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Mazuma’s Business Holiday Gift Giving Guide: Part 1, What Gifts are Tax Deductible?

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Pile of Christmas Presents on white background

The holiday season is the perfect time to show your clients and employees just how much you appreciate them. However, figuring out what to give, when to give it, and what’s tax deductible can be a daunting task. Mazuma’s made it easy with our comprehensive, deductible focused Business Holiday Gift Giving Guide.

Finding a gift that is sincere, useful, meaningful to all clients, and tax deductible sounds like a whopping job. Not to mention sending it out on time, staying within a budget and somehow making it personal. So how can you wrap all of this up in one business holiday gift?

Is a Holiday Business Gift Tax Deductible?

Let’s start with the numbers. What is tax deductible when sending a business holiday gift to a client?

Like so many other tax deductions, there is a limit on how much you can deduct when it comes to gifts. Right now, the limit is $25 per recipient per year.

Perhaps you’re especially generous throughout the year and send your clients many gifts. It’s important to know that only $25 per year per recipient is actually deductible. So, if you sent your favorite client three $25 gifts this year totaling $75…you guessed it, you are only allowed to write off $25 for that client.

How about prepping that fabulous gift and sending it off to clients? Wrapping paper, cards, scissors, tape, ribbons and bows are all tax deductible so fancy it up before shipping it out! And when you get to that mile-long post office line this December, keep your receipts because shipping and stamps are deductible as well. These costs are an addition to the $25 per recipient limit, so the actual gift itself can be valued at $25 and these expenses are still deductible.

If the $25 limit feels restrictive to you, there is a circumstance that can help you deduct more—and probably cut your work in half, too. According to the IRS, if you give a gift of “entertainment,” you can deduct 50% of the cost.

Examples of entertainment gifts are concert tickets, sporting event tickets, movie passes, restaurant gift cards, vacations, hotel stays, etc. Clearly that $25 limit per recipient can quickly be surpassed in these categories, so your deductions may actually be greater than $25 each. Your clients are sure to love the gift of entertainment and you won’t have to bother with the ribbons and bows. In fact, most of this shopping can be done online and sent to your client electronically, so win-win!

For more ideas on business holiday gift giving, visit the rest of our gift giving guide:

What To Give and Who To Give It To

Do’s and Dont’s of Client Gift Giving

Ben Sutton

Ben Sutton

Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.

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