When it comes to taxes, giving business gifts is definitely more beneficial than giving personal gifts. This is because business gifts can be deducted, and even more, sometimes what you may think is a business gift can turn out to be a plain old business expense, which is fully deductible.
There is a general $25 rule for business gifts. Per year, any one taxpayer can deduct up to $25 in business gifts. Even if your gift costs more than $25, that is all you can deduct from it. But if you give multiple gifts throughout the year, and their values add up to $25 or less, you are perfectly capable of covering them all. But keep in mind, a husband and wife are considered one tax-paying entity, so the two of them together can only give $25 in gifts.
Sometimes, gifts are not as simple as a box of chocolates or a pencil holder. Gifts like concert tickets or spa visits are also considered entertainment, so they are treated somewhat differently when it comes to taxes. If you accompany the person to the event, then it becomes a business entertainment expense and there is no limit, but you can only deduct 50% of the cost. If you do not accompany the person to the event, then you can either treat it as a gift or as entertainment. If the total value is less than $50, then it is probably more beneficial for you to treat it as a business gift.
Whether you are giving a business gift as an incentive, as an investment, or to show appreciation, keep in mind that when the giving is not personal, the IRS has a say, even for something as small as promotional metal pens.
