This may be a little late for this year, but keep it in mind for the future. It is customary to thank customers this time of year with a gift. As you might guess, once again the IRS has to stick its nose into our business. They have rules on how much you can give and still deduct. The biggest problem is that there is a $25 limit per client per year. This amount has not been changed since the 1970’s.
The downside is a dollar limit that makes the IRS look suspiciously like Ebenezer Scrooge. 25 bucks per person, max. (Bah, humbug!) Husband and wife count as one person. (Humbug again!)
How can you get around that limit? Consider these strategies:
Consider giving to groups of people, like "the Kopsa family" (Larry and Maggie ((husband and wife so 1)), Ryan ((son 1)), and Tony((son 1)), for a $75 total) or "the folks at Kopsa Otte CPA’s" (There are 25 of us, for a $625 deduction).
Consider giving a gift of entertainment, which you can treat as a gift (subject to the $25 limit) or an entertainment expense (subject to the 50% limit). For example, tickets to a ball game sell for up to $110 each. If I give two tickets, I can deduct them as a $50 gift or a $110 entertainment expense. That's an easy call. (Almost as easy as giving the tickets away instead of attending the game!)
Ad specialties with a value up to $4 each are deductible as advertising and don't count against the $25 per person annual limit for business gifts. Contest prizes you give to customers (but not employees) also qualify.
I know, I said it's better to give than receive. But why not receive that tax break for your holiday gift if it's out there?
The downside is a dollar limit that makes the IRS look suspiciously like Ebenezer Scrooge. 25 bucks per person, max. (Bah, humbug!) Husband and wife count as one person. (Humbug again!)
How can you get around that limit? Consider these strategies:
Consider giving to groups of people, like "the Kopsa family" (Larry and Maggie ((husband and wife so 1)), Ryan ((son 1)), and Tony((son 1)), for a $75 total) or "the folks at Kopsa Otte CPA’s" (There are 25 of us, for a $625 deduction).
Consider giving a gift of entertainment, which you can treat as a gift (subject to the $25 limit) or an entertainment expense (subject to the 50% limit). For example, tickets to a ball game sell for up to $110 each. If I give two tickets, I can deduct them as a $50 gift or a $110 entertainment expense. That's an easy call. (Almost as easy as giving the tickets away instead of attending the game!)
Ad specialties with a value up to $4 each are deductible as advertising and don't count against the $25 per person annual limit for business gifts. Contest prizes you give to customers (but not employees) also qualify.
I know, I said it's better to give than receive. But why not receive that tax break for your holiday gift if it's out there?
