Monday, December 15, 2008

Gift Expenses and The IRS

If you give gifts in the course of your trade or business, you can deduct all or part of the cost. This section explains the limits and rules for deducting the costs of gifts.

$25 limit. You can deduct no more than $25 for business gifts you give directly or indirectly to any one person during your tax year. A gift to a company that is intented for the eventual personal use or benefit of a particular person or limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who recieve the gift.

If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use.

If you and your spouse give gifts, both of you are treated as one taxpayer. It does not matter whether you have separate business's, are separately employed, or whether each of has an independent connection with the rescipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.

Incedental Costs:
Incedental costs, such as engraving on jewelry , or packing, insuring, nd mailing, are generally not included in determining the cost of a gift for the purpose of the $25.

1 comment:

Low Cost Insurance said...

One area I am so surprised the IRS has not changed is being able to give up to $10,000 per person out of a persons estate. Perhaps it is something not used by many people but a friend of mine received money for years out of a trust.
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