Taxes Made Simple

Gina (freelance editor) asks:

Hello Mike,

Can I deduct gifts that I give to my employees or clients? Gifts seem like a pretty normal business expense, but a friend told me that they are not deductible.
Thanks for your assistance,

Gina

Answer: 

Hi Gina. Gifts to employees or clients are deductible. However, the amount you can deduct is quite small. In a given year, you can deduct a maximum of $25 for gifts to each person.  For example, if you gave eight people gifts for $25 each, you could deduct $200 (8x25). In the next year, if you gave each of those same people two gifts, each worth $15, you could still only deduct $200. This is because, even though you gave each person $30 in gifts, you can only deduct a maximum of $25 per person.

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