Tax specialist Catherine Raker answers the question: Are gifts for clients tax deductible?
Dave Lorenzo: And now it’s time for another Cendrowski Business Minute. With us today, we have Catherine Raker. So Catherine, are gifts for clients tax deductible?
Catherine Raker: Well, like everything, there’s an exception and there’s a rule. The maximum limit that you can take for a gift to a client is $25. That’s been the limit since 1962. It’s unrealistically small, and there are some ways to get around it. For example, if you give a gift to a married couple and both spouses are in fact connected to the business, the gift limit can bump up to $50. Another example would be is if you gave a gift to a business and that business was going to use the gift in their workings, then you can deduct 100% of it; ordinary and necessary business expense. Now keep in mind that even though the limit is $25, you can still give a gift more than that. You just can’t deduct that amount.
Dave Lorenzo: Are those people at the IRS crazy? What am I going to give somebody for $25, Catherine? That’s ridiculous.
Catherine Raker: You can give them a pen.
Dave Lorenzo: Exactly. So Catherine, if people out there have any questions about paying their taxes, about taxes in their business, the best way for them to get a hold of you is to call 866-717-1607, right?
Catherine Raker: That’s correct.
Dave Lorenzo: All right, Catherine, we will make sure that when we’re giving our gifts to people that we only deduct $25, unless we’re giving a gift to a married couple, and then we can deduct $50.
This has been an enlightening business moment sponsored by Cendrowski Corporate Advisors. Catherine Raker, thank you so much for sharing that valuable information with us. We’ll be back here again tomorrow with another Business Minute from Cendrowski Corporate Advisors. Until then, I want you to remember that Cendrowski Corporate Advisors is a CPA firm with a different perspective.