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Nora Tellifson, CPA •

The holidays are approaching, and who doesn’t appreciate the gift of cash? I find that there’s a lot of confusion out there surrounding personal gifting so let’s demystify that because it’s very powerful, and you can do a lot without incurring any reporting requirements. I am not referring to charitable contributions here which are amounts you give to a charitable organization and may be deductible for income tax purposes. A personal gift occurs whenever you give something personally to someone (a family member or friend usually) and do not receive something back in consideration. For purposes of our discussion, I am going to stick to personal gifts of cash. Just be aware that there are gift considerations when you gift noncash items also. 

Nora Tellifson, CPA •

Since the holiday season is almost upon us, it’s a good time to discuss the rules surrounding business gifts.  Gifts to clients, employees, vendors, prospects and other business partners are legitimate business deductions within certain parameters.  First of all, the tax deduction is limited to $25 total per person per year.  So if you give your largest, best customer a $200 bottle of scotch, he or she will appreciate it very much, but you can only deduct $25.  If you give the same $200 bottle of scotch to the ten office workers in your best client’s office to share, it works out to $20 per person, and you can deduct $200.  However, those office workers aren’t going to get much work done after that, which would not be appreciated by your best client so consider a fruit basket or cookies instead! 
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