{"id":193674,"date":"2018-12-11T07:52:10","date_gmt":"2018-12-11T15:52:10","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=193674"},"modified":"2023-11-01T08:57:45","modified_gmt":"2023-11-01T15:57:45","slug":"tax-deductible-business-expenses","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/tax-deductible-business-expenses\/","title":{"rendered":"Are Employee Gifts a Tax-Deductible Business Expense?"},"content":{"rendered":"<p>The temperatures are cooling off and the smell of pine and mulled wine are in the air, which can only mean one thing: the holidays are almost here! It&#8217;s a time when many small business owners look to show their employees some appreciation with gift giving. The question is: Are these gifts <a class=\"SWhtmlLink\" href=\"https:\/\/www.nationalfunding.com\/blog\/small-business-tax-secrets-7-deductions-to-save-you-money-this-year\/\" target=\"_blank\" rel=\"noopener noreferrer\">tax-deductible<\/a>?<\/p>\n<h2>Are Business Gifts Tax Deductible?<\/h2>\n<p>According to the <a class=\"SWhtmlLink\" href=\"https:\/\/www.irs.gov\/faqs\/small-business-self-employed-other-business\/income-expenses\/income-expenses-8\" target=\"_blank\" rel=\"noopener noreferrer\">IRS<\/a>, the answer is yes, your gifts to employees are tax-deductible business expenses, up to $25 per recipient per year. For example, you could deduct gifts like a holiday ham or a gift basket. You&#8217;ll need to maintain records of your business gifts, so be sure to keep your receipts and note the business purpose.<\/p>\n<p><strong><img loading=\"lazy\" decoding=\"async\" title=\"A small business owner wraps employee gifts, which are considered tax deductible business expenses\" src=\"https:\/\/www.nationalfunding.com\/blog\/wp-content\/uploads\/2018\/12\/womanwrappingchristmaspr_622112.jpg\" alt=\"A small business owner wraps employee gifts, which are tax-deductible business expenses\" width=\"600\" height=\"400\" \/><\/strong><\/p>\n<h2 class=\"\">Jazz It Up and Deduct the Cost<\/h2>\n<p>You don&#8217;t have to include the following expenses in the $25 limit, as long as they don&#8217;t add significant value to the gift:<\/p>\n<ul>\n<li class=\"\">Engraving<\/li>\n<li class=\"\">Packing, including gift wrapping and boxes<\/li>\n<li class=\"\">Shipping, including postage and insurance<\/li>\n<\/ul>\n<p>All the associated costs above are considered tax-deductible business expenses beyond the $25 limit. However, the gift plus additional costs must always be less than $100 or it will be subject to tax.<\/p>\n<h2 class=\"\">Employees Aren&#8217;t Taxed for the Gifts<strong><br \/>\n<\/strong><\/h2>\n<p>The <a class=\"SWhtmlLink\" href=\"https:\/\/www.irs.gov\/government-entities\/federal-state-local-governments\/de-minimis-fringe-benefits\" target=\"_blank\" rel=\"noopener noreferrer\">IRS<\/a> notes that employees are not taxed for fringe benefits like holiday gifts. However, if you give an employee $25 as a check, cash or a cash equivalent like a gift card or gift certificate, this is considered taxable income.<\/p>\n<p>If you want to give more money, such as a $250 holiday bonus, include it in your employee&#8217;s paycheck. Just remember that the IRS will treat this as wages, not a gift, and will tax the holiday bonus accordingly.<\/p>\n<p>Wishing you and your employees a wonderful holiday season!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s the holidays and you want to show appreciation to your employees. Are these gifts tax-deductible business expenses? Yes, to a point.<\/p>\n","protected":false},"author":18,"featured_media":193672,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[65,115],"class_list":["post-193674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxes-regulations","tag-tax-advice","tag-tax-deductions-for-small-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Are Employee Gifts a Tax-Deductible Business Expense?<\/title>\n<meta name=\"description\" content=\"It&#039;s the holidays and you want to show appreciation to your employees. Are these gifts tax-deductible business expenses? 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