Are employee gifts tax deductible?

Yes, employee gifts are tax deductible. However, there are some guidelines to follow concerning this matter. According to the IRS, employee and business-related gifts are tax deductible, but you must follow these limitations:

• You do not deduct more than $25 of the cost of the employee or business gift you give directly or indirectly to each employee or professional person during your tax year.

• If you and your spouse are business owners and give gifts to the same person, you are treated as one taxing unit. In other words, one person

• .Certain incidental costs, such as engraving, packaging, or shipping, are not included in the limit of $25 (if they do not add substantial value to the gift)

• You can count items toward the $25 per person limit that costs $4, have your business or companies name engraved on them, and are items you distribute on a somewhat regular basis

• Any item considered entertainment as a gift should be recorded as entertainment and not a gift, meaning it is not tax deductible.

• You need to keep records proving the business reason for the gift and the amount you spent on the gift.