Income & Expenses
Question: Are business gifts deductible?
Answer:
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.
Additional Information:
- 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
