Tis the season of Secret Santas and Holiday Company Parties.
It’s a common tradition among businesses to get in the holiday spirit and give gifts to clients and employees. Even though giving gifts doesn’t typically put the idea of taxes in mind, it’s important to know how to report business gifts as tax deductions.
What are direct gifts versus indirect gifts?
The IRS will give the green light on a tax deduction for two types of gifts; direct and indirect. Don’t worry – this still gives you substantial leeway to choose that perfect gift this year. Direct gifts are given as part of a direct professional relationship. For example, the owner of 123, LLC gifts a Godiva gift basket to each employee for the holidays. Indirect gifts typically involve a middleman, such as sending a gift home for your employee’s child.
Is there a cost limit?
There is a $25 limit per gift, per year. What’s that mean? Well, let’s say that your company likes to give gifts to clients or employees multiple times per year. The deduction would only apply to ONE gift and only $25 of that gift could be deducted.
Keep in mind that the gift CAN cost more but only $25 of the total can be reported as a deduction (so hold onto that ‘#1 BOSS’ title and keep giving your employees those iPad minis).
Does the cost include incidentals?
Continue reading “Holiday Tax Deductions: Business Gifts”
It’s almost time to bust out the wrapping paper and tinsel!
Yes, it’s that time of year again. It’s the season of giving. Before you get wrapped up in holiday parties and stocking stuffers, you’ll want to make sure that you’re mind isn’t blurred with visions of sugarplums and too much eggnog.
January marks the start of tax season and we want to make sure that you’re ready. That includes reporting those holiday gifts to charity as tax deductions.
How do I donate?
We tend to think that the only way we can help out in society is by breaking out our checkbooks and tacking on as many zeros as our bank accounts will allow. Money is great. But it’s not the only way. It’s also probably the main reason why the majority of us end up doing nothing. We simply can’t afford to.
Seeing as our daily lives revolve around checking up on ourselves (our bank accounts, our smartphone notifications, our Tinder profiles), it’s easy to forget that taking the time out for others is also considered a charitable donation.
If you can write out a check, then all the more power to you! If you can’t, don’t downgrade the time you can spend helping out at your local soup kitchen or cleaning out your closet to donate those jeans and blazers you never ended up wearing. Your nearest Goodwill or Salvation Army will take them off your hands.
Where should I donate?
The dilemma for some of us is that we don’t know where our hard earned dollars are going when we donate to a charity. We understand! Who wants to spend time researching a reputable charity to support and then not be certain that they are using your money the right way? Continue reading “Holiday Tax Deductions: Gifts to Charity”
First comes love, then comes marriage, then comes a baby… and the Earned Income Tax Credit?
Here’s one for the next round of Jeopardy: the Earned Income Tax Credit or EITC was designed to offset the burden of Social Security taxes paid by low to middle income working families.
And here’s one you can take to bank: if you find yourself struggling to provide for your family you may qualify for the EITC and increase your refund at tax time .
Whether you qualify, not to mention the amount of the credit you’ll receive, depends on your income and how many qualifying children you’re supporting.
Eligibility is based on your income and your filing status
First, in order to qualify, you must file your tax return as married filing jointly. Your filing status can not be filing separately.
Second, your income earned (that is, the wages you received from your job or the net profits you made from self employment), can not exceed a certain threshold.
If you’re married filing jointly, your 2014 adjusted gross income, must be less than: