Very often clients come in and want to deduct expenses for gifts they send to their clients, partners or employees. But how much is really deductible?
Rule is that you can deduct $25 per gift you gave a tax year . Meaning if you spent $45 for flowers for the gift to your client, you can deduct only $25 of the price you paid. If you sent flowers four times during a year $40*4=$160, you can deduct $25*4=$100 of your gift expenses.
If you have to pay for delivery of the gift, usually this “incidental cost” does not included into $25 gift expense calculation.
Any item priced at $4 or less and
– have your name on it (such as pen, plastic bags, magnet calendars, desk sets, etc)
-signs, display racks and any other promotional items to be used on the recipient premises
ARE NOT considered gifts. (Those are promotional items and will be discussed in another blog post).