If you are a hair stylist, you may receive Form W-2, Wage and Tax Statement, from your employer. As an employee, you may receive additional income in the form of tips. Any tips you reported to your employer are included with your wages on your Form W-2, Box 1. Although you are not required to report tips of less than $20 per month to each employer, these tips are still subject to income tax. You must also include in income the value of non-cash tips such as tickets and passes and any other tips received but not reported.
If you rent space in a salon, work from home, or travel to your clients, you may be considered self-employed. Self-employed taxpayers report all of their income, including tips, on Schedule C, Profit or Loss from Business.
You may be able to reduce your taxes by deducting unreimbursed, job-related expenses. These expenses may be claimed as miscellaneous itemized deductions on Schedule A, Itemized Deductions, or, if attributable to self employment, they may be deductible on Schedule C. You should keep receipts to substantiate these expenses. Examples of some of the items you may be able to deduct include:
- Cost and cleaning of uniforms that are required as a condition of your employment and that are not suitable for everyday wear (for example, a white service uniform would qualify for deduction, but an employer-required uniform consisting of a white shirt, black pants, and black shoes is not distinctive in the nature of a uniform and would not be deductible)
- Fees for occupational taxes or licenses
- Employer-required medical exams for which you are not reimbursed
- Subscriptions to professional journals and trade magazines related to your work
- Supplies such as scissors, combs, smocks, shampoo, and blow driers
- Services such as scissors sharpening
- Liability or other business insurance
You also may be able to deduct work-related, educational courses or seminars if they meet certain requirements. Education typically meeting the requirements includes refresher courses and courses on current developments. Costs including travel for attending courses on creating the latest hair styles or new coloring techniques, for example, would qualify. However, education that qualifies you for a new trade or business, or that helps you to meet the minimum education requirements of your present trade or business are not deductible as a business expense.