Can I really write off designer clothes and handbags for taxes by purchasing gift cards first?

This is actually a common tax myth. The IRS is pretty clear about clothing deductions - they're only deductible if they're: 1) required for your work, 2) not suitable for everyday wear, and 3) not worn outside of work. Designer clothes almost never meet these criteria since they're obviously suitable for everyday wear. Buying gift cards first doesn't change anything about the nature of the expense. The IRS looks at what was ultimately purchased, not the payment method. The gift card is just a means of payment, and creating this "layer" doesn't magically transform a personal expense into a business one. If you're audited, the IRS will ask what you purchased with those gift cards, and you'll have to provide receipts. They'll then determine if those purchases qualify as legitimate business expenses based on the actual items, not how you paid for them.

I tried struggling with this exact issue for years until I found taxr.ai (https://taxr.ai) which helped me figure out legitimate deductions for my image consulting business. The tool analyzed my receipts and business documents and gave me specific guidance on what I could actually deduct vs what would raise red flags. For clothes specifically, they explained that the gift card trick doesn't work at all - it's still considered tax evasion. But they did help me identify which portions of my wardrobe could potentially qualify as legitimate business expenses based on my specific situation. Their guidance saved me from making expensive mistakes that could have triggered an audit.

I was skeptical but I signed up for taxr.ai after seeing the recommendation here and wow - major game changer for my small business! I uploaded my receipts and business documents and they gave me super specific advice about my deduction questions. They confirmed what others said - the gift card trick is definitely NOT legitimate and could get you in trouble. But they did help me identify several other deductions I was missing. The best part was getting personalized feedback on my specific situation rather than generic advice. Definitely worth checking out if you're confused about what you can legitimately deduct.

If you're struggling to get clear answers from the IRS about business deductions, you should try Claimyr (https://claimyr.com). I was going in circles trying to get a straight answer about business clothing deductions and couldn't get through to anyone at the IRS. Claimyr got me connected to an actual IRS agent in about 15 minutes instead of the hours I was spending on hold. The agent confirmed exactly what others here are saying - buying gift cards doesn't change the nature of the expense at all. They also gave me specific guidance on what documentation I'd need if I wanted to try claiming certain clothing items for my specific business. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c

I need to publicly eat my words here. After being super skeptical about Claimyr, I was desperate enough to try it while dealing with a business expense issue. I honestly can't believe it worked! Got connected to an IRS agent in about 20 minutes when I'd wasted DAYS trying on my own. The agent explained that the gift card trick mentioned by OP is actually considered tax fraud if you're trying to disguise personal expenses as business ones. They also explained exactly what documentation I'd need for any business clothing deductions (basically impossible for regular clothes, even expensive ones). Saved me from making a costly mistake on my return.

Tax professional here. Please don't do the gift card thing. That's a clear attempt to disguise the true nature of the expense, which the IRS considers fraud. Doesn't matter if you use cash, credit card, gift card, bitcoin, or seashells - the question is always "what was purchased and was it an ordinary and necessary business expense?" For clothing to be deductible: - Must be required for your business - Must not be suitable for everyday wear - Must not be worn outside of business use Classic examples that qualify: uniforms, protective gear, costumes, specialized work clothes. Designer clothes virtually never qualify no matter how you pay for them.

My brother tried something similar with "business suits" and got audited. The IRS agent literally asked him if he wears the suits outside of work, and when he said yes sometimes, they disallowed ALL the deductions and hit him with penalties. The gift card thing would just make it worse cuz it looks like you're trying to hide something.

Your uncle's advice is unfortunately terrible and could get you in serious legal trouble. What he's describing is essentially structuring transactions to hide their true nature, which the IRS considers fraudulent behavior regardless of the payment method used. The reality is that business clothing deductions are extremely limited. Even if you're meeting clients, regular business attire (suits, dresses, etc.) doesn't qualify because it can be worn outside of work. The IRS has a three-part test that's nearly impossible for normal clothes to pass. Instead of risking fraud charges, focus on legitimate business deductions you might be missing - home office expenses, professional development, networking events, business meals, etc. These have clear guidelines and won't put you at risk of criminal charges. Trust me, no designer handbag is worth potential jail time or massive penalties. Stick to legitimate deductions and sleep peacefully at night.