Can you believe Thanksgiving is just around the corner? The holiday season will be here in a blink of an eye, and there is no better time to show gratitude to your employees and customers. However, knowing what should be considered a business deduction for holiday expenses can take time and effort. We are here to help! Keep on reading below for our top tips:
1. Have a Party
Have you started planning your company’s holiday party yet? Now is the time to start! Tax-wise, if you want to treat your employees but treat yourself simultaneously, writing off your company’s holiday party is a way to do that. Here are a few things to keep in mind:
- If you’re going to write the party off, it’s to be for people and their families that work in the company only.
- If you invite people such as clients and vendors, you fall outside of the requirements set by the IRS to count the party as a deductible. As you plan, keep expenses reasonable and keep accurate records of the party to provide as evidence during tax time.
2. Gift Giving
We all love the gift-giving season, mainly to show gratitude to our customers. However, don’t go overboard.
Here are some essential tips:
- According to the IRS website, you can spend a max of $25 per person on tangible gifts to count as a deductible.
- Cash and gift cards are not tax deductible, even if given as a holiday gift. For more information, visit this IRS resource.
- Keep a good record of the gifts you give because if you’ve already given a gift to someone earlier in the year, you can’t deduct another gift expense for them.
3. Volunteer
Volunteering or other forms of giving are much needed during the holiday season and can count as a deduction towards your holiday expenses. If you’re going to donate money to an organization, ensure you’re giving to a qualified non-profit group.
When volunteering, you can deduct the costs of the supplies needed to perform the work. Note: YOUR TIME OR A SERVICE YOU PERFORM DOES NOT COUNT AS A DONATION.
Make sure to have all documentation by collecting and saving things like:
- Purchase receipts
- Bank record statements
- Written acknowledgments when applicable
- To claim the deduction, the IRS will need to be collected to ensure you’ve met all the guidelines
- before the deduction is applied.
If you have any questions, please reach out to us at [email protected]. We’d love to help!