Can I Write This Off?

Can I write off business-related gifts?

TL;DR

Yes, business-related gifts are deductible, but there are limits.

Detailed Answer

The IRS allows you to deduct up to $25 per recipient per year for business gifts. This limit applies regardless of the number of gifts you give to the same person. If you give a gift to a company, the $25 limit applies to the company as a whole, not each individual employee. Gifts that are promotional items with your business name on them and cost $4 or less are not subject to the $25 limit.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors; Form 1120, Line 19 for corporations.

Real World Example

A consultant gives a $20 pen set to a client as a holiday gift. The consultant can deduct the full $20 as it is under the $25 limit.

Calculation Required

A calculation is required for this deduction.

Calculate the total amount spent on gifts per recipient and ensure it does not exceed $25 per year.

Audit Risk & Documentation Tips

Keep detailed records of each gift, including the cost, date, description, and business purpose. Retain receipts and any correspondence related to the gift to substantiate the deduction in case of an audit.

IRS Reference

IRS Publication 463, Chapter 3

Relevant Industries

Small BusinessSales ProfessionalsConsultants

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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