Income & Expenses
Question: Are business gifts deductible?
If you give business gifts in the course of your trade or business you can deduct all or part of the costs subject to the following limitation:
- You can deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year.
- If you and your spouse both give gifts to the same person, both of you are treated as one taxpayer.
- Incidental costs such as engraving, packing or shipping are not included in the $25 limit.
- Gifts costing $4.00 or less that have your business name permanently engraved on the item, and which you distribute on a regular basis not considered gifts for purposes of the $25 per person limit.
You need to have records that prove the business purpose of the gift as well as the details of the amount spent.
- Publication 17, Your Federal Income Tax for Individuals
- Publication 463, Travel, Entertainment, Gift, and Car Expenses
Category: Small Business, Self Employed, Other Business
Subcategory: Income & Expenses