Whether you have clients who are brand new to your network or your clients have been a part of your business for years, you want them to feel loved, appreciated, and valued. One common way business owners do that is through gifts. However, there are certain tax rules for client gifts that you should be aware of. Here’s your guide to client gifts for this year.
Under $25 Per Person
When sending gifts to a client, the value must be under $25 per person. That doesn’t seem like a lot, but let’s discuss your options. At $25 per person, you can buy a gift that’s more expensive than that, as long as it’s for more than one person and the value doesn’t exceed $25 per person. So, for two people, you can write off a $50 gift. Additionally, the IRS says you can write off incidental costs that don’t add to the value of the gift. One example of that is shipping. So, even though the rule states the value must be under $25 per person, there’s some flexibility to that.
Spouses Can’t Give Multiple Gifts to the Same Client
This one is a bummer especially if you and your spouse run two different businesses. Since you’re married, you count as one taxpayer. So, even though you operate two different companies, you can’t each give a client a $25 gift. The total value would be $50, and you’d only be able to write off $25. Even though you both want to give gifts, your client will know the rules and understand both of your companies value them, you just can’t give them two separate gifts, so don’t worry too much about it!
Gifts Under $4 are Exempt
For small items that contain your company information and are handed out on a regular basis, the IRS has made an exception. These small gifts are valued under $4 each, so the IRS has exempted them from the gift rules and they can be written off. Items that qualify include things like pens, koozies, buttons, and basically anything that acts as a virtual business card. So, make sure you always count these things as write-offs when preparing for your tax return.
Client gifts are a great way to show your appreciation and make your clients feel valued, so don’t worry too much about the tax rules! If you need any additional help with client gifts, BaCo Group can help you. You can fill out the contact form on our website, and one of our employees will get back to you as soon as we can.
Published on Jan 24 @ 10:51 AM CDT