The holiday season is upon us. You may have a hard fast rule to not put out the holiday decor until after Thanksgiving OR you may have your tree already up and decorated with holiday music playing.
Either way, there is no denying that the holidays are coming and will be here fast.
For the first time since pre-COVID, we are seeing holiday parties again scheduled for companies.
As a business owner, are your holiday party and gifts deductible? 
Holiday Party
Holiday parties, company picnics, and other occasional employee appreciation events are 100% deductible (Federal and California).
Gifts To Employees
Making gifts to employees is a generous perk and may increase your employee morale. But understand what is and isn't taxable to the employee and deductible to the business.
In general, gifts of value are taxable to employees, unless they qualify as a "de minimis" fringe benefit.
There is no set dollar amount by the IRS to qualify what is de minimis, but a rule of thumb is $75.
Non-cash gifts like a ham (does anyone still give out hams??), gift baskets, company-branded gear, and other low-cost merchandise are examples of de minimus gifts that qualify as BOTH a tax deduction to the business and are not taxable to the employee.
Season tickets to sporting events do not qualify, but tickets to a play do.
Be wary of giving cash and gift cards! Your employees will love these until they show up on their W2.
Cash gifts and gift cards are deductible to the business BUT are taxable income to the employee and should be added to their income in payroll, thus making them subject to payroll taxes to the employer as well.
Gifts To Customers
Giving gifts to customers is a great way to show customer appreciation!
Are they deductible? ...maybe
The IRS allows gifts given by a business to an individual to be deductible if they do not exceed $25 per recipient, per year.
If you are gifting branded items, with your logo, these are considered marketing and do not fall within the $25 limit.
The $25 limit also only applies to individuals, so if you are sending a Harry & David tower to a company, as long as the costs are "reasonable", these are deductible gifts.
>>> Click here to download our free guide on what you can deduct for MEALS AND ENTERTAINMENT in your business. <<<
