Can You Write Off Client Gifts Tax Deductible?

Detailed Answer

The IRS allows a deduction for business gifts given to clients or customers, but the deduction is limited to $25 per recipient per year. This means if you give a client a gift worth $50, you can only deduct $25. If you give multiple gifts to the same client in one year, the total deduction cannot exceed $25. Items that are clearly of promotional nature and cost less than $4, or items like signs or display racks, are not subject to the $25 limit. Gifts to a client's family are considered gifts to the client unless there is a bona fide business connection with the family member. Additionally, incidental costs such as engraving or packaging are not included in the $25 limit.

Where to Put It on the Tax Form

Schedule C, Line 27a

Real World Example

A freelance graphic designer gives a $50 coffee table book to a client as a thank-you gift for a completed project. The designer can deduct $25 of the gift on their Schedule C, as this is the maximum allowable deduction per recipient per year.

Audit Risk & Documentation Tips

Audit risk is moderate due to the strict $25 limit per recipient. Keep detailed records of all gifts, including receipts, the business purpose of the gift, and the recipient's name. It's advisable to document how the gift relates to your business and maintain any correspondence that supports the business relationship.

Can you write off client gifts tax deductible?

TL;DR

Detailed Answer

Where to Put It on the Tax Form

Real World Example

Audit Risk & Documentation Tips

IRS Reference

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