or Loss from Business.” This form is used to calculate the net profit or loss from the business activity. All gross income earned from styling services, including client payments and tips, is reported in the income section of Schedule C.

Deductible business expenses, such as those for supplies, tools, rent, and professional fees, are then itemized in the expense section of Schedule C. The form provides specific lines for various categories of expenses, allowing for detailed reporting. After subtracting all eligible business expenses from the gross business income, the resulting net profit or loss is transferred from Schedule C to Form 1040, impacting the stylist’s overall taxable income. This procedural step consolidates all self-employment financial activity, determining the final amount subject to income tax and self-employment tax.