If you’re like most people, you love giving and receiving gifts during the holiday season. But what you may not realize is that some of those gifts could be tax deductible. That’s right, if you give a gift to someone for business purposes, it may be tax deductible.
Are Christmas Gifts Tax Deductible?
The holidays are a time for giving, and if you’re like most people, you have a list of people you need to buy gifts for. But what about the cost of those gifts? Are they tax deductible?
Unfortunately, the answer is no. The IRS does not allow taxpayers to deduct the cost of Christmas gifts on their taxes. However, there are some exceptions.
If you give a gift to someone who is not considered a relative or close friend, and the value of the gift is more than $75, then you can deduct the cost of the gift on your taxes.
So if you’re planning on doing some holiday shopping this year, keep in mind that any gifts you give will not be tax deductible. But that doesn’t mean you can’t still enjoy giving them!
Tax Deductible Gifts to Family Members
It’s that time of year again when many of us are thinking about making charitable donations. And if you’re like most people, you probably have a list of charities that you regularly support. But what about making a gift to a family member?
Is that tax deductible?
The answer is maybe. It depends on the type of gift and the relationship between the donor and the recipient.
For example, if you make a cash donation to a family member who is struggling financially, it is generally not tax deductible. However, if you make a similar donation to a registered charity, it would be tax deductible.
There are some exceptions though.
If the family member is considered to be disabled or they are 65 years of age or older, then the gift may be tax deductible. The same goes for gifts made to cover medical expenses or education costs.
Another thing to keep in mind is that any gifts made during your lifetime are subject to the federal estate tax.
So if you plan on making large gifts to family members, it’s important to consult with an accountant or financial advisor first to see how it could impact your taxes down the road.
Credit: andrewstaxaccounting.com
Can I Write off Employee Christmas Gifts?
The IRS has specific guidelines when it comes to writing off employee Christmas gifts. According to their website, “Generally, the cost of business gifts is not deductible as a business expense. However, if you give items that qualify as deductible entertainment expenses, you may be able to deduct a portion of the cost.”
To qualify as a deduction, the gift must be considered “entertainment” by the IRS.
This includes meals, recreation, and amusement. Gifts that are given purely out of goodwill or for promotional purposes do not qualify.
When it comes to holiday parties, the IRS states that “the cost of an annual holiday party or company picnic is generally not deductible as a business expense.”
However, they do allow for a deduction if the party meets certain criteria: “If your holiday party or company picnic is open to all employees and their families and is not highly selective in who attends (for example, it’s held at a public park), then you can treat the event as entertainment.”
So in short, Christmas gifts for employees can only be written off if they meet the criteria for being considered “entertainment” by the IRS. If you’re unsure whether or not your gift qualifies, it’s best to speak with an accountant or tax professional before making any deductions on your taxes.
How Much Can I Write off for Gifts?
The IRS has a few guidelines for how much you can write off for gifts. For business gifts, you can deduct up to $25 per person per year. For charitable donations, you can deduct the fair market value of the gift.
Conclusion
Are Christmas gifts tax deductible? The answer is maybe. If the gift is for a business associate or employee, it may be tax deductible.
But if the gift is for a family member or friend, it’s not tax deductible. So before you go out and spend your hard-earned money on Christmas gifts, make sure you know whether or not they’re tax deductible.